Impact on Community Character and Associated Local Retail / Service Impacts

Transcription

1 Proposed Dollar General in Germantown, NY Impact on Community Character and Associated Local Retail / Service Impacts December 9, 2016 Prepared by: Capacity Business Consulting P.O. Box 194 Rock Hill, NY In Partnership with Impact DataSource, LLC

2 Contents I. Executive Summary... 4 II. Retail Market Study Primary Market Area & Secondary Market Area Current Retail Activity in PMA & SMA Demographics Consumer Spending Patterns III. About Dollar General Lines of Goods to be Offered Jobs and Wages at the Proposed Store IV. Existing Retail Activity in the Region Market Area Comparison of Demand with Actual Retail Sales Retail Employment & Wages in the Region V. Forecast of Market Changes Forecasting Changes in Retail Sales in the Market Area Retail Sales Forecast Probable Ranges a. Primary Market Forecast b. Secondary Market Forecast VI. Economic and Fiscal Impact Analysis Forecasting Changes in Retail Employment and Wages Forecasting Impacts on Municipal Finance Supply of Retail Space Additional Retail Development in Germantown VII. About Impact DataSource

3 APPENDIX

4 I. Executive Summary Study Highlights A proposed Dollar General store in Germantown, New York would expand retail shopping options for Germantown residents and residents of neighboring communities. The proposed retailer would likely result in mostly net new sales and result in very few sales diverted from other Germantown retailers. This analysis was developed following the points outlined in the Final Scoping Document provided by the Town of Germantown and pertains to that document s Section III, E, Impact on Community Character and Associated Local Retail/Social Impacts. The information requested in parts 1, 2, 3, and 4 of that section are provided in Chapter II of this analysis. The remaining chapters of this report provide the impact analysis following methodology given in A Guide to Retail Impact Studies, as requested in part 5. Following the steps of the Guide, Chapter III of this report provides an analysis of the retailer, identifying the goods to be sold, the estimated sales of those goods, and the estimated jobs and wages associated therewith. Chapter IV discusses the existing retail activity and conditions within the region in detail, including the identification of demand for and actual sale of retail goods, existing retail employment, and a summary of other retail activity. Chapter V examines how the existing retail economy in the area will likely respond to the proposed store by forecasting a range of potential impacts. Finally, Chapter VI forecasts the impact on retail employment, wages, tax revenue, municipal costs, and other factors. It is worth noting that A Guide to Retail Impact Studies was designed specifically to assist municipalities in determining the likely impact of large-scale retail developments in their communities, which are typically defined as stores with a size of 75,000 square feet or larger, such as Wal-Mart supercenters, department stores, homes centers, etc. The proposed Dollar General will have an area of roughly 9,100 square feet and does not appear to actually belong to the large-scale retail development category. 4

5 II. Retail Market Study 1. Primary Market Area & Secondary Market Area The Primary Market Area ( PMA ) consists of the Town of Germantown, located in the southwestern corner of Columbia County, New York. Germantown is roughly 120 miles north of the City of New York, New York and roughly 40 miles south of the state s capital City of Albany. The Secondary Market Area ( SMA ) expands beyond the PMA to include the surrounding, economically integrated towns. The SMA consists of the PMA of Germantown and the following: Town of Greenport, Town of Livingston, Town of Clermont, and City of Hudson. The map below illustrates the PMA (Germantown) in green and the SMA in yellow. The red pin indicates the location of the proposed Dollar General. Figure 1: Primary and Secondary Market Area 5

6 The Dollar General would be located near, but not on, the waterfront of the Hudson River, in the western part of the Town of Germantown. It is easily accessible to potential consumers from the south and north via Route 9G and to potential consumers from the east via Main Street. The maps below illustrate the location of the proposed Dollar General site on Route 9G between Main Street and Crawford Lane. The maps show the location within the town at large and a close up of the proposed site, respectively. Map 1: Proposed Store Location within Germantown 6

7 Map 2: Aerial View of Proposed Project Location 2. Current Retail Activity in PMA & SMA Impact DataSource understands that there are four areas within the Town of Germantown that are considered to be the main commercial areas of the PMA. The map below demonstrates the four areas that Impact DataSource determined to be the primary retail and commercial areas within Germantown. 7

8 Figure 2: Commercial/Retail Areas in Germantown Area 1 includes the Village Center, consisting of the two blocks on Main Street on either side of Church Avenue. This area includes the Post Office, a Bed & Breakfast, a grocery store, a restaurant, and several other commercial spaces. Area 2 includes a small strip along Palatine Park Road, near the Germantown Library, and includes a dental practice, a pizza restaurant, self-storage, and an animal hospital. Area 3 is located south of the Project site, at the intersection of Main Street and New York State Route 9G, and includes a gas station, two banks, a convenience store, and a garden center. A construction company is also located near this area, north of the proposed project site, at the intersection of Crawford Lane and Route 9G. The determination of the fourth retail location in the Town was not as clear as Areas 1, 2, and 3. It is believed that the fourth retail area is Area 4 demonstrated in the map above, located on Woods Road roughly halfway between Roundtop Road and State Route 9G. This area consists of an antique shop. 8

