The Spending Potential Index (SPI)
The presentation link below is designed to help participants see Malcolm X Blvd. in the context of the United States, New York State, and Brooklyn by drawing on data provided by ESRI. (Environmental Systems Research Institute)
Have a look… Overview of Retail Spending
What is the Spending Potential Index?
The thematic maps in this presentation illustrate ESRI’s Spending Potential Index (SPI) for retail goods in the United States in 2010. For more information on these maps, visit ESRI online.
Spending potential data measures consumer spending for retail goods as an average per household and compares the average local expenditure to the average spent nationally. An index of 100 is average.
An SPI of 120 shows that the average spending by local consumers is 20 percent above the national average and in the maps presented a “block group” (a sub-group of a U.S. Census Tract) near Montague Street, in Brooklyn Heights has an index of 240.
(See the SPI presentation to see block group)
ESRI uses Consumer Expenditure Survey data from the Bureau of Labor Statistics in its estimates. ‘Retail Goods’ represents merchandise bought directly by consumers.
The SPI presentation opens with an image of New York State, a window will open to provide a long list of variables describing NY and how it compares nationally, the next slide illustrates Brooklyn (Kings), illustrating its 2.5 million people and $43,500 median income.
Then it gets interesting for Malcolm X Business owners.
The average household expenditure in Brooklyn is just over $18,500. Does that sound like a lot? The next slide illustrates block group near Montague Street with an annual expenditure of nearly $60,000 for retail goods and a median income over $120,000 for about 1,000 people or some 300-350 households/familes. Here, the spending potential index is 240. Neither Malcolm X nor Montague will get all of this expenditure. Market share therefore becomes the key issue.
Montague also more than neighborhood shopping district. It is an extension of the business/civic center and a tourist attraction created by the promenade.
If you had a look at the SPI presentation you noticed that a few block groups adjacent to Malcolm X you realized the key differences from block to block. If your in business on Malcolm X you know these areas well. The maps just add some numbers to define what you already know to be a reasonably accurate depiction. Note the spending potential index numbers for all of the areas are all below 100. For businesses on Malcolm X keeping ‘market share’ is a central challenge. Consumers are much more mobile than ever and lower-income households will seek out higher income areas for shopping, while the converse is rarely true — except when the exception is the rule.
The slide that shows the Breevort housing community with a median income nearing $19,000 and average family/household spending of just over $10,000. The point to remember here is it is at a higher percentage for retail goods and services and very little of it among prudent families will be for luxury goods or services. Malcolm X needs to serve the basics, but it do so with something that gains loyalty.
One of the great things about Brooklyn is just one block or two away you will enter Bainbridge Street in the Stuyvesant Heights Historic District. Note the difference in median income and average expenditure for retail goods and services.
The main question to ask is how does a business capture both of these market segments?
- Would “flare” — a sense of basics with style develop loyalty?
- Would increased participation in civic events put a face on your business?
- Are “celebrations” – block parties, house tours, and so on supported
- Are there sponsors for a Malcolm X MA soccer team or baseball
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We greatly appreciate your comments, questions and thoughts about this initial presentation and hope you will see it develop over the coming months.