Hampshire Think Big With Small Retailers

The other day I was in the post office.

A grandmother came in to conduct business.

The postal clerk mentioned the heat and wouldn’t it be nice to have an ice cream cone. The grandmother said that her grandson would run up a big bill at Dairy Queen. The clerk replied wouldn’t it be nice to have McDonald’s in town and explained why she liked it.

I said there is a McDonald’s in Hampshire already — out by the truck stop. The clerk retorted no, no, in town along Route 72.

I explained to her it would never happen. Putting one along Route 72 would be too close to the existing store cannibalize sales. There aren’t enough people living Hampshire, and not enough traffic.

At first, she looked bewildered then said oh I didn’t know that.

The biggest factors in locating a retail store, for most of the chains and even mom-and-pop stores, are:

• population density within a 1-, 2-, and 5-mile radius of the location,
• traffic counts,
• what other industry surrounds the location, and
• available land.

All four we lack currently.

The National Retail Federation’s Economic Impact of the U.S. Retail Industry study found that 98.6% of retail businesses have fewer than 50 employees, 91.1% have less than 10 employees, and 95% of retailers have just one location. These retail establishments account for more than 40% of all employment within the U.S. retail sector.

The 14th congressional district, in which Hampshire sits, has 9,856 retail establishments (including restaurants and bars) employing 73,462 people — or just over 7 employees per establishment — and generating slightly more than $328,000 in revenue. Their total GDP (gross domestic product) economic impact is $6.3 billion. For the district, retail trails manufacturing, real estate and rental and leasing, and wholesale trade industries in the amount of economic impact each generate.

In 2012, in Kane County, retail sales totaled $5.6 billion with a $10,873 per capita according to the U.S. Census Bureau.

The key to a community’s retail industry’s success is matching consumer goods and services to the resident’s demographics.

In communities who closely track population growth and their residents’ demographics

• age distribution,
• ethnic group concentration,
• income distribution,
• predominating lifestyles,
• religious preferences,
• racial composition, and
• educational levels of achievement

and purchasing behavior, retail demand is strong and flourishing whether the community is rural or urban.

In communities who don’t, retail trade is disjointed and floundering — causing residents to travel to other communities or seek other venues (e-commerce) to satisfy the needs and wants. And, the community is left to operate with less tax revenue.

Why is demographics so important?

For everyday purchases, consumers want to patronize local merchants.

The things we purchase like food, gas, oil changes, clothing, etc. that sustain our life and lifestyle account for 90.2% share of annual consumer expenditures. Access Development found that 93.2% of consumers typically travel 20 minutes or less and 87% of consumers typically travel 15 minutes or less to make their everyday purchases. In rural areas, 70.3% of consumers typically travel 20 minutes or more.

Therefore, proximity is more important to them than price, quality, service, brand reputation, etc.

For a community, personalization means that the community has the types of merchants to satisfy the everyday goods and services the residents want and need.

For a retailer, it means they’re crafting a shopping experience that conveniently supplies their target audience(s) with the types of merchandise they demand in the manner in which they want to purchase them (e.g., in store, delivery to home/business, e-commerce, etc.).

When both can do this, residents will support community merchants who satisfy their unmet wants and needs which will lead to loyalty to the community and its merchants, even though there may be competition from Amazon and other e-tailers, big box stores in other communities or even small independent retailers around the corner.

The winners in the retail industry are those who use demographics, and big data, to unlock financial value, reduce operating costs, and improve the customer shopping experience. Communities and retailers must be nimble in today’s economy.

Hampshire, Illinois Demographics

2016 Population Estimates
6,247
Source: Vintage 2016 Population Estimates: Population Estimates
Median Household Income
$ 93,775
Source: 2011-2015 American Community Survey 5-Year Estimates
Persons in poverty, percent
1.4 %
Source: 2011-2015 American Community Survey 5-Year Profiles
Educational Attainment: Percent high school graduate or higher
87.1 %
Source: 2011-2015 American Community Survey 5-Year Profiles
Persons without health insurance, percent
6.1 %
Source: 2011-2015 American Community Survey 5-Year Profiles
Median Housing Value
$ 195,400
Source: 2011-2015 American Community Survey 5-Year Estimates
Total Housing Units
1,949
Source: 2011-2015 American Community Survey 5-Year Estimates
Number of Companies
649
Source: 2012 Survey of Business Owners: Company Summary
Male Median Income
$ 49,471
Source: 2011-2015 American Community Survey 5-Year Estimates
Female Median Income
$ 19,871
Source: 2011-2015 American Community Survey 5-Year Estimates
Veterans
417
Source: 2011-2015 American Community Survey 5-Year Profiles

Amazon, Netflix, or Uber have become highly successful by disrupting the marketplace and changing consumers’ buying habits. For Hampshire to be a winner now and into the future, it must become a disruptor. Becoming one starts with putting residents front and center.

How can they do that?

Whoa. That’s been boiling up for some time. Just had to let it out.

What are your thoughts?