Retail analysis shows strengths, areas to improve, for Spring Valley
Thursday, January 26, 2017 1:54 PM
PAULA BARNESS/SPRING VALLEY TRIBUNE
Liz Templin, of the University of Minnesota Extension office, presented the information gathered for the EDA sponsored retail gap analysis.
The Spring Valley Economic Development Authority (EDA) sponsored a meeting on Jan. 18 to present information gathered for a retail gap analysis and allow local organizations to give updates on their activities.
“The EDA provides many tools for attracting and retaining businesses in the community and these tools have led to things such as the downtown revitalization, the expansion and retention of businesses, succession planning, new housing and an important tool we can provide is information,” EDA President Dave Phillips said in introducing the presentation. “Last year, we completed a child care survey, showing that there was a need for more options in Spring Valley and that has led to a joint venture that may bring a center here if everything falls into place.”
Phillips explained the purpose of the analysis is to show the health of retail sales in the community, identify trends, threats and opportunities for businesses with a focus on Spring Valley, which often doesn’t have information available specific to the community.
The presentation highlighted information on customers, which included demographics, commuting patterns and lifestyles.
To begin, participants were asked what they were hoping to learn from the study.
Lee Himle stated, “What do we have that would be unique for someone to consider our town for their business or home ownership.”
Chamber President Julie Mlinar said, “I’m wondering how to encourage more businesses to come to town and how to maintain those businesses in a healthy manner not only to benefit those businesses, but the whole community.”
And EDA member Steve Himlie asked, “How can we continue to support and thrive our small town community?”
Throughout the study by the University of Minnesota Extension office, presenter Liz Templin explained they used a trade area that included many of the communities surrounding Spring Valley for a total population of 13,371. The area went to Elkton on the west, Chester on the south, just west of Preston on the east side and just south of Stewartville on the north side.
Spring Valley economic development director Cathy Enerson noted the area was determined by the known customer bases of numerous businesses in town.
The information for the analysis was gathered through the national economic census, as well as through a commercial company, ESRI.
“For customers, I looked at age, household composition, income and net worth,” Templin said. “When I have worked with other communities and shared this information there have been some real surprises. I encourage you to apply this to your own situations.”
The study found that the highest percentage age groups of the Spring Valley area population are 45 to 54 years old and 55 to 64.
Templin noted this maybe due to people moving away after high school, but then moving back when they begin to settle down or retire.
The majority of the households are comprised of families with a husband, wife and children (23 percent), a husband and wife only ( 36 percent) or one-person households (27 percent).
“You are a heavily family-oriented community,” Templin said of the findings.
The study found that nearly 75 percent of the homes in the area are owner occupied, which is close to 10 percent more than the state average.
Templin then touched on the average education in the area, “You have more college (some college with no degree), more high school graduates and more associate’s degrees than the state as a whole. You have fewer bachelor degrees and graduate/professional degrees, but you can be proud of the how high the number is for high school graduates (92 percent). That is a great number.”
As for household income, the study showed about half the population has a household income between $50,000 and $149,000. The household net worth showed quite a variance with high numbers showing a net worth below $15,000 (17 percent) and even higher numbers showing household with net worth of $250,000 or more (37 percent). Much of the households with the higher net worth have head of households that are between 55 and 74 years old.
Templin pointed out this may be due to the large amount of agriculture in the area.
“Farmland has gone up in value with economy prices and now it is starting to go down in value. Some of the farmers are land rich and cash poor,” Templin commented.
Chuck Schwartau, also of the U of M Extension office, agreed, “When you look here at the high average, it is the older landowners, who may or may not be on their farms any longer. They are holding high value assets and quite a bit of it.”
These statistics, which compared the local trade area to the state as a whole, brought up the question of differences between metro and rural Minnesota. Bruce Schwartau, also of Extension and brother to Chuck Schwartau, researched some of this information.
“If we look at the state as a whole, the median (household) income is $63,000. If we look at the Twin Cities it is $68,000. If we just look at southern Minnesota, from Mankato east, that is $58,000. If we look at Fillmore County it is $53,000 and Mower and Freeborn counties are at $47,000,” he shared.
