While business owners intuitively adjust their operating policies to the characteristics of their surrounding PMA, sometimes hard data can provide important insights.
As an illustration, what difference does it make if one planned to open a shoe store in either Montgomery County, Pennsylvania or Montgomery County, Alabama?
Montgomery County, Pennsylvania (MC, PA) has a stronger economy. Compared to Montgomery County, Alabama (MC, AL), the labor force participation rate is higher (68% vs 62%), the unemployment rate is lower, and a larger proportion of households have wage earnings. The median earnings for workers are $42,240 vs $27,343.
The mean household income in MC, PA is $109,215 compared to $62,201 in MC, AL. Per capita income is $42,275 vs $25,138. Since the end of the 2008 recession through 2015, per capita income in MC, PA has risen 24% and just 12% in MC, AL.
The individual poverty rate in MC, PA is 6.6% vs 22.6% in MC, AL Only 6% of the households in MC, PA received food stamps during the past 12 months compared to over 20% in MC, AL.
Since 2008 total personal income in MC, PA has risen 29% with total employment up just 2%. In MC, AL total personal income is up just 12% and total employment has fallen by 5%.
Given the differences in their economies, an entrepreneur with experience in shoe retail would certainly approach each Montgomery County distinctly.
MC, PA is obviously an affluent, higher income community. Almost 47% of the adults have a bachelor’s degree or more. Employed residents are concentrated in higher end occupations. Median earnings are $49,509.
MC, AL is more of a lower middle class community with below average per capita income. Just 31% of adult residents have a bachelor’s degree or more. Employed residents are concentrated in production jobs and in state government. Median earnings are $32,045.
Obviously, a different mix of inventory would be called for in the two counties. Higher end shoes with luxury pricing in PA compared to middle and lower end shoes with heavy discounts and sales in AL. Competition from Internet sales, especially for athletic footwear, is likely to be greater in PA.
Using shoe store jobs as a measure of activity, over the recent business cycle the PA county was stable while the AL county was hit hard by the recession. This should guide decisions on inventory and planned expansion or entry. MC, PA currently has 1.5 retail shoe stores per 10,000 population compared to 0.7 in MC, AL.
There are also clear differences in the demographic characteristics of the residents in each county that would affect inventory mix and pricing.
For example, MC, PA is 6% African-American while MC, AL is 56%. The proportion of married individuals 15 years of age and older is higher in MC, PA (55% vs. 40%) and the reverse is the case for never married persons (30% vs 39%). Nearly 81% of the children in MC, PA reside in married-couple families in contrast to only 51% in MC, AL.
The population in MC, PA tends to be more stable with less turnover. In MC, PA 90% of the individuals resided in the same house as one year ago, compared to 79% in MC, AL. The higher turnover has serious implications for brand awareness and marketing. Unsurprisingly, the proportions of persons living in owner occupied housing is 73% vs 59% between the two counties.
Having the stronger economy, the resident population in MC, PA has been growing nearly three times faster than MC, AL since the end of the last recession (4.7% vs 1.7%).
This simple comparison of two Montgomery counties demonstrates how important basic economic and demographic applied data is for a business to operate successfully in a particular primary market area.
ECON First’s mission is to provide current applied economic intelligence to promote business success. With its unsurpassed knowledge of regional economies, ECON First tailors its analysis to the client’s specific primary market area.
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