Residential and Retail Market Strategy: Downtown Sandusky, Ohio Waterfront District

 

Sandusky Main Street and the City of Sandusky contracted Anderson Economic Group (AEG) to develop a strategic plan to enhance its historic downtown which is situated along Sandusky Bay and Lake Erie.

To assess public concerns, habits, and preferences, AEG conducted an on-line survey and met with key project and district stakeholders. The on-line survey, which was promoted in the local newspaper and on stakeholder websites, received over 350 responses. After evaluating the survey and stakeholder responses, AEG analyzed market characteristics of Sandusky and Erie County (including the area’s demographic and socioeconomic profile), and the retail composition, spending behavior of its residents, and the implied opportunities for growth and expansion of specific retail categories. Through a supply – demand analysis, primary data analysis, market assessment, and interviews with local realtors, we also determined the number of residential units – both owner occupied and rental – at specific price ranges the local market could support.

Results from each of these analyses provided insight into the unique opportunities for future growth, and strategies the community can use to achieve their vision. AEG completed this project with strategies and specific recommendations for increasing residential use and diversifying the retail and entertainment offerings in the district. We provided the Sandusky Main Street with our analysis, key findings, and recommendations in a loose-bound report, complete with executive summary and appendices. Included in the appendices are detailed results from the public outreach process, demographic and socioeconomic analysis, several custom maps, methodology, and complete findings from the residential and retail supply-demand analyses. As a final task, we made presentations of our findings and the strategy to both the Main Street Organization and the Sandusky City Commission. 

 

Automotive Dealership Arbitrations: Seventy-three General Motors and Chrysler Dealerships

Following the termination of over 1,000 dealerships by General Motors and nearly 800 by Chrysler, federal legislation (HR 3288, Sec 747) was introduced to provide a procedure for the review of the termination decisions. The bill, signed into law on December 16 of 2009, established criteria for the arbitration process, which was organized through the American Arbitration Association. Among the criteria that arbitrators were to consider were the dealership’s profitability, economic viability, market territory, sales performance metrics, and the manufacturer’s business plan.

Seventy-three of the dealerships that pursued arbitration retained Anderson Economic Group for expert analysis in the areas of demography, geography, sales performance analysis, economic viability, and financial analyses. These dealers were located across 23 different states. Fifty-five were General Motors dealerships, and 18 were Chrysler dealerships.

We worked with each dealership to develop a plan of work that focused on the critical elements of their case. These included geographic and demographic assessments to determine if trade area’s were properly assigned, and if performance metrics accurately accounted for local market conditions. In a number of cases we also provided financial analyses to measure the economic viability of a dealership from a profitability standpoint, and to benchmark historic financial performance against an industry average. We also assessed the overall industry structure, economic conditions, and the business plans that manufacturer’s cited as reasons to support dealership terminations. In doing so we were able to illustrate inconsistencies in their positions, and demonstrate that, in many instances, the termination of dealerships was actually harmful to the manufacturer’s economic interests. We also provided consultation regarding settlement and hearing strategies, as well as rebuttal to opposing expert analyses.

Our analyses were used by dealerships to evaluate the strength of their case, to negotiate favorable settlements prior to arbitration, and in 19 cases our experts presented findings before an arbitrator. By the end of the arbitration process more than 90 percent of our clients had received favorable financial settlements, or had been reinstated as dealerships.

Financial Evaluation and Market Value Analysis: Williams v. Anheuser-Busch

 

Auto Dealership Performance Assessment and Termination Criteria: Michigan Cadillac Dealership

In response to a notice of termination and  sales performance review from General Motors and ChannelVantage, a Michigan Cadillac dealership retained Anderson Economic Group (AEG) to provide an independent analysis for the dealership. The analysis specifically focused on 1) the factory’s assigned sales and service area, and 2) the methodology used to calculate the dealership’s Retail Sales Index (RSI).

