Six months into a year-long partnership with an analytics company, the city of Mitchell and four of its organizations are preparing to share results with local businesses.
The $65,000 partnership with Buxton, a company that analyzes data collected from credit and debit cards, aims to identify consumer spending habits and how businesses can change to bring more people into Mitchell and ensure that the people who live there aren't going elsewhere for goods and services.
According to City Administrator Stephanie Ellwein, many of South Dakota's other first-class municipalities, defined as cities that have populations of at least 5,000, have conducted similar studies in the past.
"Normally, cities really focus on what happens within their city limits, but we know Mitchell's unique in that, even if you look at the amount of sales tax that the city brings in, it would be representative of a city that's much larger than we are," Ellwein said.
Buxton only recently began to provide its findings, and now, a number of presentations will be given about the information gathered by Buxton and how businesses can use it. The first of these will be held at 8 a.m. on Dec. 11 in the Sherman Center on the Dakota Wesleyan University campus, and while the event is open to the public, the participating organizations are in the process of inviting any interested businesses to attend.
"Some businesses maybe are OK with the way they're doing stuff, and they just want to hear the information to confirm that they're on the right business plan," said Sonya Moller, director of the Mitchell Area Chamber of Commerce. "It also can be utilized for someone who is looking to maybe expand their business, or they need to diversify within their business. So the information can help answer some of those questions for them."
Ellwein said having the study done was imperative because being able to boost sales at local businesses would increase sales tax, which funds 73 percent of Mitchell's general fund: the funding for a large part of the city's operations, including emergency services and roads.
"It's extremely important, because that's how we fund what we do," Ellwein said.
While most of Buxton's findings will not be released until the presentations begin in December, Ellwein said that Mitchell's trade area is larger than anticipated.
When businesses get access to Buxton's services, they'll be using an app called LSMx - "LSM" stands for "Local Store Marketing." Moller said a few local businesses have been beta testing the apps and will likely speak to their experience during the upcoming presentations.
"It will walk them through the process that they need to help get their information out to their targeted customers, based on their spend habits that Buxton knows based on all of the data that they collect nationwide on who the typical consumer is for certain brands," Ellwein said.
Buxton's analysis is done using data collected from credit and debit cards. When a card is used to make a purchase, the information stored on the magnetic strip or chip on it is picked up. Buxton compares the collected data in a particular area with the data it already has to do the analysis, which it then provides to its customers. The data Buxton is now providing to Mitchell goes back one calendar year, and the data will continue to be updated for businesses to use.
"They know our consumer buying habits down to crazy detail, just based on what my demographics are and how I spend my money using whatever card provider that they use, all of the electronic card transactions. So it's a little bit unnerving," Ellwein said. "If you don't want people to track you, I guess you have to pay with cash for everything. It's the only way you can stay out of the database system."
The partnership with Buxton provides analysis of information collected from credit and debit cards, but not the information itself. The city, Mitchell organizations and businesses will be able to see aggregate data, such as what percentage of people who live in Mitchell tend to shop at a particular business. They won't be able to see information about individuals.
"We only know consumer trends and psychographics," Moller said. "So, I don't know that you purchased Nike shoes at Harve's last week, Friday. We don't know that. We only know the psychographic and consumer spending habits of the group as a whole, not drilled down specifics."
According to Ellwein, the data collected from Mitchell businesses is used by Buxton not just for communities trying to expand businesses, but also for retailers. Now that Mitchell has partnered with Buxton, the city's data can be used for analysis provided to any company that also partners with Buxton.
However, Mitchell's partnership is aimed solely at increasing the city's economy, for the benefit of both local businesses and the city government.
"For me, the key is that we really got a better idea of where our trade area is, and we now have access to resources for businesses so they can expand and retain that sale that they're already doing," Ellwein said.
A group effort
Of the partnership's $65,000 total cost, $50,000 was for a retail study. Half of that amount was paid for by the city, with the other $25,000 split among the Mitchell Area Chamber of Commerce, the Mitchell Area Development Corporation and Mitchell Main Street and Beyond. The additional $15,000 went toward a study on visitor data and was paid for entirely by the Mitchell Convention and Visitors Bureau.
"We also know that people are getting off the interstate to come in to the Corn Palace. So we knew we had a trade area that goes outside of our city limits, but we really didn't have anything concrete showing where that was coming from," Ellwein said. "So the CVB funding that visitor analysis gave us a better idea, outside of our municipality, where people are coming (from) that are spending money here."
The Mitchell City Council told Ellwein that it would approve $25,000 in funding if she could get area organizations to agree to pitching in on the rest of the bill.
"We brought in members from our prospective boards," Ellwein said. "They heard the proposals from the different vendors that we had, and they made the recommendation that we work with Buxton. They brought those proposals back to the respective boards. They all voted on it and decided to form a partnership."
Between 30 and 40 people, ranging from owners of businesses of various sizes, people who work in education and other community members, participated in the selection committee in total.
"We wanted to have a good cross section of Mitchell," said Moller.
Moller said that when the chamber was considering working with the city to fund the Buxton project, members were interested in being able to see which products people are buying in Mitchell and which they are going elsewhere to purchase. She said that with that information, the chamber can recommend that businesses carry certain products to keep business within Mitchell as much as possible.
"Our board felt that that was really a good use of the partnership in growing Mitchell, as well as growing our retail reach for those people who live in our communities around us," Moller said. "We want to remain their retail and shopping hub."
With enough local groups on board to fund it, the council approved the project in March, and the partnership between Buxton, the city and the various organizations involved began in May. The partnership will last through May of next year, and Ellwein said that if all goes well and it appears that Mitchell businesses are using and benefiting from the information and tools provided by Buxton, the partnership can be renewed for up to two additional years.