9 There are a few other scattered places of retail and commercial activity in Germantown, which appear to be relatively isolated and likely not considered a main commercial area of the Town. Within the larger SMA, there appear to be four additional major areas of retail and commercial activity. These areas are shown below, along with the Project location (red pin) and the PMA retail locations discussed above. Figure 3: Commercial/Retail Areas in Secondary Market Area The black pin in the northeastern corner of the SMA shows the location of Widewaters Commons on Route 9. According to Esri Business Analysis, Widewaters Commons is the only major shopping center within the designated PMA and SMA. 1 Widewaters Commons is anchored by a Walmart Supercenter, Lowe s, Kohl s, and T.J.Maxx. 1 According to the Esri Major Shopping Center Locator Analysis, there are five major shopping centers within a 30 minute driving radius of downtown Germantown: Catskill Commons, Widewaters Commons, Hudson Valley Plaza, Hudson Valley Mall, and King s Mall. All but Widewaters Commons are located on the west side of the Hudson River and are therefore not included in the SMA analysis. 9

10 In addition to this major shopping center, an online search indicates that Route 9 appears to be a corridor of other commercial and retail activity from Widewaters Commons south into Hudson. This two-mile stretch includes limited- and full-service restaurants, automotive centers, a movie theater, and various retail. The two-mile commercial strip ends near the intersection of Route 9 and Green Street in Greenport/Hudson, near the purple and blue pins. The blue pin indicates Fairview Plaza shopping center, which includes a grocery store, a cinema, a pharmacy, and a fitness center. The purple pin below it indicates the location of the existing Dollar General store in the City of Hudson. Finally, there is a Hannaford Supermarket along the eastern edge of the SMA. There does not appear to be additional commercial activity nearby. The existing Dollar General in the City of Hudson is located at 70 Fairview Avenue, #100. It is open from 8:00am 10:00pm daily and features a Rug Doctor cleaner rental. Several of Dollar General s direct competitors are located nearby, including CVS and Family Dollar in the Fairview Plaza Shopping Center and ALDI roughly two miles north on Route 9. The photo below shows the storefront of the Dollar General. Figure 4: Existing Dollar General in City of Hudson 3. Demographics Socio-economic characteristics of the SMA and PMA were determined for each of the Towns of Germantown, Greenport, Livingston, and Clermont and the City of Hudson. Characteristics include total population, total households, average household size, total families, housing units by tenure, total occupied and total vacant units, age group distribution, median age, household income distribution, median income, and per capita income. Statistics from 2010, 2016, and 2021 are given in this section. 10

11 A summary of the characteristics for the Town of Germantown and for the entire SMA are shown below. Summary characteristics for the individual Towns of Greenport, Livingston, and Clermont and the City of Hudson are shown in the Appendix. The following is a summary of the characteristics of the Town of Germantown, the PMA. Table 1: Socio-economic Characteristics of Germantown Census Number Percent Number Percent Number Percent POPULATION SUMMARY Population 1,954 2,083 2,164 Households Families Average Household Size Median Age POPULATION BY AGE % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % % Total 1, % 2, % 2, % HOUSING UNITS BY OCCUPANCY & TENURE Housing Units 1, % 1, % 1, % Occupied % % % Owner % % % Renter % % % Vacant Housing Units % % % HOUSEHOLDS BY INCOME <$15, % % $15,000 - $24, % % $25,000 - $34, % % $35,000 - $49, % % $50,000 - $74, % % 11

12 $75,000 - $99, % % $100,000 - $149, % % $150,000 - $199, % % $200, % % Median Household Income $59,046 $71,831 Average Household Income $78,547 $89,781 Per Capita Income $33,542 $38,141 Source: Esri Business Analyst The following table summarizes the characteristics of the entire SMA, including the Towns of Germantown, Clermont, Greenport, and Livingston and the City of Hudson. Table 2: Socio-economic Characteristics of Secondary Market Area, Aggregated Census Number Percent Number Percent Number Percent POPULATION SUMMARY Population 18,443 18,924 19,252 Households 7,644 7,764 7,860 Families 4,402 4,420 4,447 Average Household Size Median Age POPULATION BY AGE 0-4 1, % % % % % % , % 1, % 1, % , % 1, % 1, % , % 1, % 1, % , % 2, % 2, % , % 2, % 2, % , % 2, % 2, % , % 2, % 2, % , % 2, % 2, % , % 1, % 1, % % % % Total 18, % 18, % 19, % HOUSING UNITS BY OCCUPANCY & TENURE Housing Units 9, % 9, % 9, % Occupied 7, % 7, % 7, % Owner 4, % 4, % 4, % Renter 3, % 3, % 3, % 12

13 Vacant Housing Units 1, % 1, % 1, % HOUSEHOLDS BY INCOME <$15,000 1, % 1, % $15,000 - $24, % % $25,000 - $34, % % $35,000 - $49,999 1, % % $50,000 - $74,999 1, % 1, % $75,000 - $99,999 1, % 1, % $100,000 - $149, % 1, % $150,000 - $199, % % $200, % % Median Household Income $48,231 $54,466 Average Household Income $64,389 $71,983 Per Capita Income $26,798 $29,763 Source: Esri Business Analyst 4. Consumer Spending Patterns Consumer spending patterns were determined for each municipality in the PMA and SMA; the table below summarizes the spending patterns in the Town of Germantown and in the SMA as a whole. Table 3: Consumer Spending Patterns No. of Businesses Germantown Surplus/Deficit No. of Businesses SMA Surplus/Deficit INDUSTRY SUMMARY Total Retail Trade and Food & Drink 19 ($25,530,372) 323 $179,007,983 Total Retail Trade 16 ($22,725,962) 242 $178,026,123 Total Food & Drink 3 ($2,804,410) 81 $981,860 INDUSTRY GROUP Motor Vehicle & Parts Dealers 1 ($6,571,434) 18 ($11,276,178) Furniture & Home Furnishings Stores 0 ($1,111,399) 10 ($1,051,694) Electronics & Appliance Stores 1 ($2,068,595) 15 ($3,204,878) Bldg Materials, Garden Equip. & Supply Stores 2 ($1,179,574) 19 $23,773,773 Food & Beverage Stores 4 ($1,263,454) 25 $41,707,210 Health & Personal Care Stores 0 ($2,729,616) 16 $11,788,427 Gasoline Stations 2 $281, $13,249,085 Clothing & Clothing Accessories Stores 2 ($1,967,536) 16 ($10,349,346) Sporting Goods, Hobby, Book & Music Stores 0 ($1,011,837) 20 $2,201,478 General Merchandise Stores 1 ($3,518,539) 13 $65,543,561 Miscellaneous Store Retailers 2 ($1,540,882) 75 $32,066,860 13