To begin, we reviewed GM’s sales performance calculations and the methodology used by ChannelVantage to arrive at the dealership’s RSI score. Our Geographic Information System (GIS) was utilized to plot the location of the dealerships, its assigned Area of Geographic Sales and Service Advantage (AGSSA), nearby Cadillac dealers, and a ten-minute drive-time area from each dealer. The latter helped to identify census tracts within our client’s AGSSA that were more naturally and/or easily served by another dealer. Measuring the drive-time distances from each of center of these census tracts’ to nearby dealers aided in our revision of the assigned AGSSA. We next analyzed the demographics from the assigned AGSSA and the revised AGSSA, with a focus on variables that correlate with luxury vehicle sales, such as education levels, age, and income. We adjusted the RSI to account for our revisions to the AGSSA based on the reduction in the targeted demographic base, and a reduction in expected market share capture for the vehicle segment.

Our findings illustrated that our client had an unreasonably large market area, including over 20 census tracts that were located closer to other Cadillac dealerships. We also accounted for local demographics and customer behavior, as opposed to broad reaching assumptions based on state-level data, to estimate expected sales levels in the market. With these adjustments, we arrived at a significantly higher RSI relative to what GM determined, and used as a primary factor in termination the dealership. We compiled these findings in a report for the client, which he has shared with members of Congress while lobbying for passage of the Durbin-Hoyer bill that was enacted, and allows all terminated dealership a chance at arbitration.

An Auto Dealer's Guide to Arbitration

This guide is for dealers that are considering participating in the arbitration process established by H.R. 3288, which was signed in to law by President Obama on December 16, 2009. It reviews the timeline and arbitration process, and the criteria that will be considered by the arbitrator. It concludes with some practical steps dealers should take as they consider whether to participate in the arbitration process.

Luxury Vehicle Dealership Site Selection: Detroit, Michigan Area Dealership Group

As part of its dealership restructuring efforts, one of the Detroit Three invited current dealers to submit proposals for a new luxury vehicle dealership in suburban Detroit. Our client, a large dealership group in the Detroit area, retained us to assist in evaluating the OEM’s preferred site and an alternate site that was believed to be better positioned in the market.

We began with an assessment of the current dealer network in Wayne, Oakland, and Macomb counties. This included a drive-time analysis to assess market coverage, both for the current structure and for the structure after the known dealerships closing. We next identified the most likely site for a new dealership in the OEM preferred area and our client’s preferred area, and delineated a market area for each, accounting for drive-times, infrastructure networks, natural barriers, and the market areas for existing dealerships. A demographic and socio-economic analysis was done for each trade area, focusing on variables that predict the success of luxury automobile dealerships. We also analyzed luxury vehicle registration data from RL Polk to measure historic vehicle purchase patterns in each market. Lastly, we considered site specific factors, such as visibility, traffic count data, and proximity to other luxury vehicle dealerships.

Our final results were summarized in a memorandum and presentation to the client, and found the client preferred site to be a much stronger location. Our deliverable  included summary data tables and custom maps showing market areas, demographics, and luxury vehicle registrations. The memorandum and presentation was included by our client in their proposal to the OEM.

Market Snapshot-Demographic and Socioeconomic Analysis: Main Street Newnan, Georgia

Anderson Economic Group completed a market snapshot for the Main Street Newnan organization in Georgia, located southwest of Atlanta. The purpose of providing Newnan Main Street with the market snapshot was to help bolster the organization’s plans for attracting and recruiting business, and to uncover potential strengths and opportunities in the downtown.

We worked with Main Street Newnan to determine the downtown’s center of market activity and its likely primary and secondary market areas in terms of drive-time distances. We next used our Geographic Information System (GIS) to plot the location and delineate the drive-time boundaries on a map. To provide a visual display of key data in the community, we customized maps to display the current year per capita income and population density, and projected percent population change, all at the block group level.

