In other cases, secondary data may be utilized to indicate such leakage or surplus. One such technique for determining retail surplus or leakage is called sales gap analysis. The technique is a relatively simple one. Members of local economic development committees are certainly capable of performing the analysis for their community. The following sections describe how to perform the analysis, indicate data requirements, and suggest likely sources for locating data.
Gap analysis is a technique for identifying the strengths and weaknesses in a local retail market.
Essentially, the analysis estimates how many shoppers are coming to a community to purchase retail items. For example, if a town with a population of 2,000 is attracting 4,000 shoppers annually, the interpretation is that this community is attracting its own residents, in addition to drawing in nonlocal customers. If the same town of 2,000 people was only attracting 1,000 shoppers, the implication would be that this town is not capturing the retail dollars of its own residents. Out-shopping is probably taking place. The value associated with sales gap analysis comes from knowing the strengths and weaknesses of the local retail economy.