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DRAFT

MARKET FEASIBILITY AND


ECONOMIC AND COMMUNITY IMPACT ANALYSIS
FOR A NEW FRED MEYER STORE
IN MAPLE VALLEY

PREPARED BY
HEBERT RESEARCH
13629 NE BEL-RED RD
BELLEVUE, WA 98005

JUNE 2, 2008

Prepared by Jim Heber


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Kevin Koutou - Research Analyst
DRAFT

Research Goals and Objectives

The purpose of this study is to assess the potential consumer demand for economic and
community impact of a new Fred Meyer store in the Maple Valley trade area. Research
was conducted applying accepted theories of retail convergence and leakage. In essence,
this means the research assesses whether the large “one-stop shopping” model of Fred
Meyer will increase the flow of retail trade into Maple Valley and positively contribute to
area’s overall economy.

The following are included in this study:

1. An assessment of the extent to which the proposed retail facility will capture a
share of retail sales in the community, and the potential impact of the project on
existing employers in the community.

2. An assessment of how the construction and operation of the proposed retail


facility will affect the supply and demand for retail space in the community.

3. The number of persons employed in existing retail stores in the community.

4. An estimate of the number of people who will likely be employed by the proposed
retail establishment.

5. An assessment of whether the proposed retail establishment will result in a net


increase or decrease in retail employment.

6. The effect on wages and benefits of employees of other retail businesses.

7. The projection of the cost of public services and public facilities resulting from
the construction and operation of the proposed retail establishment.

8. The projections of the public revenue resulting from the construction and
operation of the proposed retail establishment.

9. An assessment of the effect that the construction and operation of the proposed
retail establishment will have on retail operations in the same market area,
including the potential for blight resulting from retail business closures.

10. An assessment of the potential for long-term vacancy of the property on which the
retail facility is proposed in the event that the business vacates the premises.

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11. Determination of the primary and secondary trade areas.

12. Demographic, income and consumption data for the Maple Valley trade area.

13. Identification of existing commercial enterprises (grocery stores, retail stores,


service enterprises, etc.) within a five-mile radius of the site – basically the Fred
Meyer one-stop shopping example: jewelry, hardware, clothing, food and
gardening.

14. Identification of ways for Fred Meyer to penetrate the market in the trade area.

15. Estimation of the target market’s likelihood to shop at Fred Meyer.

16. Identification of key variables that will drive demand for Fred Meyer.

17. Estimation of the target market’s frequency of use of Fred Meyer.

18. Estimation of the average amount spent per visit at the grocery store.

19. Estimation of weekly and annual sales demand; projected over five years.

20. Assessment of the need for other non-grocery commercial enterprises.

21. Impact on other Fred Meyer stores.

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Research Methodology

To assess the potential consumer demand for and economic and community impact of a
new Fred Meyer retail store in the Maple Valley area, Hebert Research has used a
combination of economic impact analysis, secondary research, and quantitative telephone
interviews.

Secondary Research

Secondary research was conducted as a preliminary step to collect the city census and
industry data that will be subsequently used to create economic models, conduct
quantitative analyses and develop research insights. Since this study involved a
significant amount of city economic data, secondary research accounted for a big part of
the project.

The following were used as major sources of secondary data to characterize and quantify
the consumer retail market in the Maple Valley area:

• U.S. Census
• U.S. Bureau of Economic Analysis
• Puget Sound Regional Council
• Department of Revenue
• Washington State Department of Labor
• Urban Land Institute
• King County Budget Office
• Puget Sound Forecast Council

Additional behavioral data was obtained from Claritas and from previous research
conducted by Hebert Research. Specific variables included:

• Trade area definition.


• Retail expenditure within Maple Valley and outside surrounding areas.
• Growth rate and change of retail.
• Employment and new job creation.
• Income distribution.
• Expenditure by type of product sold by Fred Meyer and other area retailers.
• Population trends – natural and net migration.

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Map of Maple Valley

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Primary Research

Primary research included a quantitative survey to obtain customer perception of Fred


Meyer in the Maple Valley area, the likelihood of customers in the trade area to use a new
Fred Meyer store, and attitudes about the impact of a new Fred Meyer store on the
community.

