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Expected Sales Expected sales is a retail performance benchmark. It is an estimate of the sales level a town would achieve if it were performing on par with Minnesota towns of a similar size. In addition to population and income variables,expected sales incorporates the typical strength of comparable communities via the typical pull factor. Expected sales is the product of city population,state per capita sales,the index of income and the typical pull factor. For example,if a city has a population of 5,000,the state per capita sales are$9,000,the typical pull factor is 1.30,and the index of income is 1.03,expected sales is approximately$60 million per year(5,000 x$9,000 x 1.30 x 1.03). This provides a means of comparing what is expected for a city of a certain size to what is actually happening. Potential Sales Potential sales is an estimate of the amount of money that is spent on retail goods and services by residents of a county.It is the product of county population,state per capita sales and the index of income.The potential sales concept for counties is similar to the expected sales calculations for towns.However,potential sales does not utilize a measure of average pulling power(like the typical pull factor that is used in the expected sales equation). Since a county is a relatively large region within which retail business takes place,counties are compared without adjustments for trade area size. Variance Between Actual and Expected Sales (Surplus or Leakage) The variance between actual and expected sales is how much retail sales differ from the"norm"(i.e.,the amount above or below the standard established by the expected sales formula).When actual sales exceed expected sales,we say the city has a "surplus"of retail sales. When actual sales fall short of expected sales,we say the city has a retail sales"leakage".The set of 4110 similarly-sized cities in Minnesota is the"peer group"to which the comparison is being made. Discrepancies between expected and actual sales occur for a variety of reasons. Proximity to larger population centers,management,marketing,and transportation patterns are just a few factors that can cause the retail sales of a particular town to deviate substantially from expected sales. It is important that decision-makers consider these influences when constructing policies,plans,or projects. The surplus or leakage is expressed in dollars, percentages,and customer equivalents. The use of the analysis will dictate which measure best conveys the information, though all are equivalent. In the case of leakages,the dollar amount is usually the easiest to use since it immediately conveys the potential sales for new businesses. Trade Area Population Gain or Loss The trade area population gain or loss translates the percentage amount of surplus or leakage of retail sales into an estimate of the number of customers gained or lost in the trade area. It is calculated by multiplying the percent surplus or leakage by the population estimate for the city or county. For example,if a city with 10,000 residents had a retail sales surplus of 20%,the trade area population gain would be 2,000. Adding this number to the city's population gives an estimate of the population size of the city's trade area. III Page 3