It is very clear that not all the consumers who are within the trading area shop exclusively from that area. A group of consumers known as “out-shoppers” frequently and regularly shop outside their local trading area. These consumers spend a considerable amount of time, money and effort making inter-trading area shopping trips. Some out-shoppers look for economic gains arising from lover prices in larger trading centers where assortments are better and the level of competition is more intense. Some shoppers simply seek the diversity of unfamiliar or more stimulating surroundings. Demographically out-shoppers are younger and are relatively well educated and their relative income is high; psychologically, out-shoppers are active and are on the “go”, urban-oriented who are neither time conscious nor store loyal shoppers. They tend to manifest a distaste for local shopping and, hence, a strong preference for out of town shopping areas.
To obtain an accurate estimate of total expected sales, the retailer has to undertake this out-shopper analysis, subtracting out-shopping sales, normally called as “sales leakage”, from the trading areas gross sales to arrive at a more realistic sales volume for the trading area. To estimate “sales leakage” that results from out-shopping behavior a retailer can conduct consumer surveys or use standard adjustment. Consumers survey help in getting information on how much the consumers spend locally on a particular class of goods as a percentage of their total expenditure for those goods. Here, retailer can use this percentage to adjust the gross sales figure for the trading area.… Read the rest