• Sampling frame

A total of 250 Fred Meyer family customers and non-customers, including a stratified
sample population of existing retail customers in Maple Valley and principal shoppers
of Fred Meyer. The data was weighted to reflect actual post weights.

• Questionnaire

Herbert Research developed the questionnaire in conjunction with Fred Meyer. The
questionnaire was designed to address the objectives of the research and was
approved by the client before it was administered in the field.

• Pre-Testing Questionnaire

Hebert Research pre-tested the initial survey questionnaire among a small group of
respondents to examine the effectiveness of the survey tool and determine revisions to
improve the quality of answers and ensure that the survey objectives could be met.

• Quantitative process (CATI System)

Questionnaires were programmed into Hebert’s CI3 CATI (Computer Aided


Telephone Interviewing) interviewing software (Sawtooth Software) and then tested
to ensure that the logic was correct and skip patterns were working properly.

Data Analysis and Modeling

To develop a complete understanding of the City’s economic development and provide a


comprehensive evaluation of the new Fred Meyer project, Hebert Research used an
econometrics modeling approach to analyze the economic data. This approach included
the IMPLAN model designed for examining the impact of the proposed Fred Meyer
establishment on the local and broader City’s economy.

Economic Impact Analysis

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The economic impact analysis was conducted by building a series of Impact Models with
IMPLAN software, which is an interactive application for economic analysis. An impact

analysis begins by identifying one or several economic impact issue actors. In this case,
the objectives of the proposed establishment of a new Fred Meyer store and converting
their actions to a set of expenditures. These expenditures are the initial changes (“input”)
that stimulate further economic activities (“output”). The actions and the economic
activities they stimulate are the impact. These economic activities interact with one other
in a Social Accounting Matrix (SAM). Established multipliers convert “input” to
“output” and encompass three components:

• Direct effects : the demand changes stimulated directly by one or several


economic activities.

• Indirect effects: the changes in inter-industry purchases as they respond to the


new demands of the directly affected retail industries.

• Induced effects: the changes in spending from households as income/population


increases or decreases due to the changes in production.

The effects of the proposed Fred Meyer project are illustrated in the following chart.

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Commercial Fred Commercial
Taxes Meyer Taxes
Store

Value-added
Construction Downstream
Parts Suppliers Businesses

Raw
Material Employment Material and
Suppliers Parts Suppliers

Income
Taxes Households’ Consumer
Consumption Product
Providers

Sales Taxes Direct Effects


Commercial
Indirect Effects
Taxes
Induced Effects

Social Accounting Matrix (SAM Model)


Note: This is for illustration only, and is by no means an exclusive list of all economic effects.
There might be more economic activities stimulated by the proposed project.

After the initial changes of economic variables (e.g. the construction costs, the increased
employment) were identified through secondary research, the total impact of the Fred
Meyer project on the City’s economic development could be quantified and expressed as
monetary expenditures. These expenditures represent the total economic output, and
were allocated to several economic categories (e.g. employment compensation, proprietor
income, city revenue, etc).

This powerful economic model was used to evaluate the economic impact or benefits that
the proposed construction of a new Fred Meyer store will bring to the City.

Sustainability Assessment

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DRAFT
In addition to the IMPLAN study, Hebert Research also assessed the sustainability of
economic effects stimulated by the new Fred Meyer. This assessment was based on
examining the local economic and demographic growth trends, the risks of investment in

the retail business, and the possible controls and governance exercised over project
development.

The assessment of economic effects is always associated with the assessment of risk and
control. The relationships between economic effects, risk, and control are shown below.
When control or governance is improved, the risk and economic effects increase, helping
to ensure that economic effects will be sustainable.

Figure 3: Relationships between Control, Risk and Return

Control Risk Effects


micEff

Univariate Analysis:

Univariate analysis consists of identifying and quantifying the key variables that
influence the overall operation of a system or process. In this case, statistical
averages and variances give us an overall picture of the potential customers in
the Maple Valley trade area, their behavior as consumers, their perceptions of
Fred Meyer, and the extent to which they are likely to use the services of a new
Fred Meyer store in their neighborhood.

