Professional Documents
Culture Documents
PREPARED BY
HEBERT RESEARCH
13629 NE BEL-RED RD
BELLEVUE, WA 98005
JUNE 2, 2008
The purpose of this study is to assess the potential consumer demand for economic and
community impact of a new Fred Meyer store in the Maple Valley trade area. Research
was conducted applying accepted theories of retail convergence and leakage. In essence,
this means the research assesses whether the large “one-stop shopping” model of Fred
Meyer will increase the flow of retail trade into Maple Valley and positively contribute to
area’s overall economy.
1. An assessment of the extent to which the proposed retail facility will capture a
share of retail sales in the community, and the potential impact of the project on
existing employers in the community.
4. An estimate of the number of people who will likely be employed by the proposed
retail establishment.
7. The projection of the cost of public services and public facilities resulting from
the construction and operation of the proposed retail establishment.
8. The projections of the public revenue resulting from the construction and
operation of the proposed retail establishment.
9. An assessment of the effect that the construction and operation of the proposed
retail establishment will have on retail operations in the same market area,
including the potential for blight resulting from retail business closures.
10. An assessment of the potential for long-term vacancy of the property on which the
retail facility is proposed in the event that the business vacates the premises.
12. Demographic, income and consumption data for the Maple Valley trade area.
14. Identification of ways for Fred Meyer to penetrate the market in the trade area.
16. Identification of key variables that will drive demand for Fred Meyer.
18. Estimation of the average amount spent per visit at the grocery store.
19. Estimation of weekly and annual sales demand; projected over five years.
Research Methodology
To assess the potential consumer demand for and economic and community impact of a
new Fred Meyer retail store in the Maple Valley area, Hebert Research has used a
combination of economic impact analysis, secondary research, and quantitative telephone
interviews.
Secondary Research
Secondary research was conducted as a preliminary step to collect the city census and
industry data that will be subsequently used to create economic models, conduct
quantitative analyses and develop research insights. Since this study involved a
significant amount of city economic data, secondary research accounted for a big part of
the project.
The following were used as major sources of secondary data to characterize and quantify
the consumer retail market in the Maple Valley area:
• U.S. Census
• U.S. Bureau of Economic Analysis
• Puget Sound Regional Council
• Department of Revenue
• Washington State Department of Labor
• Urban Land Institute
• King County Budget Office
• Puget Sound Forecast Council
Additional behavioral data was obtained from Claritas and from previous research
conducted by Hebert Research. Specific variables included:
Primary Research
• Sampling frame
A total of 250 Fred Meyer family customers and non-customers, including a stratified
sample population of existing retail customers in Maple Valley and principal shoppers
of Fred Meyer. The data was weighted to reflect actual post weights.
• Questionnaire
Herbert Research developed the questionnaire in conjunction with Fred Meyer. The
questionnaire was designed to address the objectives of the research and was
approved by the client before it was administered in the field.
• Pre-Testing Questionnaire
Hebert Research pre-tested the initial survey questionnaire among a small group of
respondents to examine the effectiveness of the survey tool and determine revisions to
improve the quality of answers and ensure that the survey objectives could be met.
analysis begins by identifying one or several economic impact issue actors. In this case,
the objectives of the proposed establishment of a new Fred Meyer store and converting
their actions to a set of expenditures. These expenditures are the initial changes (“input”)
that stimulate further economic activities (“output”). The actions and the economic
activities they stimulate are the impact. These economic activities interact with one other
in a Social Accounting Matrix (SAM). Established multipliers convert “input” to
“output” and encompass three components:
The effects of the proposed Fred Meyer project are illustrated in the following chart.
Value-added
Construction Downstream
Parts Suppliers Businesses
Raw
Material Employment Material and
Suppliers Parts Suppliers
Income
Taxes Households’ Consumer
Consumption Product
Providers
After the initial changes of economic variables (e.g. the construction costs, the increased
employment) were identified through secondary research, the total impact of the Fred
Meyer project on the City’s economic development could be quantified and expressed as
monetary expenditures. These expenditures represent the total economic output, and
were allocated to several economic categories (e.g. employment compensation, proprietor
income, city revenue, etc).