Templin then moved on to the lifestyle portion of the study.
“They have divided the country into 65 lifestyle segments, which they call tapestries,” Templin said of the ESRI program. “It is based of the demographic data, their market research and they are looking at shared lifestyle traits, interests and shopping patterns.”
The study showed half of the population in the Spring Valley trade area finds buying American is important and are likely to buy a brand that supports a charity. They also found price is usually more important than brand name.
The Spring Valley area was broken into five segments.
The first segment, called prairie living, makes up 48 percent of the population of the local trade area and has a predominance of self-employed married couple farmers who value faith and religion. Half have some college or a college degree and tend to buy things based on needs rather than wants. Most spend their leisure time outdoors. The national median household income of this segment is $51,000 with a national median net worth of $118,000.
The second segment, named green acres, is 21 percent of the population and includes mainly country living and self-reliant older, married couples. Of this number, 60 percent are college educated and 15 percent are self-employed. Thirty percent of the households have an investment income and have a national median household income of $72,000 and a median net worth of $226,000. Members of this group tend to make purchases based on quality and durability and do many of their own home improvements and gardening. They are also active in social organizations from fraternal orders to veterans clubs.
The third segment, represents 16 percent of the populace and is called rustbelt traditions.
This group is family oriented with half being married families without children. Most live, work and play in the same area for the majority of their lives and are high school graduates with some college. Most are skilled workers in manufacturing, retail trade and health care. The majority of the group has modest incomes with above average net worth and 30 percent draw from Social Security with 20 percent drawing income from retirement accounts. Most are budget aware and favor American made products.
The fourth segment, heartland communities, makes up 8 percent of the population.
This group includes semi-rural and semiretired persons who own mortgage-free homes and are active in the outdoors. When shopping this group supports local businesses and are budget savvy who buy brands that they grew up with and are predominantly American made.
The fifth and final segment consists of 7 percent of the populace and is comprised of retired seniors with above average net worth. Of this group, 42 percent receive Social Security and 28 percent also have retirement income. Their purchases are traditional, not trendy, they opt for convenience and comfort and are attentive to price, but not at the expense of quality. This group prefers to buy American and natural products.
The study then compared the businesses within a one-mile radius of the downtown areas of 120 cities in the Greater Minnesota area with populations of 1,000 to 2,500.
This showed Spring Valley has a higher number of automotive repair and maintenance shops, businesses with building materials and supplies, beauty salons, bars, amusement, gas stations, automotive parts and accessory stores, pharmacy and drug stores, used merchandise stores, florists and liquor stores.
“I will tell you, I have done this presentation in other communities and it doesn’t look this good in a lot of communities,” Templin commented. “I think you can feel, from my perspective, proud of the diversity and mixes that you have here.”
Next, Templin outlined the retail gap analysis for Spring Valley.
“It is based on the full spending potential of all residents (within trade area), so it’s not based on tourism or visitors or people who work here but don’t live in the trade area. It is a ballpark estimate based on national spending; it is a national database based on the number of stores and how much is spent on that category and therefore how many people it takes to support a store. Last, it is not a business feasibility study, it gives you information about the demographics and it gives you information about what is possible,” Templin explained.
It was noted that businesses that have more than one format, such as having a pharmacy owned by and located within a grocery store, were only included based on the main business, which would be the grocery store in this case.
“Often its not a new store, but an existing business that might add a category,” Templin stated. “Those are ways you can think about tweaking existing businesses or recruiting new ones.”
The study found retail gaps in Spring Valley included clothing stores, photographic services, special food services, dry cleaning and laundry services, shoe stores, jewelry, luggage and leather goods stores, health and personal care stores, nail salons, amusement and recreation industries, cosmetics, beauty supplies and perfume stores, consumer goods rentals, office supplies, stationery, and gift stores, pet and pet supply stores, book stores and news dealers, household appliance stores, consumer electronics and appliance rental, motion picture and video exhibition, disc rentals, musical instrument and supply stores, recreational vehicle dealers, manufactured home dealers, grocery stores, formal wear and costume rentals.