Multivariate Analysis:

Multivariate analysis uses more sophisticated mathematical techniques to help us


understand the deeper relationships between important variables and the extent to which
they help explain variations. As an example, Fred Meyer may want to know how much
price, quality, service or selection influence the likelihood that customers in Maple Valley
will shop at a new store in their neighborhood and how much they may be willing to
spend per visit. Multivariate analysis encompasses a number of more advanced
techniques that help us answer such questions.

Research Deliverable

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DRAFT
The results of this research project are to be delivered in a final Executive Summary. The
current draft report contains a univariate analysis of the customer survey, along with
findings based on data from secondary sources. The final Executive Summary will be
presented when the multivariate analysis described above has been completed.

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DRAFT

Population of Maple Valley, 2000 through 2007

From 2000 through 2007, the population of Maple Valley grew from 14,209 to 20,020, a
compound annual growth rate of 5%. The greatest growth occurred in 2005 and 2006,
when the population grew by 9.77% and 7.11%, respectively.

According to the City of Maple Valley Economic Profile and Baseline Market
Assessment report, Maple Valley is expected to grow at a low to moderate rate over the
next 15 years, between 1.1% and 2%.

Change in Change in
Years Population Pop. Pop. ( %)
2000 14,209
2001 14,590 381 2.68%
2002 15,040 450 3.08%
2003 15,730 690 4.59%
2004 16,280 550 3.50%
2005 17,870 1,590 9.77%
2006 19,140 1,270 7.11%
2007 20,020 880 4.60%
Source: US Census Bureau

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DRAFT

Population by Race

Maple Valley is a relatively homogeneous community. Most of the residents (90.4%) was
of Caucasian decent in 2007. Hispanics accounted for 4% of the population, Asian or
Pacific Islanders 2.8%, African Americans 1.1%) and Native Americans 0.7%. Nearly
4% of the people of Maple alley self-identified with two or more races.

Population By Race

100.0%
% of Total Population

80.0%

60.0%

40.0%

20.0%

0.0%
African Native Asian or Two or
Caucasian Other Race Hispanic
American American Pacific More

Series1 90.4% 1.1% 0.7% 2.8% 1.4% 3.7% 4.0%


Race

Source:
ESRI

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Average Household Size and Age

According to the U.S. Census of 2000, the average household in Maple Valley had was
3.0 people. In that year, only 22% of the population was over the age of 55 and 44% of
the population was between the ages of 18 and 54. The median age in 2007 was a
relatively young 36.7 years.

Ages Percentage
0- 17 years 34%
18- 24 years 5%
25- 34 years 17%
45 to 54 years 22%
55 to 64 years 12%
65 years and Older 10%

Source: U.S. Census, 2000 & Maple Valley Economic Profile & Baseline Market Assessment

Population by Gender

The population of Maple Valley was evenly distributed in 2007 between male and female.
The difference between males and females was only 0.4 percent.

2007 Population by Sex


Male 50.20%
Female 49.80%
Source: ESRI

Median Income

According to Claritas, the median income of Maple Valley in 2007 was $91,916. About
one-third (31%) of the population earns over $100,000 per year. Another 44% earns
between $50,000 and $100,000, while only 25% earns below $50,000 a year.

2007 Households by Income


Median Household Income $91,916
Income Under $50,000 25.0%
Income $50K-$100,000 44.0%
Income Over $100,000 31.0%
Source: Claritas

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Estimated Median Income of Maple Valley 2007

50.00%
44.00%
45.00%

40.00%

35.00%
31.00%
30.00%
Percentage

25.00%
25.00%

20.00%

15.00%

10.00%

5.00%

0.00%
Income Under $50,000 Income $50K-$100,000 Income Over $100,000
Income

Employment in Maple Valley

According to the Office of Financial Management, the number of employed Maple Valley
residents rose from 1,937 in 2000 to 3,318 in 2006. The service sector was the major
employer in 2006 with 1,212 persons employed. Another 508 people were employed in
Construction / Resources, while 507 people were employed in retail. The retail sector and
manufacturing experienced brief decline in employment in 2005 but recovered during the
following year.