This powerful economic model was used to evaluate the economic impact or benefits that
the proposed construction of a new Fred Meyer store will bring to the City.
Sustainability Assessment
the retail business, and the possible controls and governance exercised over project
development.
The assessment of economic effects is always associated with the assessment of risk and
control. The relationships between economic effects, risk, and control are shown below.
When control or governance is improved, the risk and economic effects increase, helping
to ensure that economic effects will be sustainable.
Univariate Analysis:
Univariate analysis consists of identifying and quantifying the key variables that
influence the overall operation of a system or process. In this case, statistical
averages and variances give us an overall picture of the potential customers in
the Maple Valley trade area, their behavior as consumers, their perceptions of
Fred Meyer, and the extent to which they are likely to use the services of a new
Fred Meyer store in their neighborhood.
Multivariate Analysis:
Research Deliverable
From 2000 through 2007, the population of Maple Valley grew from 14,209 to 20,020, a
compound annual growth rate of 5%. The greatest growth occurred in 2005 and 2006,
when the population grew by 9.77% and 7.11%, respectively.
According to the City of Maple Valley Economic Profile and Baseline Market
Assessment report, Maple Valley is expected to grow at a low to moderate rate over the
next 15 years, between 1.1% and 2%.
Change in Change in
Years Population Pop. Pop. ( %)
2000 14,209
2001 14,590 381 2.68%
2002 15,040 450 3.08%
2003 15,730 690 4.59%
2004 16,280 550 3.50%
2005 17,870 1,590 9.77%
2006 19,140 1,270 7.11%
2007 20,020 880 4.60%
Source: US Census Bureau
Population by Race
Maple Valley is a relatively homogeneous community. Most of the residents (90.4%) was
of Caucasian decent in 2007. Hispanics accounted for 4% of the population, Asian or
Pacific Islanders 2.8%, African Americans 1.1%) and Native Americans 0.7%. Nearly
4% of the people of Maple alley self-identified with two or more races.
Population By Race
100.0%
% of Total Population
80.0%
60.0%
40.0%
20.0%
0.0%
African Native Asian or Two or
Caucasian Other Race Hispanic
American American Pacific More
Source:
ESRI
According to the U.S. Census of 2000, the average household in Maple Valley had was
3.0 people. In that year, only 22% of the population was over the age of 55 and 44% of
the population was between the ages of 18 and 54. The median age in 2007 was a
relatively young 36.7 years.
Ages Percentage
0- 17 years 34%
18- 24 years 5%
25- 34 years 17%
45 to 54 years 22%
55 to 64 years 12%
65 years and Older 10%
Source: U.S. Census, 2000 & Maple Valley Economic Profile & Baseline Market Assessment
Population by Gender
The population of Maple Valley was evenly distributed in 2007 between male and female.
The difference between males and females was only 0.4 percent.
Median Income
According to Claritas, the median income of Maple Valley in 2007 was $91,916. About
one-third (31%) of the population earns over $100,000 per year. Another 44% earns
between $50,000 and $100,000, while only 25% earns below $50,000 a year.
50.00%
44.00%
45.00%
40.00%
35.00%
31.00%
30.00%
Percentage
25.00%
25.00%
20.00%
15.00%
10.00%
5.00%
0.00%
Income Under $50,000 Income $50K-$100,000 Income Over $100,000
Income
According to the Office of Financial Management, the number of employed Maple Valley
residents rose from 1,937 in 2000 to 3,318 in 2006. The service sector was the major
employer in 2006 with 1,212 persons employed. Another 508 people were employed in
Construction / Resources, while 507 people were employed in retail. The retail sector and
manufacturing experienced brief decline in employment in 2005 but recovered during the
following year.
