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Forney EDC Uses Emsi Retail Leakage Report to Help Target New Businesses

November 8, 2017 by Fraser Martens

Summary:

In a crowded market, where every business location decision requires a complete analysis, how can Forney, Texas, tell its story and attract the retail investment it needs to grow? For the Forney Economic Development Corporation, the answer came from a retail leakage report provided by Emsi’s consulting team.

Key takeaways:

• Forney EDC used Emsi’s report to show it had a retail sales gap of $210 million and that it could support 118 new retail businesses.
• The city now knows the types of businesses they were in the best position to pursue.
• Emsi’s retail leakage data helped Forney EDC arrange meetings with legitimate retailers at this year’s International Council of Shopping Center Texas conference.

Changing Nature of Retail Site Selection

Stewart McGregor

In many ways, Forney, Texas, is a small town like many small towns. Thanks to low housing costs and cost of living, it’s a great place to live. Located about 20 miles east of the outskirts of Dallas, it’s officially home to 19,000 people. But thanks to the way its city limits and the region around it are laid out, it actually has an effective population of more like 40,000, and that number is growing steadily. That’s why its motto is “the city without limits.”

At the same time, though, like many small cities, Forney is being affected by seismic shifts in America’s retail economy. The combination of an aging brick-and-mortar retail infrastructure that was overbuilt, the rise of e-commerce, and overall shifts in consumer buying patterns have made it essential that Forney attract new innovative businesses so that it can keep its residents’ spending in its own economy.

Those same trends have also changed the way businesses make site-selection decisions. A decade ago, companies like Walmart and Kroger could put locations in every town. Now site selection is a data-intensive decision. “Ten years ago, you could call up retailers and they would say, ‘We’ll put one there, no problem!’” said Stewart McGregor, Economic Development Coordinator for the Forney EDC. “But now that’s changed and there’s a lot of hesitancy from retailers.”

Report Shows How Much Money Leaves Forney

To help attract businesses to Forney, McGregor wanted a crucial data point to add to the conversation: retail leakage. The goal was to be able to show potential businesses just how much money was leaving Forney to go to other regions—money that could be spent in the region if the businesses Forney residents wanted were to locate in the city. As McGregor explained, “When we go to International Council of Shopping Center shows or we get a visit from a site selector, we needed to have some hard data to show them, ‘You will make money here. That will not be a problem. This is how much money is leaving Forney every day.’ And the findings that Debbie [Menk] and her team provided for that were very strong.”

Emsi’s report gave Forney two important weapons. First, it was able to conclusively demonstrate that a large amount of money was leaking out of the city. And second, it knew exactly what kinds of businesses it was in the best position to pursue.

Emsi’s research identified an overall amount of demand in Forney that wasn’t being satisfied by local businesses—a retail sales gap of near $210 million in 2016. That meant, according to Emsi estimates, Forney could support approximately 118 new retail businesses.

Thanks in large part to showing these findings, McGregor has already seen an increase in the number of meetings he’s been able to arrange with legitimate retailers at this year’s ICSC Texas conference.

 

Forney Now Knows Which Businesses City Needs Most

Forney also needed to know which kinds of businesses the city most acutely needed. Emsi narrowed that demand down to key business types, including car dealerships, food and beverage stores, furniture and home furnishings stores, restaurants, clothing stores, and several more. For each of these, by applying the specific site selection criteria that apply to those industries, Emsi was able to calculate the immediate trade area of nearby competition.

“For example, one thing we found was that there are laws and franchising agreements in place that establish how far apart dealerships have to be,” McGregor explained. “So, in our case, Mesquite has all the dealerships, and on the other side of Forney, Terrell has all the dealerships, and since we’re within 10 miles of each community, we don’t have much hope of getting a dealership. So our target is getting a franchised used car dealership like a CarMax.”

Looking at this helped show how much of Forney’s demand gap was being met by businesses that would directly conflict with a potential new business. Site selection looks closely at potential sites to avoid competition with existing local locations, so that number was important to make sure that Forney didn’t end up trying to attract businesses that would dismiss the city. It also gave Forney the ability to know how many businesses it ought to try to attract.

Said McGregor: “In areas like food service, for example, it showed that we had demand for 50 more establishments. But we’ve seen that the industries that are growing in retail are the destination-type retail places like Cabela’s and a Bass Pro Shop, and of course dining. It was helpful to get numbers on how many we have and how many we need—better direction regarding what our saturation could be. Is one enough? Can we get more than one?”

Overall, McGregor said that Emsi’s report and data have been a big part of telling Forney’s story to potential businesses. “We have the income that most of our surrounding cities don’t have, we have the land, and we have the population, so we’re trying to tell people about the opportunity you could have if you put your business here in Forney. That was what the Emsi study was for—to show retailers, ‘You are not going to fail here. You’re going to draw from a good area, and you’re going to have the support of a growing community.’”

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