In May of 2005, the City of Effingham commissioned the consulting firm of Peckham Guyton Albers and Viet of St. Louis, Missouri, to undertake a trade area study update.

The following is a concise overview.

 

Overall Findings

This study reveals that the primary trade area for Effingham is extraordinarily large for a community the size of Effingham. Both the existing and prospective businesses may be deceived by cursory reviews of the market potential of an Effingham location. Focusing on demographic and economic data for Effingham proper could greatly underestimate real market potential.

The findings of this study show that the overall primary trade area extends beyond Effingham County into all adjacent counties. This trade area contains an aggregate income of over $1.3 billion (2004 estimate).

This trade area is comprised of 21 zip codes, which are itemized in this report. Effingham businesses also draw from and beyond the defined primary trade area, attracting customers from 177 zip codes (not including out-of-state customers).

There are opportunities in the Effingham marketplace, and Effingham businesses could be capturing more of the disposable income within the primary trade area.

 

Background and Scope of Study

The principal purpose of this study was to determine the geographic boundaries of the overall retail and service market for the City of Effingham, Illinois. For some time, the extraordinarily large sales tax generation within the City has indicated something unusual about Effingham's business drawing power. City officials have promoted this characteristic to business prospects but, until now, it was only supported by sales tax collection figures.

The results of this study are intended to provide useful information in support of economic development activities of the City of Effingham. Both existing business and future business prospects should find this information helpful in understanding the geographic size and characteristics of the Effingham trade area.

 

Findings

Effingham enjoys a significant amount of "transient" (highway-oriented) business activity by virtue of its location at the common routes of Interstates 70 and 57. This interstate highway segment accommodated average daily traffic volumes of 36,100 to 38,200 vehicles in 2003. Initially, it was hypothesized that this transient business activity caused the unusually high sales activity. However, this study reveals that the transient business volumes, although abnormally high, accounts for only a portion of the high per-household business volume in the City. When discounting transient business activity, the per-household sales activity is still very high. This is indicative of a trade area that draws from a geographic area beyond the typical local market.

Business in Effingham registered sales volumes of nearly $466 million in 2004. When eliminating the largest segment of transient sales (50% of "drinking and eating places" and 37% of "automotive and filling stations"), total sales volume in Effingham amounted to approximately $375 million. Total income in 2004 for the immediate Effingham area (Zip Code 62401) amounted to $454 million. This shows that the Effingham business community draws from a larger geographic area in order to support such sales volume.
An intercept survey of patrons at four business locations in Effingham was conducted in order to determine the origin of patrons to these locations. The results of this survey revealed that the boundary of Effingham's primary trade area extends into perimeter counties. The primary trade area represents approximately 85% of the market area as measured by an analysis of the Zip Code origin of patrons.

The local business community is drawing significant patronage from communities such as Vandalia/St. Elmo (Fayette County), Strasburg (Shelby County), Neoga (Cumberland County), Newton (Jasper County), and Flora (Clay County). Total 2004 income within the primary trade area was estimated to be just over $1.3 billion. The survey also indicated patronage from more distant communities throughout southern Illinois.

 

Conclusions

Effingham contains a strong retail sector that not only attracts significant business activity from interstate highway traffic but also draws from a relatively large geographic area. This trade area is substantially larger than average for a community the size of Effingham.

In addition to market growth (both within the local area and the primary trade area) there are opportunities for business expansion. When evaluating a business location in the City of Effingham, one must not only consider local spending potential but also the buying power of a primary trade area that extends beyond Effingham County.

For further information on the study and on the City of Effingham, please contact Todd Hull, Economic Development Programs Administrator, at (217) 342-5304.