1. Supermarket Evaluation for the Town of Edenton, NC

2. Who Am I 30+ year veteran of sales analysis for the retail industry. BS and MBA from Northern Michigan University Analyst for Howard L. Green & Associates – A top consulting firm specializing in Shopping Center Evaluations (1986-1990) Analyst and Department Manager for BI-LO Supermarkets, Greenville, SC (1991-2008) Established Kevin R Anderson, Consulting in 2009 as an independent consulting firm specializing in Grocery, Convenience and Fuel Stores location research.

3. Introduction The evaluation was approached as a two phased process. Phase I: Is there enough potential for a second grocery/supermarket in the Edenton/Chowan County area? Phase II: If the potential is great enough for a second supermarket, what is its potential sales for the most optimal location?

4. Phase I: Study Area Study Area definition is the first step in determining the market potential for an area. For Edenton/Chowan County we determined the Study Area by: – Observing travel patterns of the population (i.e. to work, shop, school, etc.). – Locate any potential suppliers of Grocery/Supermarkets that could affect the Study Area. There is usually a cutoff for size in our case > 5,000 Total Square Feet, and within the grocery channel. – Physical barriers that limit travel and overall travel distances.

5. Map of the Projected Study Area

6. Phase I: Population Estimates Population estimates for the Study Area. – Population is relatively easy to obtain from the Census and outside vendors. Population for Chowan County is 14,784. Western portion of Perquimans County is 7,300. Total Study Area Population is 22,084. Once population is established we can estimate the Per Capita Weekly expenditure potential (referred to as PCW).

7. Phase I: PCW Per Capita Weekly [PCW] is the estimated consumption per person of supermarket type merchandise. – Not only consumables but also non-consumables Example of consumables – Produce, Meat, Deli, Bakery, Dry/Unrefrigerated Grocery, Dairy and Frozen Foods Non-consumable examples – Cleaning supplies, General Merchandise, