Cape Charles Market Study Uncovers Opportunities for Growth

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By Stefanie Jackson
Cape Charles has a leak, but instead of a problem, this leak presents an opportunity. That was one conclusion of a market retail study presented to Cape Charles Town Council in late December.
Businesses in Cape Charles’ trade area sell nearly $148 million of goods and services annually, but consumers from those areas spend almost $189 million annually, resulting in retail leakage — when locals travel outside the trade area they live in to do their business and purchase goods and services — of about $41 million, the study revealed.
Aaron Arnett, of the Greenville, S.C. firm that has done work for other affiliates of the state and national Main Street programs, called the leak “demand and opportunity to grow our businesses.”
The study was conducted by planning firm Arnett & Muldrow Associates under the direction of the Cape Charles Main Street organization to identify the town’s opportunities for economic and community development.
It included an online survey given on social media that had received 141 responses as of Dec. 12. About 54 percent of the respondents were from the Eastern Shore, including 39 percent from Cape Charles.
Visitors come to Cape Charles an average of once per month in the winter and once per week in the summer and spend about $200 to $300 per visit, Arnett said.
The top three activities they enjoy are dining, shopping, and the beach. Arnett believes “the beach” will be the number one answer if the survey is given during the summertime.
About 66 percent of respondents agreed Cape Charles’ greatest need commercially is more grocery options, 64 percent want a nearby urgent care facility, and 42 percent asked for a dry-cleaning business. More family-friendly entertainment and restaurants were requested by 37 percent and 29 percent of respondents, respectively.
“This is really the basis for all of the market research. The intent of this is to figure out what the true consumer trade patterns are … that’s the foundation,” Arnett said.
Eleven of Cape Charles’ businesses participated in another survey that identified visitors from 201 unique ZIP codes, 25 states, and two countries.
“That’s actually pretty impressive for a small town … 11 businesses is a relatively small sample … it definitely is not part of your peak season. … We’re going to give you all the tools to do this moving forward in the summer time with one of your peak seasons. You’re going to see those numbers really … expand.”
Nearly half of customers have an Eastern Shore ZIP code. Roughly one-third have a Cape Charles ZIP code, and roughly another third – an unusually large amount, according to Arnett – are from out-of-town. “That number is a very high number. We don’t typically see this in all the communities that we do the survey,” he said.
Cape Charles’ primary trade area includes all businesses with a 23310 ZIP code, and its secondary trade area includes the nearby towns and communities of Machipongo, Birdsnest, Franktown, Nassawadox, and Exmore.
The biggest source of retail leakage was about $6.75 million in general merchandise, followed by about $2.4 million spent at home centers, nearly $1.9 million in clothing stores, and about $985,000 on sporting goods, hobbies, and musical instruments.
Other sources of leakage included health and personal care, furniture, pet supplies, and perfume and cosmetics. The numbers reported do not account for online spending, Arnett added.
He said Cape Charles has the potential to capture about 42,000 square feet of additional retail space, including about 22,000 square feet in general merchandise (for example, a dollar store is between 10,000 and 15,000 square feet), about 4,000 square feet in clothing, and nearly 3,000 square feet in sporting goods.
Cape Charles has been successful as a “dining destination,” Arnett said, having gained $5 million in restaurant sales from out-of-town customers.
Restaurants account for 22 percent of Cape Charles’ business share, almost three times the benchmark of 8 percent.
Cape Charles’ primary trade area is gaining in grocery sales, about $5.9 million, although the town itself is leaking $1.2 million. Those figures indicate that there isn’t demand for a full grocery store in town, but there is “room to grow” for specialty stores offering more variety for grocery shoppers.
The average home is worth $330,000 in Cape Charles, the town with the highest home values in the region. One in three Cape Charles homes is worth more than half a million dollars.
About 52 percent of Cape Charles’ homes are owner occupied, and 48 percent are renter occupied or available for rent or sale.
Newly constructed homes are hard to find in Cape Charles. About half the homes on the market were built before 2000, Arnett said.
Affordable housing in another issue Cape Charles faces. About 28 percent of all Cape Charles’ occupied housing, including 40 percent of its rentals, are a “cost burden,” meaning the occupants spend more than 30 percent of their in-come on housing, Arnett said.
The firm also studied the town’s demographics as “a tool for us to understand what our market’s made of, but also to look at any underrepresented segments … that we may want to target.”
The average age of Cape Charles residents is 53.5, the highest in the region, and the average household income is $42,777, slightly higher than the county average.
About 66 percent of the market are mature adults whose primary social groups were labeled by the firm as “back country folks,” “Mayberryville,” and “simple pleasures.” These groups mainly include older people who don’t have children and own their homes, though some rent. Their homes range from “modest” to “upscale.”
About 36 percent of Cape Charles’ population has at least a bachelor’s degree and is considered highly educated.
The firm’s work was not yet complete when Arnett met with the town council in late December, but he promised a final report with recommended business strategies within a few weeks.
“You all have really got something special here,” Arnett said. “You’re a small town, just 1,000 people. But you’ve got high quality businesses in your community. … We don’t always see that.”