14 Nonstore Retailers 1 ($44,294) 5 $13,577,825 Food Services & Drinking Places 3 ($2,804,410) 81 $981,860 Total 19 ($25,530,372) 323 $179,007,983 Note: Deficit indicates a "leakage" of retail opportunities, as consumers leave the trade area to purchase goods and services elsewhere. Surplus indicates a market that draws consumers from outside the trade area to purchase goods and services within the trade area. Source: Esri Business Analyst As shown in the table, Germantown residents spend roughly $25.5 million more outside of Germantown than Germantown business receive in sales from all customers. This finding indicates that the vast majority of Germantown consumer spending occurs outside of Germantown. In fact, Gasoline Stations appears to be the only industry in which Germantown appears to provide a surplus of sales beyond the demand of the town s residents. The median disposable (i.e., after-tax) income for Germantown residents in 2016 was $46,386 and per capita income was $33, Using total demand sales from Esri Business Analyst, it can be determined that the average Germantown consumer spent the largest portions of his/her per capita income on Motor Vehicle & Parts Dealers (11.0%), Food & Beverage Stores (9.3%), General Merchandise Stores (5.5%), and Food Services & Drinking Places (4.6%). The table above indicates that Germantown residents demands for these items are not being met within the PMA indicating that Germantown residents must travel outside of their town to purchase the commodities that account for most of their spending. In terms of total spending, the categories in which Germantown consumers face the largest deficit within Germantown are Motor Vehicle & Parts Dealers, General Merchandise Stores, Food Services & Drinking Places, Health & Personal Care Stores, Department Stores, and Electronics & Appliance Stores. These categories represent a demand deficit of over $2,000,000 each. Within the five municipalities of the SMA, the median disposable income in 2016 was $38,352, and the per capita income was $26,798 3 slightly lower than the characteristics of Germantown. The average consumer in the SMA spent the largest portions of his/her income in the same categories 2 Considering the likely participation rate in the labor force, it is reasonable that median income might be higher than per capita income. Specifically, ACS 2014 Housing Data for Columbia County, New York (the smallest division for which data is available) indicates a population of 52,973 over the age of 14, roughly approximating the size of the population eligible to be in the labor force. Combining this population data with employment data from the BLS (which indicates a 2014 annual labor force size of 31,388) indicates that only roughly 59% of that approximated population participates in the labor force. It is likely that the labor force participation rate in Germantown Town is similar to that of Columbia County. Therefore, median income represents the smaller proportion of the population that is working, while per capita income averages all of the income of that proportion across all of the population. 3 See Footnote 2. 14

15 as above, at only slightly different percentages: Motor Vehicle & Parts Dealers (11.1%), Food & Beverage Stores (9.8%), General Merchandise Stores (5.8%), and Food Services & Drinking Places (4.9%). The table above indicates that consumers demands are met within the SMA for three of their top four expenses Food & Beverage Stores, General Merchandise Stores, and Food Services & Drinking Places. However, it appears that consumers must travel outside the SMA to meet their demands for Motor Vehicle & Parts Dealers. Within the SMA as a whole, consumers largest unmet needs are for Motor Vehicle & Parts Dealers, Clothing & Clothing Accessories Stores, and Electronics & Appliance Stores. These categories represent unmet demand valued at over $3,000,000 each. Tables with the consumer spending patterns for the other four individual municipalities are shown in the Appendix. The following four sections provide an analysis of the impact of the proposed Dollar General Store on the existing Retail Market using the methodology described in the Guide to Retail Impact Studies, as requested in the Final Scoping Document provided by the Town of Germantown. Disclaimer: The analysis of the proposed Dollar General in the following sections has been developed following A Guide to Retail Impact Studies, prepared by Civic Economics for and with the Institute for Local Self-Reliance in 2008, as requested by the Town of Germantown. A Guide to Retail Impact Studies is specifically designed to assist municipalities in determining the potential impact of large-scale retail developments, which are typically defined as retail stores of 75,000 square feet or larger. Note that, while the proposed Dollar General Store may fall under the categories of stores included in the Guide s Appendix, it is estimated that the new store will be roughly 9,100 square feet and does not appear to fall under the definition of a large-scale retail 15