Templin then concluded the presentation by focusing on commuting patterns.
“Where people work makes a big difference in terms of where they are going to buy things,” Templin said.
The study found that of the people who are employed in the Spring Valley trade area, 499 live in the city, 217 live in Iowa, 176 live in Grand Meadow, 134 in Rochester, 109 in Chatfield, 92 in Austin, 87 in Racine, 81 in Preston, 80 in Stewartville, 71 in Adams and 68 in LeRoy.
“People, especially if they have long commutes, tend to shop en route. They will shop either near where they work or their home. So where the workers live can add more potential customers that are not included in the analysis of residents,” Templin explained.
Out of the residents living in the trade area 2,209 work in Rochester, 522 work in the seven-county metro area, 522 are employed in Spring Valley, 321 in Austin, 270 in Iowa, 266 in Chatfield, 223 in Grand Meadow, 203 in Stewartville, 202 in Preston, 109 in Adams and 107 commute to Wisconsin.
In response to the commuter findings Steve Himlie suggested, “Something to keep in mind is the hours of operation for businesses. If they are leaving early and coming back late you may have to adjust your hours.”
Competing with the larger retail stores in the Rochester area has been an ongoing battle for many local businesses. Bruce Schwartau shared what he has learned in this area: “We’ve done some research on when big box stores were coming into rural communities and how existing smaller businesses compete. Some of the same things we learned then are going to be important for you, because your main competition is big box stores in Rochester. First of all, you want to know what other businesses within your community sell, so that when a customer comes in for something you don’t have you can refer them to a business within Spring Valley. You also want to know how the lines that you carry vary from the products that might be sold in common competitors in Rochester. And offer customer service that makes them want to keep coming back.”
“The implication for retail – identify the competitors, whether they are in Rochester or here,” Templin suggested, by focusing on selection, quality, price and service. “Provide some kind of online shopping and market and expand services. So somebody can look at this and think about what can I either start, continue or change.”
Interestingly, it was noted that once people visit Minnesota they want to move here, more so than in any other state in the Midwest.
This brings the power of tourism to the forefront, as rural areas continue to work on growing their communities.
“Right now we are in a situation that businesses that want to expand are bypassing our area because we do not have enough workforce here. It is going to be critical for us to have more residents moving into our area for our economic growth to occur,” Bruce Schwartau expressed.
After absorbing the large amount of information gathered by the study, participants were given an opportunity to share their thoughts and reactions.
“This is showing me a picture that we have more than I expected; we have a lot to be appreciative about, but there is always room for growth,” Rita Hartert remarked.
“This was pretty mind blowing,” Mlinar said of the findings.
Mlinar then spoke about the mission for the Spring Valley Chamber of Commerce.
“Our mission for the Chamber is focused on the businesses that we have here and also the community. So we do a lot of activities through the year, but we feel like we’ve maybe lost some of our vision in the last years. So, we’ve started having special meetings, which Cathy (Enerson) has helped facilitate, to put our focus in order,” Mlinar stated.
The group has begun a process called the SWOT plan, which focuses on strengths, weaknesses, opportunities and threats.
The Chamber hopes to get feedback from residents outside of its membership to help build its information and would like to work on more networking between local businesses to continue on this process of growth.
Spring Valley Tourism Chairperson Kathy Simpson, then spoke to the group to give some insight on the work the board does to support the area.
Simpson highlighted some of the tourism businesses or assets, such as Good Earth Village, Deer Creek Speedway, Four Daughter’s Winery, the local museums, Forestville/Mystery Cave State Park, the Spring Valley Bakery, Root River Country Club, Glad Gatherings and the A&W Drive-in.
Simpson explained that she promotes many of these through numerous social media sites and three websites.
Simpson also is the chairperson for the Almanzo bicycle races based in Spring Valley, which consistently brings more than 1,000 riders and spectators to the community.
These organizations, the EDA, Chamber of Commerce and the Tourism Board, continue to strive to build and grow the community of Spring Valley through the gathering and sharing of information, such as the retail gap analysis.