Covered Employment Estimates


Years 1995 2000 2001 2002 2003 2004 2005 2006
Const./Resources 256 403 340 260 314 342 397 508
Fire 56 50 56 67 81 100 116 129
Manufacturing 62 78 66 43 31 41 31 47
Retail 343 439 411 462 492 502 482 507
Services 761 970 1,159 942 969 1,083 1,174 1,212
WTU 64 48 49 43 76 74 90 111
Education 346 568 588 594 491 437 499 511
Government 49 94 89 90 245 200 219 292
Total 1,937 2,651 2,759 2,501 2,697 2,778 3,007 3,318
Source: Puget Sound Regional Council

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Retail Sales in Maple Valley

Total estimated retail sales revenue in 2007 in the City of Maple Valley was
$440,436,261,1 with sales distributed among groceries, electronic appliances, and apparel
among other products. The major beneficiaries were the food and beverage stores
($52,486,489), grocery stores ($47,433,316), convenience stores ($45,089,298), and
general merchandise ($57,921,730).

The table below is a partial overview of some of the major categories that benefited from
the buying power of the local population.

Maple Valley Retail 2007


Furniture & home furnishing $ 14,460,321
Furniture stores $ 7,554,982
Home furnishing $ 6,905,339
Electronic appliances $ 12,487,747
Appliance, TV, electronic stores $ 9,556,620
Household appliance $ 2,089,620
Radio, TV, electronics $ 7,467,000
Camera, photo equipment stores $ 496,891
Hardware stores $ 4,317,015
Lawn, garden equipment, supply stores $ 5,324,457
Food & beverage stores $ 52,486,489
Grocery stores $ 47,433,316
Supermarket, grocery (ex. Convenience stores) $ 45,089,298
Health and personal care stores $ 18,673,554
Pharmacies & drug stores $ 15,942,641
Cosmetics, beauty supply, perfume stores $ 637,562
Optical good stores $ 935,608
Clothing & clothing accessories stores $ 24,347,505
Clothing stores $ 17,121,866
Children's infants clothing stores $ 945,608
Shoes stores $ 3,306,593
Jewelry stores $ 3,623,190
Luggage & leather stores $ 295,856
sporting goods stores $ 3,895,670
Hobby, toys and games $ 2,280,048
General merchandise $ 57,921,730
Department stores (excluded: leased department) $ 27,858,429
Warehouse clubs & super stores $ 25,529,473
Florist $ 1,003,493
Office supplies, stationary gift stores $ 5,546,674
Gift, novelty, souvenirs $ 2,420,071

1
Source: Claritas

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DRAFT

Source: Claritas

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Total Population Expenditures / Spending Power of Maple Valley

The population of Maple Valley spent $572,071,437 2 in 2007. This is notably higher than
the $440,436,261 in total sales recorded by the retail stores in the City, suggesting an
economic leakage of $131,635,176 from Maple Valley to surrounding areas.

Trade Area Defined

Population of Trade Area

The Maple Valley trade area encompasses the towns of Hobart, Noble, Landsburg,
Mirrormont and other areas around the city (see trade area map for more details).
The total population of the trade area is estimated at 40,036, 3 including the population of
Maple Valley, which was estimated at 20,020 as of 2007.

Trade Area Average Households (HH)

The average household in Maple Valley trade area was estimated at 2.82 people in 2007.
This equates to approximately 14, 197 households.

2007 Trade Area Average HH


Population 40,036
Average HH Size 2.82
Number of HH 14,197.16
Source: Claritas

Median Age of Trade Area Population

The median age of the population of the trade area was estimated at 38.05 years as of
2007.

General Retail in Trade Area

In 2007, the retail trade area had total estimated retails of $709,619,409. 4 The total
amount generated by items sold in the trade area was considerably lower than the buying
power of the population ($923,980,394). There was a leakage of $214,360,985 in 2007.
Sales were distributed among several categories, from furniture to electronics to
groceries. Food and beverages, grocery stores and building material were among the
2
Source: Claritas, 2007
3
Source: Claritas, 2007 demographics
4
Source: Claritas, 2007

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DRAFT

main beneficiaries. Other categories such as Health& Beauty and Florists also benefited
from the buying power of the population.

