Retail Sales Reduce Direct Spend?!?

Hi Jenny. We certainly understand your question and the answer is as follows. With retail sales, the direct impact is not the value of the retail purchases but it is only the retail margin portion of those sales remain that remain in the local region. Many times, the goods and services being sold or not produced locally and/or the stores they are being sold in may be large companies, with headquarters outside of the local region and state. So most of the revenues from the retail purchases go to the corporate headquarters in another state. However, if you know the exact merchandise that were purchased during the sporting event, then you may be able to capture more of the producer, transportation, and wholesale margins in the region by modeling the goods in the sector producing them. So using Margins, we can allocate the demand among all sectors involved in the sale, allowing us to split the single Event we started with into several Events. The second common case of retail purchases is when you don’t know exactly what was bought. For example, a new grocery store opens and it expects to have sales of $10 million the first year. While we know there are $10 MM of retail sales from the food market, we don't know what products are actually being purchased- in other words, we don't know what's in the basket of goods. In this case, we can't divide the demand into producing sectors, because we don't know which products are being sold. Our only recourse is to create an Event and choose the retail food market sector (324). When we put in $10 MM as the Value and apply margins, the $10 MM is reduced to about $2.94 MM, which is the approximate value of the retail service margin (.294). Since we don't know what was purchased, there aren't any product margins, nor are there any transport or wholesale margins. Finally, in terms of handling the discrepancy in reporting your results, you can add back into your results the $1.12 million in direct sales not included in the analysis, along with your indirect, and induced sales. Summing all together gives you the total impact of these sales. We hope this explains this a little better for you.

Hello, I have a follow up question on retail margining. I have read through the explanations on retail margining and I wanted to make sure I fully understand the Direct Impact of retail purchases. Assuming that I know what is being purchased and it's $1 Million of toys, at purchaser's prices. When I put this into IMPLAN using sector 312, it applies the margins and applies the SAM Model LPP. The direct impact in the event results drops from $1 Million to $561,000. (1) Is this,$561,000, the actual Direct Impact of these retail purchases? or (2) The $1 Million is the Direct Impact of the retail purchases and the total of the IMPLAN event is the Total Impact? Thank you!

Hi Judy Thank you for your post. In the Edit Margin screen, do you have the Retailer set to 100% in the % Local field? If you do then the result reflects the actual Direct Effect of the Retail Purchases even though the sales value was a million dollars. Thus all of the Retail activity is local Direct Effect, and the Model is estimating that some of the wholesale, transport and production are local, the remaining portion of the Direct Effect is assumed to have been met by imported wholesale services, transporters and producers. Again, assuming that the Retailer is set to 100%, the local $1MM is estimated to generate $561K dollars of local Direct Activity and then the resultant Indirect and Induced Effects. Thanks!