Total estimated retail sales revenue in 2007 in the City of Maple Valley was
$440,436,261,1 with sales distributed among groceries, electronic appliances, and apparel
among other products. The major beneficiaries were the food and beverage stores
($52,486,489), grocery stores ($47,433,316), convenience stores ($45,089,298), and
general merchandise ($57,921,730).
The table below is a partial overview of some of the major categories that benefited from
the buying power of the local population.
1
Source: Claritas
Source: Claritas
The population of Maple Valley spent $572,071,437 2 in 2007. This is notably higher than
the $440,436,261 in total sales recorded by the retail stores in the City, suggesting an
economic leakage of $131,635,176 from Maple Valley to surrounding areas.
The Maple Valley trade area encompasses the towns of Hobart, Noble, Landsburg,
Mirrormont and other areas around the city (see trade area map for more details).
The total population of the trade area is estimated at 40,036, 3 including the population of
Maple Valley, which was estimated at 20,020 as of 2007.
The average household in Maple Valley trade area was estimated at 2.82 people in 2007.
This equates to approximately 14, 197 households.
The median age of the population of the trade area was estimated at 38.05 years as of
2007.
In 2007, the retail trade area had total estimated retails of $709,619,409. 4 The total
amount generated by items sold in the trade area was considerably lower than the buying
power of the population ($923,980,394). There was a leakage of $214,360,985 in 2007.
Sales were distributed among several categories, from furniture to electronics to
groceries. Food and beverages, grocery stores and building material were among the
2
Source: Claritas, 2007
3
Source: Claritas, 2007 demographics
4
Source: Claritas, 2007
main beneficiaries. Other categories such as Health& Beauty and Florists also benefited
from the buying power of the population.
The table below is a recapitulation of some of the main items that sold during the year
2007.
In 2007, Maple Valley trade area consumers spent $923,980,3945, spread over many
different retail segments. Only $709,619,409 worth of items was sold in the Trade area in
2007.
The table below shows some the expenditures by trade-area residents. This list is not the
total expenditure of the residents of the trade area; it is a representation of some of the
most popular items purchased. Some items are shown with subcategories (e.g., Drugs).
5
Source: Claritas
Total retail sales in Maple Valley in 2007 were estimated at $163,880,538. The revenue
to local businesses of $163,880,538 was just about one-third of the demand of the local
population. The estimated demand for total retail in Maple Valley in 2007 was
$484,534,768.6 There was a considerable “leakage” of revenue to surrounding
communities. The only area where Maple Valley’s current businesses are able to meet
and exceed the demand is in the food and beverage sector where there is an excess of
$8,908,81. There is a shortfall in other retail trade categories, e.g., furniture, electronics,
sporting goods, food services and drinking places. There was a shortage of $23,221,689
for Clothing and Clothing Accessories in Maple Valley. This resulted in a significant loss
in revenue for the City. Similar shortages of supply exist in several other areas:
Electronic And Appliance Stores ($9,362,064), general merchandise store ($54,868,334),
Gafo7 ($111,458,187). Overall, the retail gap in Maple Valley (excluding motor vehicle
& part dealers and gasoline stations) is estimated at $312,149,799.