The table below is a recapitulation of some of the main items that sold during the year
2007.

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Items Sold By Businesses in Trade Area Money Received from Sales


Furniture Stores & Home furnishing stores $ 23,523,439
Furniture stores $ 12,240,591
Home furnishing stores $ 11,282,848
Electronic and appliances stores $ 20,081,535
Appliance, T.V, electronic stores $ 15,368,184
Household appliance stores $ 3,366,866
Radio, television, electronic stores $ 12,001,318
Building material, garden equipment stores $ 99,624,087
Paint & wallpaper $ 2,354,774
Hardware stores $ 6,986,797
Lawn, garden equip, supplies store $ 8,601,773
Nursery & garden centers $ 7,303,995
Food and beverage stores $ 84,022,329
Grocery stores $ 75,914,763
Supermarkets, grocery stores $ 72,171,194
Beer, wine and liquor stores $ 5,551,370
Health and personal care stores $ 30,548,573
Pharmacy and drug stores $ 26,081,822
Cosmetics, beauty supplies, perfume $ 1,048,574
Optical goods $ 1,521,000
Clothing & Clothing Accessory Stores $ 39,121,758
Clothing stores $ 27,457,933
Children, infant, clothing stores $ 1,463,895
Shoe stores $ 5,252,009
Jewelry stores $ 5,931,626
Luggage & leather good stores $ 480,191
Sporting goods, hobby, books music $ 16,844,227
Sporting goods, hobby, musical instrument stores $ 6,232,761
Sporting goods stores $ 11,855,364
Hobby, toy, game shop $ 3,617,935
General Merchandise $ 93,057,024
Department stores (Excl Leased) $ 44,804,332
Warehouse clubs & superstores $ 40,938,518
Florists $ 1,632,830
Office supplies and stationary stores $ 8,929,314
Office supplies and stationary stores $ 5,033,126
Gift, novelty, souvenir shop $ 3,896,189
Source: Claritas

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DRAFT
Consumer Spending Power

In 2007, Maple Valley trade area consumers spent $923,980,3945, spread over many
different retail segments. Only $709,619,409 worth of items was sold in the Trade area in
2007.

The table below shows some the expenditures by trade-area residents. This list is not the
total expenditure of the residents of the trade area; it is a representation of some of the
most popular items purchased. Some items are shown with subcategories (e.g., Drugs).

Items Bought by Residents of Trade Area Amount Spent in 2007


Food At Home $ 101,368,018
Food Away from home $ 88,943,763
Food/ Nonalcoholic beverage at convenience stores $ 6,303,548
Food/Nonalcoholic Beverages At Grocery Store $ 96,762,415
Drugs $ 27,023,832
Non Prescription drugs $ 2,298,439
Vitamins & supplement $ 1,668,436
Prescription drugs $ 23,056,957
Eyeglasses $ 1,889,631
Topical & Dressings $ 404,009
Household furnishing & furniture $ 28,495,709
Heat/Air conditioning/ electric labor mat $ 2,257,640
Major Household Appliance $ 6,803,555
Miscellaneous household equipments $ 10,358,903
Personal care products $ 17,507,493
Pet Food $ 5,175,185
Pets Porch/ Supplies medicine $ 712,321
Small Appliances $ 14,773,505
Smoking product and supplies $ 10,392,064
Music Instruments $ 1,056,868
Sports equipments $ 18,467,150
General sport/ exercise equipment $ 3,870,154
Bicycle $ 1,107,452
Camping $ 482,724
Hunting, fishing equipment $ 658,639
Winter Sports $ 491,432
Other Sports $ 1,246,548
Water Sports $ 582,789
Playground equipments $ 733,486
Toys games hobbies tricycle $ 9,293,926
Total Apparel $ 87,117,968
TV, radio, & sound equipment $ 36,883,398
Source: Claritas

5
Source: Claritas

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DRAFT
Retail Supply and Demand in Maple Valley