16 III. About Dollar General 1. Lines of Goods to be Offered Dollar General is classified under the North American Industrial Classification System (NAICS) as All Other General Merchandise Stores. According to the classification, this industry comprises establishments primarily engaged in retailing new goods in general merchandise stores (except department stores, discount department stores, warehouse clubs, superstores, and supercenters). These establishments retail a general line of new merchandise, such as apparel, automotive parts, dry goods, hardware, groceries, housewares or home furnishings, and other lines in limited amounts, with none of the lines predominating. Dollar General s 2015 Form 10-K, an annual report required by the U.S. Securities and Exchange Commission (SEC) that gives a comprehensive summary of a company's financial performance, categorizes their sales in four main categories: Consumables, Seasonal, Home products, Apparel. The following excerpt from the 10-K sheds light on these four categories. We offer a focused assortment of everyday necessities, which drive frequent customer visits, and key items in a broad range of general merchandise categories. Our product assortment provides the opportunity for our customers to address most of their basic shopping needs with one trip. We sell high-quality nationally advertised brands from leading manufacturers. Additionally, our private brand consumables offer even greater value with options to purchase value items and national brand equivalent products at substantial discounts to the national brand. Consumables is our largest merchandise category and has become a larger percentage of our total sales in recent years as indicated in the table below. Consumables include paper and cleaning products (such as paper towels, bath tissue, paper dinnerware, trash and storage bags, laundry and other home cleaning supplies); packaged food (such as cereals, canned soups and vegetables, condiments, spices, sugar and flour); perishables (such as milk, eggs, bread, frozen meals, beer and wine); snacks (such as candy, cookies, crackers, salty snacks and carbonated beverages); health and beauty (such as over-the-counter medicines and personal care products, such as soap, body wash, shampoo, dental hygiene and foot care products); pet (such as pet supplies and pet food); and tobacco products. Seasonal products include decorations, toys, batteries, small electronics, greeting cards, stationery, prepaid phones and accessories, gardening supplies, hardware, automotive and home office supplies. 16

17 Home products include kitchen supplies, cookware, small appliances, light bulbs, storage containers, frames, candles, craft supplies and kitchen, bed and bath soft goods. Apparel includes casual everyday apparel for infants, toddlers, girls, boys, women and men, as well as socks, underwear, disposable diapers, shoes and accessories. The percentage of net sales of each of our four categories of merchandise for the fiscal years indicated below was as follows: Our seasonal and home products categories typically account for the highest gross profit margins, and the consumables category typically accounts for the lowest gross profit margin. The Dollar General 2015 Form 10-K also describes the typical Dollar General Store. On average, each store includes 7,400 square feet of selling space and achieve net sales per square foot of $226 per year. Approximately 70% of the stores are located in towns of 20,000 or fewer people. The typical store is operated by a store manager, one or more assistant store managers, and three or more sales associates. The proposed store in Germantown will match the details of this typical store almost exactly. Based on the proposed floor plan provided by the developer, the store will include 9,100 square feet with 7,364 square feet of selling space. The Town of Germantown has a population of approximately 2,000. Additionally, the developer believes the store will hire 9-12 employees: 1 Manager 1-2 Assistant Managers 1 Lead 5-8 Sales Associates. Combining the sales per square foot information and the sales by category, the table below shows an estimate of the proposed Dollar General Store s total sales by category. Category Table 4: Projected Sales by Category Estimated Sales Percent of Total Consumables $1,263, % Seasonal $206, % 17

18 Home products $104, % Apparel $89, % Total $1,664, % 2. Jobs and Wages at the Proposed Store As described in A Guide to Retail Impact Studies 4, Impact DataSource reviewed Dollar General s annual 10-K document to identify the portion of General & Administrative costs that contain labor costs. Selling, General & Administrative costs were reported in aggregate but unfortunately the specific detail enumerating labor costs was not provided. In order to estimate the jobs and wages at the proposed store, Impact DataSource uses conservative employment estimates for the Dollar General store and estimates employment and wages to be the following: Table 5: Projected Sales by Category Position Count Wages Manager 1 FT $27,644 Assistant Manager 2 FT $27,644 Lead 1 FT $27,644 Sales Associates 5 PT $69,110 Total 9 (Headcount) $152,042 The full-time wages in the table above reflect the annual wages paid to retail employees in Columbia County, NY in 2015 according to the Quarterly Census of Employment and Wages produced by the Bureau of Labor Statistics. The eight part-time workers are assumed to work and earn 50% of the full-time workers. According to this data, the workers will make approximately $13.29 per hour. Total labor income will be $152,042 per year or approximately 9% of total sales at the store. The Selling, General & Administrative costs (which includes labor costs among other expenses) is 21% of total sales at its stores as reported in the company s 10-K total

19 IV. Existing Retail Activity in the Region 1. Market Area The market area for a Dollar General in Germantown, New York is most likely the immediate town area. As stated in A Guide to Retail Impact Studies 5, Market area patterns of various communities tend to follow consistent rules. The most fundamental is that larger communities have a stronger retail draw than smaller communities. Since Dollar General sells basic every day and household needs products supplemented with a variety of general merchandise, it would not be expected to draw consumers from far outside the immediate area. Again, as stated in A Guide to Retail Impact Studies: Market areas for everyday needs, such as bread or gasoline, tend to be quite small, as even the smallest communities can provide such goods. For less frequent and more expensive purchases, market areas begin to expand greatly. A rural resident may drive further for a good deal on a television than for bread, and further still for a dishwasher or a vehicle. Impact DataSource understands that Germantown officials want to evaluate the impact of the proposed retailer on the Primary Market Area of the Town of Germantown as well as the secondary market area consisting of the towns of Clermont, Germantown, Greenport, Livingston, and the City of Hudson. Figure 5: Primary and Secondary Market Area