6
Source: Claritas
7
GAFO (General merchandise, Apparel, Furniture and Other) represents sales at stores that sell merchandise normally sold in
department stores. This category is not included in Total Retail Sales Including Eating and Drinking Places
Supply Demand
Maple Valley Line of Items Sold in 2007 (Retail (Consumer Surplus/ Percentage
(NAICS) Sales) Expenditures) (Deficit) 2007 of Market
Furniture and Home Furnishings Stores- $ $
442 587,855 $ 14,460,321 (13,872,466) 4%
$ $
Electronics and Appliance Stores-443 3,125,683 $ 12,487,747 (9,362,064) 25%
Building Material, Garden Equip Stores $ $
-444 32,304,060 $ 61,369,713 (29,065,653) 53%
$ $
Food and Beverage Stores-445 61,395,380 $ 52,486,489 8,908,891 117%
$ $
Health and Personal Care Stores-446 5,435,360 $ 18,673,554 (13,238,194) 29%
Clothing and Clothing Accessories Stores- $ $
448 1,125,816 $ 24,347,505 (23,221,689) 5%
Sporting Goods, Hobby, Book, Music $ $
Stores-451 5,515,007 $ 10,567,050 (5,052,043) 52%
$ $
General Merchandise Stores-452 3,053,396 $ 57,921,730 (54,868,334) 5%
$ $
Miscellaneous Store Retailers-453 4,975,323 $ 13,567,778 (8,592,455) 37%
$ $
Non-Store Retailers-454 - $ 29,480,507 (29,480,507) 0%
$ $
Foodservice and Drinking Places-722 21,251,409 $ 44,098,507 (22,847,098) 48%
$ $
GAFO* 13,872,840 $ 125,331,027 (111,458,187) 11%
$ $
Total Retail Sales(No Auto & Gas) 152,642,129 $ 464,791,928 (312,149,799)
Source: Claritas
Current suppliers in Maple Valley have captured variable shares of total retail purchases
in the Maple Valley Trade Area. Maple Valley grocers account for 73% of total area
grocery purchases. By contrast, local furniture and home furnishing stores account for
2% of the total sales in the trade area.
Source: Claritas
Tax Rate
Sales tax to
city rate
State 6.5000%
Metro 0.7000% 255761.13
Public Transportation $
Benefit District 0.2000% 92,600,000.00 0.276%
Regional Transit tax from fred
Authority 0.0000% $258,445.79 meyer sheet
State Administration 0.0085% 0.279% tax rate then is
County 0.1500%
sq ft for fred cost of
Total Non City Tax 7.5585% 175,000 meyer constr $95
sq ft for other cost of
70,000 store constr $89
City Base Tax 0.8415%
City Base On
Population 0.1000%
City Total 0.9415% 2.79%
1,02 sft foot for all
0,000.00 location
Total Sales Taxes 8.5000% $7.50 per sqt foot
Inital Construction
Initial Construction Construction Percent of Sale Sales Tax to
Sales Tax Dollar Tax City
$ $
Fred Meyer 30,285,000.00 0.8415% 254,848.28
Anciliary Retail $ $
Building 7,598,369.97 0.8415% 63,940.28
Total land acquisition $ $
cost 7,650,000 0.8415% 64,375
$
construction tax only 318,788.56
Total-Construction
Sales Tax to City $
construction 383,163.31
$ $ $
Fred Meyer 92,600,000.00 258,445.79 0.8415% 255,761.13
Anciliary Retail $ $ $
Building 6,230,000.00 529,550.00 0.8415% 17,207.26
$
T 272,968.39
3% year 2
Gross Sales Total Sales Tax Percent Sales Sales Tax to
Dollars Payable Tax to City City
$ $ $
Univariate Analysis
DEMOGRAPHICS
Residence of Respondents
A total of 250 people were surveyed for this research project. Of this number, 152 people
(60.1%) live in Maple Valley, 82 people (32.4%) live in Renton, 10 people (4.0%) live in
Ravensdale, and the remainder live in Covington, Issaquah, Kent, and Newcastle.
A majority of total participants (57.8%) live in zip code 98038; another 19.9% live in zip
code 98058, and 12.4% live in zip code 98059.
Respondents by Age
The median age for survey respondents is 52. All of the respondents were born between
1922 and 1990. A more detailed distribution of survey respondents by age group is
shown below.
A total of 42.3% is married without dependent children; another 41.5% is married with
dependent children. Singles without dependent children account for 9.5% of respondents,
while singles with dependent children account for 4.3%. Two thirds of the survey
participants are women.
Household Income
Nearly 45% of the survey participants have annual household income above $95,000, and
a nearly equal percentage - 43.4%- has annual household income of $50,000 to $95,000.