Total retail sales in Maple Valley in 2007 were estimated at $163,880,538. The revenue
to local businesses of $163,880,538 was just about one-third of the demand of the local
population. The estimated demand for total retail in Maple Valley in 2007 was
$484,534,768.6 There was a considerable “leakage” of revenue to surrounding
communities. The only area where Maple Valley’s current businesses are able to meet
and exceed the demand is in the food and beverage sector where there is an excess of
$8,908,81. There is a shortfall in other retail trade categories, e.g., furniture, electronics,
sporting goods, food services and drinking places. There was a shortage of $23,221,689
for Clothing and Clothing Accessories in Maple Valley. This resulted in a significant loss
in revenue for the City. Similar shortages of supply exist in several other areas:
Electronic And Appliance Stores ($9,362,064), general merchandise store ($54,868,334),
Gafo7 ($111,458,187). Overall, the retail gap in Maple Valley (excluding motor vehicle
& part dealers and gasoline stations) is estimated at $312,149,799.

6
Source: Claritas
7
GAFO (General merchandise, Apparel, Furniture and Other) represents sales at stores that sell merchandise normally sold in
department stores. This category is not included in Total Retail Sales Including Eating and Drinking Places

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Retail Supply and Demand in Maple Valley

Supply Demand
Maple Valley Line of Items Sold in 2007 (Retail (Consumer Surplus/ Percentage
(NAICS) Sales) Expenditures) (Deficit) 2007 of Market
Furniture and Home Furnishings Stores- $ $
442 587,855 $ 14,460,321 (13,872,466) 4%
$ $
Electronics and Appliance Stores-443 3,125,683 $ 12,487,747 (9,362,064) 25%
Building Material, Garden Equip Stores $ $
-444 32,304,060 $ 61,369,713 (29,065,653) 53%
$ $
Food and Beverage Stores-445 61,395,380 $ 52,486,489 8,908,891 117%
$ $
Health and Personal Care Stores-446 5,435,360 $ 18,673,554 (13,238,194) 29%
Clothing and Clothing Accessories Stores- $ $
448 1,125,816 $ 24,347,505 (23,221,689) 5%
Sporting Goods, Hobby, Book, Music $ $
Stores-451 5,515,007 $ 10,567,050 (5,052,043) 52%
$ $
General Merchandise Stores-452 3,053,396 $ 57,921,730 (54,868,334) 5%
$ $
Miscellaneous Store Retailers-453 4,975,323 $ 13,567,778 (8,592,455) 37%
$ $
Non-Store Retailers-454 - $ 29,480,507 (29,480,507) 0%
$ $
Foodservice and Drinking Places-722 21,251,409 $ 44,098,507 (22,847,098) 48%
$ $
GAFO* 13,872,840 $ 125,331,027 (111,458,187) 11%
$ $
Total Retail Sales(No Auto & Gas) 152,642,129 $ 464,791,928 (312,149,799)
Source: Claritas

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Retail Supply in Maple Valley and Demand in Trade Area

Current suppliers in Maple Valley have captured variable shares of total retail purchases
in the Maple Valley Trade Area. Maple Valley grocers account for 73% of total area
grocery purchases. By contrast, local furniture and home furnishing stores account for
2% of the total sales in the trade area.

Maple Valley Supply & Trade Area Trade Area Percentage


Demand (NAICS) Supply Maple Valley Demand of Market
$
Furniture and Home Furnishings Stores-442 $587,855 27,023,832 2%
$
Electronics and Appliance Stores-443 $ 3,125,683 20,081,535 16%
$
Building Material, Garden Equip Stores -444 $ 32,304,060 99,624,087 32%
$
Food and Beverage Stores-445 $61,395,380 84,022,329 73%
$
Health and Personal Care Stores-446 $5,435,360 30,548,573 18%
Clothing and Clothing Accessories Stores- $
448 $1,125,816 39,121,758 3%
Sporting Goods, Hobby, Book, Music $
Stores-451 $5,515,007 16,844,227 33%
$
General Merchandise Stores-452 $ 3,053,396 93,057,024 3%