The primary and secondary market areas and the county were further analyzed to provide a detailed understanding of Newnan’s demographic and socioeconomic make-up for the current year and projected trends over the following five years. Relevant categories, including age, income, households, education attainment, and consumer expenditures were detailed in a table and summarized in a narrative to explain the trends and key points.

The market snapshot product is being used by Newnan Main Street in their business and other attraction efforts.

 

Market Snapshot: Traverse City Area Chamber of Commerce

 

Anderson Economic Group completed a market snapshot for the Traverse City Area Chamber of Commerce (TC Chamber) in Michigan. The purpose of the market snapshot was to help bolster plans for attracting and recruiting business, provide a marketing piece for promotional efforts, and to uncover potential strengths and opportunities in the area.

We worked with the TC Chamber to determine downtown Traverse City’s center of market activity and its likely primary and secondary market areas in terms of drive-time distances. We next used our Geographic Information System (GIS) to plot the location and delineate the drive-time boundaries on a map. To provide a visual display of key data in the community, we customized maps to display the current year per capita income and population density, and projected percent population change, all at the block group level.

The primary and secondary market areas and the state were further analyzed to provide a detailed understanding of Traverse City’s demographic and socioeconomic make-up for the current year and projected trends over the following five years. Relevant categories, including age, income, households, education attainment, and consumer expenditures were detailed in a table and summarized in a narrative to explain the trends and key points.

The market snapshot product is being used by the Traverse City Chamber in their business and other attraction efforts, and was used as a marketing handout at their annual Economic Forecast Breakfast in November 2009. Patrick Anderson, Anderson Economic Group’s CEO, also spoke at the event, and contributed to the region’s “2010 Economic Outlook” report.

For a copy of the market snapshot, and the 2010 Economic Outlook report, you can visit: http://www.tcchamber.org/events/economic-forecast-breakfast

 

Mixed-Use Market Study and Development Strategy: Northern Michigan University, Marquette

Northern Michigan University retained Anderson Economic Group to conduct a market study and strategy for the development of university owned property in Marquette, Michigan. The commission of this report opened the opportunity for the proactive planning of future development efforts, the return of underutilized property to productive uses, and the physical and social connection of the campus and community.

Our approach began with a field assessment in Marquette, followed by community outreach through online surveying, meetings with community stakeholders, and focus groups for the business community, area residents, university faculty and staff, and students. Findings from the community engagement helped to qualify results from our retail and residential supply and demand analyses, which identified opportunity for growth in various retail categories and housing value brackets to complement the existing stock. Our recommendations included illustrative development plans for the property, and specific development guidelines and tenant recommendations to enliven the area, connect the campus to the community, and bring in each element of living, working, and playing.

We provided the university with a full report which included an executive summary and appendices that contained explanations of the methodology used, detailed findings from the analyses, custom maps, and results from the community engagement process. We also provide pro forma financial models for the development to illustrate the financial considerations related to the project.

Automotive Industry Analysis and Presentation: State of Illinois Financial Forecast Forum

The Illinois City/County Management Association, Illinois Government Finance Officers Association and the Northern Illinois University Center for Governmental Studies Civic Leadership Academy holds an annual financial forecast forum for municipal leaders and financial officers from throughout the state. The day long forum for 2009 attracted more than 50 attendees, and feature speakers from the federal reserve, the banking, retail, and real estate sectors, as well as a presentation on the automotive industry by AEG’s Scott Watkins.

Our presentation addressed: the global nature of the automotive industry and overall economic slowdown; what the automotive industry in the State of Illinois region looks like and how it has changed in recent years; how the industry slowdown might impact automotive operations in the state; the current and forthcoming issues that will further challenge the automotive industry and regional economies that strongly depend on automotive industry employment; and the need to automotive dealership contraction and how that will impact communities throughout the country.

The presentation was delivered to the over 50 attendees of the forum at Northern Illinois State University’s Naperville, Illinois campus. After the presentation AEG consultant Caroline Sallee joined Scott Watkins to address questions from the audience.