When asked to rate their overall perception of Fred Meyer on a scale of 0 to 10, with 10
being the most positive, the average rating among all respondents was 7.46, with a
standard deviation of 1.76. A total of 57.2% gave Fred Meyer an overall rating of 8 or
higher. Another 40% gave the company a rating of 4 to 7..
When asked to rate their overall perception of Fred Meyer with respect to price, using a
scale of 0 to 10 with 10 being the most positive, respondents gave Fred Meyer an average
rating of 7.00, with a standard deviation of 1.66. A total of 42.3% gave Fred Meyer a
rating of 8 or higher, and another 54.8% gave the company a rating between 4 and 7.
Respondents gave Fred Meyer an average rating of 7.29 with respect to quality, with a
standard deviation of 1.58. Over half (50.4%) gave the company a rating of 8 or better.
Respondents gave Fred Meyer an average rating of 7.76 with respect to selection of
brands, sizes, etc., with a standard deviation of 1.57, and an impressive 62.1% gave the
company a rating of 8 or better.
When asked to rate their overall perception of Fred Meyer with respect to service, again
using a scale of 0 to 10 with 10 being the most positive, respondents gave Fred Meyer an
average rating of 6.89, with a standard deviation of 1.996. A total of 40.9% gave Fred
Meyer a rating of 8 or higher, and another 53.4% gave the company a rating between 4
and 7.
Respondents gave Fred Meyer an average rating of 7.34 with respect to convenience,
with a standard deviation of 1.83. Over half (52.8%) gave the company a rating of 8 or
better, while another 43.5% gave a rating of 4 to 7.
The company scored an average rating of 8.07 among respondents as a one-stop shop,
with a standard deviation of 1.77, and 71% of the respondents gave a rating of 8 or better.
Nearly half of the survey respondents (49%) said that they had shopped at Fred Meyer
more than five times during the past three months. Another quarter (25.3%) had shopped
at Fred Meyer from three to five times during the same period.
Survey respondents were asked to indicate the types of products they had purchased at
Fred Meyer in the past three months, with multiple responses allowed. The leading
product categories were Groceries (87.7%), Clothing (64.7%), Lawn / Garden / Nursery
(63%), Health & Beauty (59.2%), and Home Accessories (55.8%).
On average, respondents spent $72.99 per visit to Fred Meyer, with a standard deviation
of $53.21. The median amount spent per visit was $75, while the mode was $50.
Nearly 40% of respondents said they would shop at a new Fred Meyer Store in Maple
Valley once or more than once per week, but 22% of respondents said they would not
make use of a new Fred Meyer store in Maple Valley.
Using a scale of 0 to 10 with 0 being the least likely and 10 being the most likely,
respondents were asked to rate their likelihood of purchasing the following types of
products at a new Fred Meyer store in Maple Valley.
A. Groceries
B. Clothing
C. Pharmacy
D. Health / Beauty
E. Home Accessories
F. Kitchen Supplies / Appliances
G. Bed & Bath
H. Hardware
I. Lawn / Garden / Nursery
J. Sporting Goods
K. Electronics
L. Music CDs, Movie DVDs, Computer Games
M. Jewelry
N. Flowers / Gifts
O. Automotive
P. Children’s Toys and Games
Respondents said they would spend an average of $63.33 per visit to a new Fred Meyer
in Maple Valley (standard deviation: $55.07), with a median expenditure of $50. As
noted previously, nearly 22% of respondents said they would not make use of a new Fred
Meyer store in Maple Valley.
Using a scale of 0 to 10 with 10 being the most positive rating, survey participants were
asked whether a new Fred Meyer store in Maple Valley would be an improvement to the
community. Participants responded with an average rating of 6.32 (standard deviation:
3.57). Nearly half (48.9%) gave a rating of 8 or higher, and another 29.4% gave a rating
of 4 to 7.
Over 70% of respondents said that rising fuel prices would lead them to change their
shopping patterns. Nearly 55% said that rising fuel prices would cause them to shop
closer to home, 33% said that rising fuel prices would cause them to consolidate
shopping trips, and 23% expect to do more one-stop shopping.