Source: Claritas

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City of Maple Valley Tax


Calculation

Tax Rate
Sales tax to
city rate
State 6.5000%
Metro 0.7000% 255761.13
Public Transportation $
Benefit District 0.2000% 92,600,000.00 0.276%
Regional Transit tax from fred
Authority 0.0000% $258,445.79 meyer sheet
State Administration 0.0085% 0.279% tax rate then is
County 0.1500%
sq ft for fred cost of
Total Non City Tax 7.5585% 175,000 meyer constr $95
sq ft for other cost of
70,000 store constr $89
City Base Tax 0.8415%
City Base On
Population 0.1000%
City Total 0.9415% 2.79%
1,02 sft foot for all
0,000.00 location
Total Sales Taxes 8.5000% $7.50 per sqt foot
Inital Construction
Initial Construction Construction Percent of Sale Sales Tax to
Sales Tax Dollar Tax City

$ $
Fred Meyer 30,285,000.00 0.8415% 254,848.28
Anciliary Retail $ $
Building 7,598,369.97 0.8415% 63,940.28
Total land acquisition $ $
cost 7,650,000 0.8415% 64,375
$
construction tax only 318,788.56
Total-Construction
Sales Tax to City $
construction 383,163.31

Gross Sales Total Sales Tax Percent Sales Sales Tax to


First Year Sales Tax Dollars Payable Tax to City City

$ $ $
Fred Meyer 92,600,000.00 258,445.79 0.8415% 255,761.13
Anciliary Retail $ $ $
Building 6,230,000.00 529,550.00 0.8415% 17,207.26
$
T 272,968.39
3% year 2
Gross Sales Total Sales Tax Percent Sales Sales Tax to
Dollars Payable Tax to City City
$ $ $

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CEO Page 24 of 64
Kevin Koutou - Research Analyst
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95,378,000.00 266,199.16 263,433.96
$ $ $
6,416,900.00 545,436.50 17,723.47
$
281,157.44
Gross Sales Total Sales Tax Percent Sales Sales Tax to
3% year 3 Dollars Payable Tax to City City
$ $ $
98,239,340.00 274,185.14 271,336.98
$ $ $
6,609,407.00 561,799.60 18,255.18
$ $ $
104,848,747.00 835,984.73 289,592.16

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Univariate Analysis

DEMOGRAPHICS

Residence of Respondents

A total of 250 people were surveyed for this research project. Of this number, 152 people
(60.1%) live in Maple Valley, 82 people (32.4%) live in Renton, 10 people (4.0%) live in
Ravensdale, and the remainder live in Covington, Issaquah, Kent, and Newcastle.

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Respondents by Zip Code

A majority of total participants (57.8%) live in zip code 98038; another 19.9% live in zip
code 98058, and 12.4% live in zip code 98059.

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Respondents by Age

The median age for survey respondents is 52. All of the respondents were born between
1922 and 1990. A more detailed distribution of survey respondents by age group is
shown below.

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Family Status and Gender of Respondents

A total of 42.3% is married without dependent children; another 41.5% is married with
dependent children. Singles without dependent children account for 9.5% of respondents,
while singles with dependent children account for 4.3%. Two thirds of the survey
participants are women.

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Household Income

Nearly 45% of the survey participants have annual household income above $95,000, and
a nearly equal percentage - 43.4%- has annual household income of $50,000 to $95,000.

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Overall Perception of Fred Meyer

When asked to rate their overall perception of Fred Meyer on a scale of 0 to 10, with 10
being the most positive, the average rating among all respondents was 7.46, with a
standard deviation of 1.76. A total of 57.2% gave Fred Meyer an overall rating of 8 or
higher. Another 40% gave the company a rating of 4 to 7..

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Perception with Respect to Price

When asked to rate their overall perception of Fred Meyer with respect to price, using a
scale of 0 to 10 with 10 being the most positive, respondents gave Fred Meyer an average
rating of 7.00, with a standard deviation of 1.66. A total of 42.3% gave Fred Meyer a
rating of 8 or higher, and another 54.8% gave the company a rating between 4 and 7.

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Perception with Respect to Quality

Respondents gave Fred Meyer an average rating of 7.29 with respect to quality, with a
standard deviation of 1.58. Over half (50.4%) gave the company a rating of 8 or better.