20 As an aside, the requested primary and secondary market areas coincide well with reasonable drive-times surrounding the proposed Dollar General site in Germantown. The map below shows drive times of 5 minutes, 10 minutes, and 15 minutes. The 5-minute drive time (Blue area) corresponds reasonably well to the Town of Germantown s limits. The 15-minute drive time (Red area) corresponds reasonably well to the secondary market area s definition. Figure 6: Drive Times from Proposed Dollar General Site ( minutes) Ultimately, the primary market area (Town of Germantown) and secondary market area (the towns of Clermont, Germantown, Greenport, Livingston, and the City of Hudson) are strongly affected by infrastructure and geographic features. The north-south nature of the area is affected by New York State Route 9G. The Hudson River to the west and lack of bridges near Germantown results in a natural geographic boundary resulting in little western mobility. 2. Comparison of Demand with Actual Retail Sales The proposed Dollar General store will sell consumables (like grocery items, non-prescription medications), home products, clothing/apparel, and general merchandise/seasonal products. The comparison of retail demand and actual sales in the primary and secondary market areas focus exclusively on these particularly lines of products. The tables below show the actual sales in the market area, the potential market demand in the area and the difference expressed as a surplus or deficit. A surplus indicates strong local sales and attraction of shoppers from outside the area while a deficit indicates weak local sales and leakage to other jurisdictions. 20

21 The table below for the primary market area of Germantown shows a significant opportunity for the lines of goods offered by Dollar General. According to the data from ESRI, the total available deficit in the primary market area is $8.75 million for the product types that will be sold by the new store, meaning local demand is not met by local retailers in the area causing local residents to travel outside of Germantown for $8.75 million worth of spending on these items. NAICS Lines of Goods Table 6: Primary Market Sales and Demand Actual Primary Market Sales Potential Primary Market Area Demand Primary Market Surplus / Deficit Consumables 4451 Grocery Stores $4,878,831 $5,400,689 ($521,858) 446,4461 Health & Personal Care Stores $0 $2,729,616 ($2,729,616) Total $4,878,831 $8,130,305 ($3,251,474) Seasonal products 452 General Merchandise Stores $296,840 $3,815,379 ($3,518,539) Home products 4422 Home Furnishings Stores $0 $549,000 ($549,000) Apparel 4481 Clothing Stores $128,213 $1,555,543 ($1,427,330) Total Available Deficit in the Primary Market ($8,746,343) Source: Esri Business Analyst Data for the secondary market area (the towns of Clermont, Germantown, Greenport, Livingston, and the City of Hudson) shows that this area serves as a supplier to an even larger area for the lines of goods offered by Dollar General. Retail establishments in the secondary market area meet the local demand of residents in the secondary market area and supply more than $105 million of additional retail sales to consumers from outside of the region. Because this region includes the Town of Germantown (which had a net deficit for these lines of products), we know that retailers in the secondary market excluding Germantown supply enough sales to cover the Germantown deficit and still attract more consumers from outside of the region. 21

22 NAICS Lines of Goods Table 7: Secondary Market Sales and Demand Actual Secondary Market Sales Potential Secondary Market Area Demand Secondary Market Surplus / Deficit Consumables 4451 Grocery Stores $79,292,052 $41,367,999 $37,924, ,4461 Health & Personal Care Stores $32,279,718 $20,491,291 $11,788,427 Total $111,571,770 $61,859,290 $49,712,480 Seasonal products 452 General Merchandise Stores $94,893,099 $29,349,538 $65,543,561 Home products 4422 Home Furnishings Stores $3,913,330 $3,934,113 ($20,783) Apparel 4481 Clothing Stores $3,947,845 $12,312,237 ($8,364,392) Total Surplus in the Secondary Market $106,870,866 Source: Esri Business Analyst 22

23 3. Retail Employment & Wages in the Region According to US Census Bureau data, the Town of Germantown is the place of employment for 660 workers. This accounts for just 6.4% of the employment in the entire region under analysis. Retailindustry employment in Germantown accounts for only 32 of the 660 jobs (2.4%). Across the entire region under analysis, the 32 retail jobs in the Town of Germantown represent only 0.3% of total employment in the region. Based on population, the Town of Germantown represents almost 11% of the region under analysis. The data below regarding total employment, population, and retail employment reveal some important patterns. Table 8: Employment and Population in the Secondary Market Region Area Employment 6 Employment Population 7 Population % of Total % of Total Town of Clermont % 1, % Town of Germantown % 1, % Town of Greenport 4, % 4, % City of Hudson 4, % 6, % Town of Livingston % 3, % Total 10, % 18, % Within the region under analysis, the Town of Greenport and the City of Hudson are the main population hubs, accounting for 59.0% of the entire area s population with 22.6% and 36.4%, respectively. Employment is even more highly concentrated in these two communities, accounting for 85.0% of the region s employment; the Town of Greenport accounts for 40.1% of total employment while the City of Hudson accounts for 44.9%. Area Table 9: Retail Employment in the Secondary Market Region Retail Employment 3 % of Total Retail Employment Retail Employment as % of Total Employment Town of Clermont 6 0.5% 0.1% Town of Germantown % 0.3% Town of Greenport 1, % 10.6% City of Hudson % 1.7% Town of Livingston 7 0.5% 0.1% Total 1, % 12.7% 6 U.S. Census Bureau OnTheMap Application. Longitudinal-Employer Household Dynamics Program. (All Jobs, 2014) 7 U.S. Census Bureau Census Summary Files Population. 23

