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Front Page » July 31, 2008 » Carbon County News » Leakage report explores link to niche businesses
Published 2,625 days ago

Leakage report explores link to niche businesses

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The state of Utah just released new figures on how much money in each area of the state was spent inside that area and outside of it in the annual "leakage" report, and eastern Utah shows some places in retail sales where opportunities for new business could exist.

"It's a matter of niches," said Delynn Fielding, the economic development director for Carbon County. "If one looks at this report there are some areas where a businesses in our area could do well."

The report is generated by looking at reported sales taxes in an area, adjusting the wages for the people living there (either up or down from the state average), and estimating from the taxes how much business was done in one of dozens of categories. Then a formula is used to come up with figures that show how much people spent in a certain geographical region and how much they spent by going out of that region (either by physically leaving and spending money or by doing Internet or catalogue sales).

The result of this, is a set of figures that tells retailers and others in the area where opportunities lie or where service, supply or retail outlets might be weak.

For instance, if the state determined that in a certain area of people who live there would spend $100 per year on shoes and what was actually sold per person was $120 of shoes that would mean an area was at 120 percent of what should be spent for the population size and income level.

There are a lot of things that could affect the figures, however, so those particular numbers would need to be taken with a grain of salt.

"This is not a perfect tool by any means,"stated Fielding. "But it can be a good measure of what money is being spent outside the area."

Fielding says the numbers for various kinds of businesses must be big enough that they can be weighed properly.

"In some of the categories there are zero percent figures and that is because if there aren't at least four businesses reporting in that area, they don't figure it in this report."

A number of factors can skew the figures, such as a retailer listed as selling a certain kind of item in their store, but over the years changing to something else, while not reporting the change to the state. A store may also sell many kinds of different things, thereby reporting under general merchandise, yet their sales impacts other smaller businesses that have niche sales in some of those same areas.

The highlights of the report including the following information.

•Building and garden. Oveall the area only spends 70 percent of the money it spends on items from this category within the two county area. Within this category, mobile home dealers seem to do very well for the size of the population selling 312 percent more than would be expected in this area. Lumber and other building materials are listed at 72 percent of what it should be.

•General merchandise. Department stores and variety stores do very well in this local area. Because many shoppers here come from other places (tourists and outside the two county area that have no big box stores) department stores do 161 percent of what is expected while variety stores do 264 percent.

•Food stores. Americans live in a convenient society, and it shows by how they frequent convenience stores. In the area convenience stores sell 197 percent of their expected projects based on the population. Even regular grocery stores do well with 107 percent.

•Motor vehicle dealers. The 2007 figures show that used (only) car dealers do a big business in the Carbon-Emery area. In 2007 they sold 448 percent of what would normally be projected for used car sales in the area. New and used dealers sold 92 percent. While the figures show that motorcycle (and ATV) dealers only sell 57 percent of what they should for the population, that figure is probably much below where it should be, because one dealer that sells those types of machines is listed by the state as a boat dealer (as it originally was set up) and boats sell at 1068 percent higher than would be normal for the area. That of course is impossible, because there are no boat dealers in the two county area.

•Apparel and accessory. While the sales of these items overall was only listed as 12 percent of what would be estimated, it needs to be pointed out that the box stores in the area sell a lot of the merchandise that fits under this category, but those sales are put under the general merchandise listing in the report.

•Eating places. While outside the home eating is only 99 percent of what is expected in the two counties, private clubs and beer retailers/taverns report sales that are equal to 158 and 269 percent of what would be expected from the area. Fast food eating places showed a rate of 142 percent.

•Hotel and lodging. In 2007 the local lodging industry did well with 336 percent of sales as to what was expected by the state.

•Total business services. This includes mailing and reproduction, building services, equipment rentals, computer and data processing as well as a few other categories. This was rated as only 61 percent of what it should be for the area.

•Auto and miscellaneous repair. Overall this area did a brisk business at 208 percent of what would be normal for the area.

•Entertainment and amusement. With the next to lowest total expeditures measured in the study at 29 percent, video tape rentals and bowling ranked the highest with 96 and 148 percent respectively.

"This report gives us a way to look at the money going out of the two county area," said Fielding. "It can also show the way for improvement in many businesses or the start up of new ones."

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July 31, 2008
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