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Perception with Respect to Selection

Respondents gave Fred Meyer an average rating of 7.76 with respect to selection of
brands, sizes, etc., with a standard deviation of 1.57, and an impressive 62.1% gave the
company a rating of 8 or better.

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Perception with Respect to Service

When asked to rate their overall perception of Fred Meyer with respect to service, again
using a scale of 0 to 10 with 10 being the most positive, respondents gave Fred Meyer an
average rating of 6.89, with a standard deviation of 1.996. A total of 40.9% gave Fred
Meyer a rating of 8 or higher, and another 53.4% gave the company a rating between 4
and 7.

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Kevin Koutou - Research Analyst
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Perception with Respect to Convenience

Respondents gave Fred Meyer an average rating of 7.34 with respect to convenience,
with a standard deviation of 1.83. Over half (52.8%) gave the company a rating of 8 or
better, while another 43.5% gave a rating of 4 to 7.

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Kevin Koutou - Research Analyst
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Fred Meyer as a One-Stop Shop

The company scored an average rating of 8.07 among respondents as a one-stop shop,
with a standard deviation of 1.77, and 71% of the respondents gave a rating of 8 or better.

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Kevin Koutou - Research Analyst
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Frequency of Shopping at Fred Meyer

Nearly half of the survey respondents (49%) said that they had shopped at Fred Meyer
more than five times during the past three months. Another quarter (25.3%) had shopped
at Fred Meyer from three to five times during the same period.

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Kevin Koutou - Research Analyst
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Products Purchased at Fred Meyer

Survey respondents were asked to indicate the types of products they had purchased at
Fred Meyer in the past three months, with multiple responses allowed. The leading
product categories were Groceries (87.7%), Clothing (64.7%), Lawn / Garden / Nursery
(63%), Health & Beauty (59.2%), and Home Accessories (55.8%).

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Kevin Koutou - Research Analyst
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Amount Spent Per Visit

On average, respondents spent $72.99 per visit to Fred Meyer, with a standard deviation
of $53.21. The median amount spent per visit was $75, while the mode was $50.

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Visits to a New Store in Maple Valley

Nearly 40% of respondents said they would shop at a new Fred Meyer Store in Maple
Valley once or more than once per week, but 22% of respondents said they would not
make use of a new Fred Meyer store in Maple Valley.

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Likelihood of Specific Purchases at a New Fred Meyer Store

Using a scale of 0 to 10 with 0 being the least likely and 10 being the most likely,
respondents were asked to rate their likelihood of purchasing the following types of
products at a new Fred Meyer store in Maple Valley.

A. Groceries
B. Clothing
C. Pharmacy
D. Health / Beauty
E. Home Accessories
F. Kitchen Supplies / Appliances
G. Bed & Bath
H. Hardware
I. Lawn / Garden / Nursery
J. Sporting Goods
K. Electronics
L. Music CDs, Movie DVDs, Computer Games
M. Jewelry
N. Flowers / Gifts
O. Automotive
P. Children’s Toys and Games

Charts reflecting their responses are provided on the following pages.

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Amount Spent Per Visit in New Maple Valley Fred Meyer

Respondents said they would spend an average of $63.33 per visit to a new Fred Meyer
in Maple Valley (standard deviation: $55.07), with a median expenditure of $50. As
noted previously, nearly 22% of respondents said they would not make use of a new Fred
Meyer store in Maple Valley.

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CEO Page 60 of 64
Kevin Koutou - Research Analyst
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Improvement to the Community

Using a scale of 0 to 10 with 10 being the most positive rating, survey participants were
asked whether a new Fred Meyer store in Maple Valley would be an improvement to the
community. Participants responded with an average rating of 6.32 (standard deviation:
3.57). Nearly half (48.9%) gave a rating of 8 or higher, and another 29.4% gave a rating
of 4 to 7.

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Fuel Prices and Shopping Patterns

Over 70% of respondents said that rising fuel prices would lead them to change their
shopping patterns. Nearly 55% said that rising fuel prices would cause them to shop
closer to home, 33% said that rising fuel prices would cause them to consolidate
shopping trips, and 23% expect to do more one-stop shopping.

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