OV market analysis a disappointment to some - The Explorer: Import

OV market analysis a disappointment to some

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Posted: Thursday, April 15, 2004 11:00 pm | Updated: 7:48 am, Thu Mar 24, 2011.

A long-awaited retail trade analysis of Oro Valley released last week offered a list of low- to medium-end retailers as the best possible match for the town's demographics and spending habits. On the upside, the report also indicated that a proposed shopping mall at Oracle and Tangerine could generate nearly $1 billion in annual sales, or potentially $20 million in sales tax revenue.

The $50,000 report, developed by the Buxton Company of Fort Worth, Texas, was a disappointment to many who attended the March 8 study session (see box for list of retail matches, page 4).

Karen McRae, a former manager with Lucent Technologies, who with her husband retired to Oro Valley two years ago, said that she spoke after the meeting with some of the other residents. "Not one of us could name one store or restaurant on the list that we would patronize," she said. "At least a handful of us were saying, 'My goodness, what is Buxton thinking?' It's shocking and disappointing if this is what we as a community will end up with."

The Oro Valley Town Council commissioned the report Aug. 20.

Mayor Paul Loomis was "not impressed" by Buxton's list of retail matches. "But this is a snapshot in time of where we are today versus, say, three years from now," he said in a later interview. "What (the report) does do is give us a better perspective on some of the things the commercial folks are looking for. When you look at upscale retail development, those require a significant number of rooftops.

"The Buxton report never was a master plan for development, it's just one way to provide additional information," he said.

"It doesn't surprise me that some people will say (they're disappointed)," said Oro Valley Economic Development Administrator Jeff Weir. "What really matters is looking at the entire trade area of more than 50,000 people who may have different views and different needs. That's all the market analysis can do.

"One thing you can count on is that the composition and makeup of the retailers will change over time. Even though today, these retailers may not be the most desirable, in time, they probably will be."

Representatives of Vestar, the Phoenix-based developers of the proposed Oro Valley Marketplace, who attended the study session, were "extremely pleased," Weir said. "They didn't know the sales potential was that big. But that doesn't mean they're interested in those retailers. All (the study) does is provide additional information to secure financing and tenants."

Buxton's projection of nearly $1 billion in annual revenue potential at the site means "for the first time, we're able to identify a market that will bring in hundreds of millions of dollars," Weir said. "It says these opportunities are real, here's what the demand is. By identifying the way people are spending their money today, (it) helps to bring in retailers assured of success. One thing's for certain, they're not coming by themselves."

Michael Rosa, senior vice president of operations for Buxton, said he's aware that many residents had better restaurants in mind than Coco's or IHOP and more upscale shops than Mervyn's department store. "They were very, very disappointed in the list," he said. "But the retailers we provided seem to match the trade area the best."

The trade area used for the study included Catalina to the north, Tortolita to the west and a portion of northwest Tucson to the south, a 15-minute drive-time "polygon" that included 20,874 households.

"This is a high-end community with a lot of people with a lot of money," he said. "But the density needs to be a little higher (to attract higher-end retailers)."

Nordstrom's department store, for example, typically has a population of about a half million within a 15 minute drive. "You're not going to find a Nordstrom's next to the Hearst Mansion, even though that one customer is a great customer," he said.

Buxton initially compared three retail locations in and around Oro Valley to determine each site's viability for potential retailers and projected a potential annual retail sales figure: The proposed Oro Valley Marketplace at the southwest corner of Oracle and Tangerine roads, $965.5 million; Oracle Crossings at the southwest corner of Magee and Oracle roads, $691.2 million; and Foothills Mall at the northwest corner of Ina Road and La Cholla Boulevard, $1.2 billion.

The company selected the proposed Oro Valley Marketplace as the best site to attract new retailers. "Retailers at this site are in an excellent position for maximum exposure accessibility given the high daily traffic counts on Oracle Road (43,400 cars a day)," the report stated. Other attractive features noted were an "exceptionally" high growth rate, with a population doubling in 10 years and just over 50 percent of households characterized as affluent.

The other two sites, with more population density and more competing retail, had shorter, seven-minute drive times. "With more density, we'll tighten the drive time because tolerance is less for the 15-minute drive time," Rosa said.

The company, which has about 400 retail clients, developed its list from about 3,000 to 4,000 retailers nationwide that best matched the selected site, based on population density, drive times and compatible household segments in the area.

If Buxton has it right, Oro Valley is dominated by "Mid-Life Success," "Comfortable Times," and "Movers and Shakers," all in the top 10 of 50 household segments (see box) describing spending habits, socioeconomic status, lifestyle and other "psychographic" information about residents acquired from national consumer databases.

"This is Big Brother stuff," joked Rosa at the study session. "For example, we know that Best Buy has 80,000 to 90,000 people within its drive time. Oro Valley is not quite there, but, based on household segmentation, its core customers are here."

A sampling of Oro Valley's Dominant Household Segments

4. Mid-Life Success: "These households have very high incomes and own their own suburban homes, whose value is two-and-a-half times the national average. They work in white-collar occupations - such as sales, use discount brokers to purchase stocks, and stay informed by reading news and travel magazines."

7. Comfortable Times: "These are typically high-income households, with slightly older than average married couples or families. They typically live in the suburbs, own their home, have a high level of education, and work in white-collar occupations. They are very civic minded, belonging to veteran's clubs, contributing to public broadcasting, and writing to elected officials."

8. Movers and Shakers: "Typically, these households contain employed singles and couples with no children. They live in the suburbs and have high incomes and advanced education. Members of this segment are likely to visit museums and attend live theater. Movers and Shakers are active Internet users who shop, bank, and make purchases on line."

source: The Buxton Company

Selcted retailers & restaurants

The following businesses were selected as the best match for the town of Oro Valley.

Retailer Classification Average Sales

Anchor Blue - Clothing/Apparel; Average Sales: $1,600,000

Big 5 Sporting Goods - Sporting Goods/Athletic wear; Average Sales : $1,800,000

Coco's Family Restaurant - Restaurants/Bars; Average Sales: $3,000,000

Electronics Boutique - Computers/Software; Average Sales: $1,700,000

General Nutrition Center - Nutrition Shops/Diet centers; Average Sales: $590,000

Hasting's Books, Music and Videos - Books/Music/Rentals; Average Sales: $4,710,000

Hollywood Video - Video rentals/sales; Average Sales: $1,670,000

IHOP - Restaurants/Bars; Average Sales: $2,340,000

Jamba Juice - Coffee Bars/juice bars; Average Sales: $2,130,000

Medicine Shoppe - Drug stores; Average Sales: $1,000,000

Mervyn's Dept. Store - Dept. Stores; Average Sales: $15,700,000

Perkins - Restaurants/bars; Average Sales: $1,780,000

Play It Again Sports - Sporting Goods/Athletic wear; Average Sales: $500,000

Rite Aid Discount Pharmacies - Drug Stores; Average Sales: $2,630,000

Round Table Pizza - Restaurants/Bars; Average Sales: $1,050,000

Samuels Jewelers - Fine Jewelry/watches; Average Sales: $700,000

Sav-on-Drugs - Drug Stores; Average Sales: $3,520,000

Staples the Office Superstore - Office supplies/furniture; Average Sales: $5,230,000

Victoria's Secret - Women's apparel; Average Sales: $1,160,000

Vitamin World - Nutrition shops/diet centers; Average Sales: $800,000

source: The Buxton Company

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