Fall 2011 A Pulse on Specialty Retail
First of quarterly reports unveils new data on the industry.
One thing that people in specialty retail frequently ask for is data: What are the top-selling products? What kind of growth has the industry seen? There hasn’t been any concrete information to help retailers target specific growth products or allow developers to use strong industry numbers to attract tenants.
With that in mind, Specialty Retail Report recently commissioned Alexander Babbage Inc., a third-party market research company, to take an in-depth look at the specialty retail market and to create quarterly reports that would help those in the industry get a better grasp on specialty retail performance, trends and growth.
The first of these reports, called Specialty Retail Pulse, was released in July. The study is a benchmark performance report for the specialty retail industry which includes carts, kiosks and temporary in-line stores.
Research for Specialty Retail Pulse was generously sponsored by the Max F. James Family Foundation. Max James is the owner of North American Kiosk, LLC and American Kiosk Management, LLC, which operates over 700 specialty retail kiosks in the United States, Canada and Puerto Rico.
“My family and I have been in this industry for 15 years and have not had access to industry performance numbers to ascertain how our business results compare to others in our same market space,” James said. “The specialty retail industry has been a blessing to our company, and we felt that we could donate back to the entire industry, so that we all might better be able to improve our performance and our customer satisfaction.”
Ramping up project
Alan McKeon, president of Alexander Babbage, began by reaching out to retailers and developers across the United States and Canada.
“Since the information we’re gathering is very sensitive, including their sales data, leasing data and the rent they pay, we asked what they would be willing to share and where there would be hesitations. One of the issues is that they wanted it to be a blind pool, so the first criteria [for the numbers] was that we needed to be confident that an individual retailer or mall couldn’t be identified.”
McKeon said that there’s an aggregation in the database so a retailer or developer who purchases the research can’t drill down to the point where they can figure out who a retailer was; for example, they could not search for a sunglass cart in a specific city at a specific mall.
Next Alexander Babbage put together a pilot program, with the companies in the founding group receiving a customized report free of charge in exchange for contributing their shopping center/company’s data. As a result, the first phase of research included 5,800 retail locations representing 600 million dollars in revenue.
The participants were asked to provide Alexander Babbage with sales and rental information for 2009 and 2010. The research firm then built databases to organize the data, cleaned it and analyzed it to create the first quarterly report.
Specialty retail on the move
One of the most important findings was the growth the specialty retail market has experienced; an overall year-on-year industry sales growth of 10.6 percent from 2009 to 2010.
“The industry grew more than retail sales did (2.9 percent) for the same period,” said McKeon. “That indicates aspects of innovation in specialty retail and some aspects of the unemployment situation; there’s a low barrier to entry, so if you have an idea going into temporary retail to sell it is relatively low risk.”
Moving forward, McKeon said the study could expand beyond the traditional shopping center, as well as outside of the United States and Canada. “Now that we’ve got the basic framework in place, we can easily take [the study] outside to other markets such as airports, sports arenas and other places where there is a significant specialty retail presence.”
Patricia Norins Clapp, publisher and CEO of Specialty Retail Report, is looking forward to the opportunities Specialty Retail Pulse will bring.
“Over the last 15 years I’ve had so many retailers and specialty retail managers ask questions about the size of the industry or sales figures for specific categories. We can give our best guess, but never had any real way to define it. It’s exciting to be able to have real data behind what we’re saying is trending, and it will be a great tool to attract new people to the industry.”
For more information about the reports, visit specialtyretail.com/pulse. To participate in the study, please email Charlotte Sykes at Alexander Babbage (firstname.lastname@example.org).
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