24 An analysis of retail employment reveals that 83.1% of total retail employment is located in the Town of Greenport. Wage data for the retail industry workers is available at the Columbia County level from the Bureau of Labor Statistics Quarterly Census of Employment and Wages. The table below shows little change in the number of retail establishments, retail employment and average annual wages for retail employees in Columbia County for more than a decade. The proposed Dollar General store and its 10 employees will have negligible effect on the overall retail employment in the county. Table 10: Retail Establishments, Employment, and Average Annual Wages in the Columbia County Year Retail Establishments Retail Employment Average Annual Wages ,714 $26, ,811 $27, ,709 $27, ,747 $27, ,735 $26, ,821 $27, ,671 $24, ,700 $25, ,682 $26, ,779 $26, ,787 $27,664 24

25 V. Forecast of Market Changes 1. Forecasting Changes in Retail Sales in the Market Area The introduction of a Dollar General store as proposed in the Town of Germantown presents an opportunity to increase total retail activity two ways: (1) import substitution and (2) nonresident spending. Import substitution describes the phenomenon where local residents begin making purchases locally that they previously made in other communities. Residents of a community, no matter how large or diverse the retail market in their home community, will routinely make purchases outside of their local area. The residents may make purchases outside of their immediate community out of convenience for example, they may commute to work outside of the community and purchase some items near their place of work. Similarly, residents may choose to purchase an item outside of the area or even online because the retailer outside of the community offers a better price. A Dollar General store in Germantown may induce Germantown residents to forego some of the shopping they do elsewhere since the items can now be purchases at the new local store. Nonresident spending describes the situation when residents of other communities begin making purchases at the new store. Residents of neighboring towns may choose to travel to the new Dollar General store in Germantown for certain purchases where they had previously traveled farther north to the Town of Greenport for those purchases. Nonresident spending may also come in the form of tourist spending. Due to the difficulty in estimating tourist spending and the fact that tourists spending at the Dollar General store is expected to be minimal, tourist spending is disregarded in this analysis. 2. Retail Sales Forecast Probable Ranges Forecasting the precise impact of the proposed Dollar General store is not possible. However, this section presents a reasonable approach to provide public officials with an estimated range of impact they may anticipate. To forecast the probable range for retail sales, Impact DataSource compared the expected sales at the proposed Dollar General store and the surplus/deficit for the primary and secondary market areas. 25

26 a. Primary Market Forecast In order to develop reasonable ranges for the primary market forecast, Impact DataSource compares the projected Dollar General sales by product line to the current sales and the surplus/deficit in the primary market area. The table below shows that the Dollar General store will likely fill a much-needed gap in retail supply in the primary market area. Across each of the four lines of products there exists a deficit in supply or leakage of retail purchases that occur outside of the region because the local demand by Germantown residents is not currently supplied by local retailers in Germantown. Also, comparing the relative size of the Dollar General to existing retail sales in Germantown, we see that the $1.7 million in projected Dollar General sales represents only 31% of the total existing retail sales of $5.3 million. Evaluating the projected sales, existing sales, and deficit in the primary market shows tremendous opportunity for Dollar General to reduce leakage and help make the Germantown retail economy more self-sufficient. For example, consumables exhibit a $3.3 million opportunity in retail sales even though local retailers already supply $4.9 million of consumable products. Table 11: Projected Sales, Existing Sales and Surplus/Deficit for Primary Market Areas Projected Dollar General Sales Existing Retailer Sales Surplus / Deficit Consumables $1,263,176 $4,878,831 ($3,251,474) Seasonal products $206,369 $296,840 ($3,518,539) Home products $104,849 $0 ($549,000) Apparel $89,870 $128,213 ($1,427,330) Total $1,664,264 $5,303,884 ($8,746,343) Recall that a surplus indicates strong local sales and attraction of shoppers from outside the area while a deficit indicates weak local sales and leakage to other jurisdictions. Consumables is the only product line in which there is any legitimate concern that the new store might divert sales from existing retailers to Dollar General. In the worst-case scenario, Dollar General may syphon off $1.3 million of consumable sales out of the $4.9 million so at most 25.9%. Currently, Germantown retailers have no home products sales, so no diversion of purchases is expected for this category. Seasonal products and apparel are similar insofar as the projected Dollar General s sales represent 70% of the existing retailer sales; however, the deficit in supply is extremely large. It is reasonable to expect very little diversion of purchases from existing retailers for the seasonal product and apparel categories. The table on the next page details the market share forecast for the primary market area. The estimates are shown for Years 1, 5, and 10 to give a sense of changes over time. 26

