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2.3 ftetail Market Analysis Ellensburg is a retail center serving the primary and secondary markets defined above. This section examines the Ellensburg Market to identify potential opportunities for new or expanded stores by examining "retail leakage." This will allow the comrnunity to assess what kind of additional stores would be attracted to Ellensburg and will help individnal existing businesses understand how they can diversifo product lines to capture this leakage. 2.3.1 Retail Leakage in the Trade Areas Retaii leakage refers to the difference between the retail expenditures by residents living in a particular area and the retail sales produced by the stores located in the same area. If desired products are not available within that area, consumers will travel to other places or use different methods to obtain those products. Consequently, the dollars spent outside of the area are said to be "leaking." If a community is a major retail center with a variefy of stores it will be "attracting" rather than "Ieaking" retiail sales, Even large commtrnities may see leakage in certain retail categories while some small communities may be attractors in categories. Ellensburg is a strong "attracting" community in many retail categories and is "leaking" sales in other categories. Such an analysis is not an exact science. In some cases large outflow may indicate that money is being spent elsewhere (drug store purchases at a Target or apparel purchases through the internet). It is important to note that this analysis accounts best for retail categories where households (rather than businesses) are essentially the only consumer groups. For example, lumberyards may have business-to-business sales that are unaccounted for in consumer expenditures. The best example for Ellensburg is gasoline. Ellensburg can capture some of the inflow of dollars from gasoline stations, but it is unlikely that truckers are going to be the potential customers who would go downtown to eat and shop. Stores such as jewelry shops and clothing stores are more accurately analyzed using retail leakage. The leakage sfudy for Ellensburg is a "snapshot" in time. Consequently, there are factors that point to this being a more conservative look at retail potential depending on what factors are examined, For example, population growth means that there will be more customers in the future resulting in greater demand for retail. A second factor making this study more conservative is that the leakage study only examines the market demand of the geographies defined as the primarytrade area identified for Ellensburg. A successful store model can capture from well beyond the defined primary trade geography and foster a strong visitor market, which is evidenced in the figures 1.1 and 1.2 which show over 10% of the customers are coming fi'om outside of the state of washington. With these conservative factors in mind (meaning our numbers represent "minimum" potential and not "maximum" potential) the primary trade area selected store sales equaled $520.i million in 2015. Consumers in the same area spent $541.9 million. Therefore, the primary trade area is leaking $21.5 million in sales annually. Ellensburg is unique, however, in its location along Interstate 90. The city serves as a stop before and after crossing the Snoqualmie pass over the Cascade Mountain Range, and it sits at the intersection of a major East/Vfest Interstate and a North/South Interstate. The result is that l3