Main Spotlight: The Art of Market Analysis (Part One)

Market analysis is often seen as a purely data-driven exercise. But in reality, effective market analysis goes beyond just crunching numbers. It’s a blend of science and art, requiring a deep understanding of your community, its needs, key drivers, and the broader context of how it functions as a place where consumers, visitors, locals and small businesses and organizations converge.

In this three-part series, we’ll explore the multifaceted nature of market analysis. We’ll delve into the importance of both quantitative and qualitative data and how design thinking plays a vital role in interpreting the information gathered. Stay tuned for part two in a few weeks to learn how to identify key themes to form transformation strategies through a combination of data analysis and an understanding of the local context.

Understanding Market Analysis

The primary purpose of a market analysis is to understand what makes your district unique within your local and regional marketplace. You can think of your Main Street like a product competing for consumer attention based on your ​‘Market Position Statement.’ But there is a philosophy underlying market analysis that more art than science. In the simplest terms, there are factors in the decision-making process beyond just the data as presented.

In fact, market analysis shouldn’t rely on one piece of data. You can image the analysis as multiple puzzle pieces that, when analyzed in connection with one another, craft the whole picture of your market. At the core of our philosophy of market analysis is the idea that qualitative data matters as much as quantitative data. It’s easy to get excited geeking out on ESRI, Plac​er​.ai or IRS data. However, it is also important to consider the feedback you gather from focus groups, local business owners, key asset stakeholders, and outreach to traditionally underrepresented groups. These perspectives can bring critical context to your quantitative data.

Strategies to Build an Understanding

While it may seem counter-intuitive, quantitative data collected in a market analysis typically leads to further questions, rather than presenting a clear picture of the market. Take this example: in ESRI, there is a report that looks at retail demand over the coming five years. That data is based on projected trend lines calculated by births and deaths in census data. However, that data may not consider IRS Migration data showing new people moving into your county.

Remember that you are already participating in a market, and you can use your Main Street experience to build a deeper understanding of how your are already functioning within that market. You can find information by examining your business mix, level of vacancy, shopping demographics, activity mix, how are assets connected (or not?), etc. You should continuously examine your district; markets are always in evolution.

It is also important to consider outside factors that are impacting your community. No district resides in a market bubble isolated from economic, societal, or technology shifts. We all saw firsthand the accelerated pace of change caused by a global pandemic. It’s critical that your market analysis reflects national or even global trends. While your market is primarily local/​regional in nature, it is also influenced by these large shifts.

Finally, your experience and know-how of your community (sometimes referred to as a gut instinct) also matter in market analysis. If a particular strategy feels out of place or a bit too far of a stretch, it likely warrants further discussion. These gut feelings are just as important as understanding psychographic characteristics of your community for example.

Context Matters

Much of the ​‘art’ of market analysis comes in the form of on-site context setting. While data can tell you plenty from afar, context gives you an understanding from a district function perspective. Let’s examine the different ways in which context matters in the market analysis process.

Nodal Development

For downtowns and neighborhood business districts, a general read of market data or even a business directory can be a great foundation for analysis. However, it doesn’t tell you the spatial layout of those uses and functions. Even if you provide a map, a map is not typically three dimensional, and thus doesn’t tell you if there are set-backs, placement of parking lots, areas of infill need, etc. It is important to understand how consumers interact spatially with different buildings, business uses, and other activities.

Assets

Data may demonstrate certain market opportunities, but it might not show whether there are assets to drive those opportunities in the form of natural, built, economic, or societal assets. For example, data may suggest that you are undersupplied with restaurants. However, your strategy may shift if restaurants were relying on a population of office workers who are now working from home.

Building condition and ownership can also make a huge difference in understanding and executing on market strategies through the market analysis process. Many districts with plenty of market opportunities remain plagued by derelict properties and owners unwilling or unable to help as a critical partner in the revitalization process.

Connectivity

Connectivity can make all the difference in the outcome of new market strategies. Even if the data suggests there is an opportunity, it may not be realized if the connectivity isn’t also in place. It is important to understand how people navigate your district, which pathways are available, and what barriers might prevent people from moving through the space. This can impact strategies for retail, dining, public space, and more. 

Example: Downtown Alta Vista, Virginia

While this is a relatively small community, the downtown has two well-defined market nodes that impact how consumers interact with the district. Node One is highly auto-centric, with more national chains, buildings broken up by parking lots, setback from the sidewalk, lower density, and the building uses lean toward personal and professional services rather than retail. Node Two is much more compact with a mix of retail and home furnishings, as well as a theater seeking renovation. There are no gaps nor building setbacks, and the scale of the buildings are uniform. Without this context, you wouldn’t realize that there is really a need for two different market strategies (Transformation Strategies) based on the built environment.

Node Two is also near a key traffic generator for the community, English Park. The park attracts visitors to its Kid’s Water Park, has a great trail and features a large event venue attracting thousands of visitors through a variety of festivals. However, there is a railroad that serves as a barrier for that area, which impacts retail and food market opportunities downtown. This context is key for understanding opportunities. 

Example: Downtown Galax, Virginia 

Using Plac​er​.ai data as an input, Galax found that the highest peak visitor day in 2023 was July 22, the day of the Smoke on the Mountain barbeque festival. On the other hand, the Old Fiddler’s Convention, held in Felts Park the following month, (see map with green circle) attracted more than 30,000 visitors over the weekend, but did not draw significant downtown traffic. After focus groups with local stakeholders, they found that design and connectivity were preventing the downtown from attracting the opportunity presented by the convention. The same was true of the New River Bike Trail, which is poorly connected to the downtown because of Highway 58 and nearby topography. Finally, the Chestnut Creek School of the Arts is located within the yellow highlighted area of the downtown, with multiple facilities and thousands of annual visitors and participants. But the data sets struggled to pick up any traffic to service and restaurant establishments coming from the school. Context matters!

Key Takeaways

In the second part of this series, we will explore a process from the qualitative analysis playbook which involves documenting ​‘market themes’ to develop your transformation strategies. Using a case study approach, we’ll walk through the various data and observational context inputs to hone in on likely market-based strategies to position your Main Street work.

Market analysis is a powerful tool that can be made more powerful using the wealth of knowledge and connections held by Main Street leaders. You can leverage your knowledge about your district to shape your market analysis and the development of your transformation strategies. Data from surveys, ESRI, and Plac​er​.ai are very illuminating, but only half of the story. That’s where the art of market analysis really makes a difference.

Learn more about market analysis in ​“The Art of Understanding Local Markets” from the Main Street Business Insights Podcast.

Redevelopment Resources, a Main Street America Allied Member, is this quarter’s Main Spotlight advertiser. For more information about the services they provide to Main Street organizations, click here >