27 Table 12: Market Share Forecast - Primary Market Area Consumables Year 1 Year 5 Year 10 Low Medium High Low Medium High Low Medium High Variable Sales Diverted from Other Merchants 25.0% 12.5% 0.0% 25.0% 12.5% 0.0% 25.0% 12.5% 0.0% Sales Sales WITHOUT Dollar General $4,878,831 $4,878,831 $4,878,831 $5,281,004 $5,281,004 $5,281,004 $5,830,655 $5,830,655 $5,830,655 Sales WITH Dollar General $5,826,213 $5,984,110 $6,142,007 $6,306,481 $6,477,393 $6,648,306 $6,962,864 $7,151,566 $7,340,267 Seasonal products Year 1 Year 5 Year 10 Low Medium High Low Medium High Low Medium High Variable Sales Diverted from Other Merchants 20.0% 10.0% 0.0% 20.0% 10.0% 0.0% 20.0% 10.0% 0.0% Sales Sales WITHOUT Dollar General $296,840 $296,840 $296,840 $321,309 $321,309 $321,309 $354,751 $354,751 $354,751 Sales WITH Dollar General $461,935 $482,572 $503,209 $500,013 $522,351 $544,689 $552,055 $576,718 $601,381 Home products Year 1 Year 5 Year 10 Low Medium High Low Medium High Low Medium High Variable Sales Diverted from Other Merchants 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% Sales Sales WITHOUT Dollar General $0 $0 $0 $0 $0 $0 $0 $0 $0 Sales WITH Dollar General $104,849 $104,849 $104,849 $113,492 $113,492 $113,492 $125,304 $125,304 $125,304 Apparel Year 1 Year 5 Year 10 Low Medium High Low Medium High Low Medium High Variable Sales Diverted from Other Merchants 20.0% 10.0% 0.0% 20.0% 10.0% 0.0% 20.0% 10.0% 0.0% Sales Sales WITHOUT Dollar General $128,213 $128,213 $128,213 $138,782 $138,782 $138,782 $153,226 $153,226 $153,226 Sales WITH Dollar General $200,109 $209,096 $218,083 $216,605 $226,332 $236,060 $239,149 $249,889 $260,630 TOTAL Year 1 Year 5 Year 10 Sales Analysis Low Medium High Low Medium High Low Medium High Sales WITHOUT Dollar General $5,303,884 $5,303,884 $5,303,884 $5,741,095 $5,741,095 $5,741,095 $6,338,632 $6,338,632 $6,338,632 Sales WITH Dollar General $6,593,106 $6,780,627 $6,968,148 $7,136,590 $7,339,569 $7,542,547 $7,879,372 $8,103,477 $8,327,582 Net Increase in Sales $1,289,222 $1,476,743 $1,664,264 $1,395,495 $1,598,474 $1,801,453 $1,540,740 $1,764,845 $1,988,950 Amt. Diverted from Existing Retailers $375,042 $187,521 $0 $405,957 $202,979 $0 $448,210 $224,105 $0 Pct. Diverted from Existing Retailers 7.1% 3.5% 0.0% 7.1% 3.5% 0.0% 7.1% 3.5% 0.0% 27

28 A Low, Medium, and High scenario is modeled for each year and for each product line to be offered by the Dollar General. LOW - The Dollar General generates minimal new sales with more of its revenue diverted from existing merchants. MEDIUM - Most likely mix of new and diverted sales. HIGH - The Dollar General generates maximum new sales with less of its revenue diverted from existing merchants. In the first year, the forecast shows a net increase in retail sales in Germantown of $1.3 million to $1.7 million. In the Low scenario, where Dollar General diverts the largest amount of sales from existing retailers, this forecast corresponds to as much as $375,000. In the High scenario, it is possible that Dollar General will not divert any local sales. The Medium scenario shows approximately $187,500 diverted from existing retailers to the proposed General Dollar store. This Medium scenario would translate into a 3.5% reduction in sales for Germantown retailers that sell the same lines of products as General Dollar, but an overall net increase in sales of over $1.5 million each year. Ultimately, based on the forecasted probable range shown here, the primary market area would see very little negative impact from the Dollar General and Germantown residents would greatly benefit from the new local retail option. b. Secondary Market Forecast A similar approach is taken to develop reasonable ranges for the secondary market forecast. Impact DataSource starts by comparing the projected Dollar General sales by product line to the current sales and the surplus/deficit in the secondary market area. The table below shows that the Dollar General store will be a small player in the secondary market area, which already serves more than the local residents. Overall, the proposed Dollar General sales account for less than 1% of the total existing retailer sales. Home products and apparel present opportunity for the proposed Dollar General to fill a gap in local supply but overall, Dollar General will not necessarily fill a gap in supply. At best, the new store would likely attract additional shoppers from outside of the secondary market area. At worst, the store would cause a small percentage of existing retail sales to be diverted from existing retailers in the secondary market area. 28

29 Table 13: Projected Sales, Existing Sales and Surplus/Deficit for Secondary Market Areas Projected Dollar General Sales Existing Retailer Sales Secondary Market Surplus / Deficit Consumables $1,263,176 $106,692,939 $49,712,480 Seasonal products $206,369 $94,596,259 $65,543,561 Home products $104,849 $3,913,330 ($20,783) Apparel $89,870 $3,819,632 ($8,364,392) Total $1,664,264 $209,022,160 $106,870,866 Recall that a surplus indicates strong local sales and attraction of shoppers from outside the area while a deficit indicates weak local sales and leakage to other jurisdictions. The table on the next page details the market share forecast for the secondary market area. The estimates are shown for Years 1, 5, and 10 to give a sense of changes over time. 29

30 Table 14: Market Share Forecast - Secondary Market Area Consumables Year 1 Year 5 Year 10 Low Medium High Low Medium High Low Medium High Variable Sales Diverted from Other Merchants 100.0% 75.0% 50.0% 100.0% 75.0% 50.0% 100.0% 75.0% 50.0% Sales Sales WITHOUT Dollar General $111,571,770 $111,571,770 $111,571,770 $120,768,872 $120,768,872 $120,768,872 $133,338,593 $133,338,593 $133,338,593 Sales WITH Dollar General $111,571,770 $111,887,564 $112,203,358 $120,768,872 $121,110,698 $121,452,523 $133,338,593 $133,715,996 $134,093,400 Seasonal products Year 1 Year 5 Year 10 Low Medium High Low Medium High Low Medium High Variable Sales Diverted from Other Merchants 100.0% 75.0% 50.0% 100.0% 75.0% 50.0% 100.0% 75.0% 50.0% Sales Sales WITHOUT Dollar General $94,893,099 $94,893,099 $94,893,099 $102,715,342 $102,715,342 $102,715,342 $113,406,037 $113,406,037 $113,406,037 Sales WITH Dollar General $94,893,099 $94,944,691 $94,996,283 $102,715,342 $102,771,187 $102,827,032 $113,406,037 $113,467,695 $113,529,352 Home products Year 1 Year 5 Year 10 Low Medium High Low Medium High Low Medium High Variable Sales Diverted from Other Merchants 97.3% 50.0% 0.0% 97.3% 50.0% 0.0% 97.3% 50.0% 0.0% Sales Sales WITHOUT Dollar General $3,913,330 $3,913,330 $3,913,330 $4,235,914 $4,235,914 $4,235,914 $4,676,792 $4,676,792 $4,676,792 Sales WITH Dollar General $3,916,161 $3,965,754 $4,018,179 $4,238,979 $4,292,660 $4,349,406 $4,680,175 $4,739,444 $4,802,095 Apparel Year 1 Year 5 Year 10 Low Medium High Low Medium High Low Medium High Variable Sales Diverted from Other Merchants 50.0% 25.0% 0.0% 50.0% 25.0% 0.0% 50.0% 25.0% 0.0% Sales Sales WITHOUT Dollar General $3,947,845 $3,947,845 $3,947,845 $4,273,274 $4,273,274 $4,273,274 $4,718,040 $4,718,040 $4,718,040 Sales WITH Dollar General $3,992,780 $4,015,248 $4,037,715 $4,321,914 $4,346,233 $4,370,553 $4,771,742 $4,798,593 $4,825,443 TOTAL Year 1 Year 5 Year 10 Low Medium High Low Medium High Low Medium High Sales Analysis Sales WITHOUT Dollar General $214,326,044 $214,326,044 $214,326,044 $231,993,403 $231,993,403 $231,993,403 $256,139,462 $256,139,462 $256,139,462 Sales WITH Dollar General $214,373,810 $214,813,257 $215,255,535 $232,045,106 $232,520,778 $232,999,514 $256,196,547 $256,721,727 $257,250,291 Net Increase in Sales $47,766 $487,213 $929,491 $51,703 $527,375 $1,006,111 $57,085 $582,265 $1,110,828 Amt. Diverted from Existing Retailers $1,616,498 $1,177,051 $734,773 $1,749,749 $1,274,078 $795,341 $1,931,865 $1,406,685 $878,121 Pct. Diverted from Existing Retailers 0.8% 0.5% 0.3% 0.8% 0.5% 0.3% 0.8% 0.5% 0.3% 30

31 In the first year, the forecast shows a net increase in retail sales in Germantown of $47,800 to $929,500. In the Low scenario, where Dollar General diverts the largest amount of sales from existing retailers, this forecast corresponds to as much as $1.6 million. In the High scenario, it is possible that Dollar General will not divert as much local sales and attract shoppers from outside of the region and the sales diverted from existing retailers would be $734,800. The Medium scenario shows approximately $1.2 million diverted from existing retailers to the proposed General Dollar store. This Medium scenario would translate into a 0.5% reduction in sales for secondary market retailers that sell the same lines of products as General Dollar. Ultimately, based on the forecasted probable range shown here, secondary market area retailers could potentially see a $1.2 million reduction in sales but relative to the $214.3 million in existing area retail sales, the impact would not be significant to any individual business in the secondary market area. 31

32 VI. Economic and Fiscal Impact Analysis 1. Forecasting Changes in Retail Employment and Wages As previously discussed, the Dollar General store anticipates hiring 9 employees, preliminaryily expected to consist of a Manager, two Assistant Managers, a Lead, and 5 part-time Sales Associates. Wages for retail workers in Columbia County were shown to be approximately $27,664 per year on average. The forecast of the total retail employment change in the market areas as a result of the proposed Dollar General takes into account that sales may be diverted from existing retailers. This forecast of total retail employment change relies on the forecasts presented in the Forecast of Market Changes section above. The analysis laid out below for the primary and secondary market areas relies on the relationship of sales per employee in order to determine how many net new jobs may be created for a given increase in retail sales. The ratio of retail sales to retail employment was determined by dividing retail sales in the secondary market by the retail employment in the secondary market to obtain a figure of approximately $163,500 in sales per employee. Therefore, this analysis assumes that a new retail job is created for every $163,500 in additional sales. The economic and fiscal impact forecasts for the primary and secondary market areas are shown on the next two pages. In the case of the primary market area, where sales are expected to increase by $1.5 million in Year 1 of the Medium scenario, total retail employment is expected to increase by 9 jobs. This forecast is consistent with the store s projections calling for 9 new workers. In the case of the secondary market area, where sales are expected to increase by only $500,000 in Year 1 of the Medium scenario, total retail employment is expected to increase by 3 jobs. This forecast is only about 30% of the actual employment impact expected in Germantown. Ultimately, this forecast takes into account the fact that some sales may be diverted from other secondary market area retailers, muting the overall employment impact in the region. The change in sales tax collections is also shown for both the primary and secondary market areas. It should be noted that the sales tax collections are based on the county s local 4% sales tax and the overall change in sales for the specific area. The forecasted change in sales tax collections for the primary market area should be interpreted with caution. As discussed, the proposed Dollar General store will likely result in a shifting of retail spending patterns within the county. The forecasts estimate a $1.5 million increase in taxable sales in Germantown but only a $500,000 increase across the entire secondary market area. Therefore, the expected overall net increase in 32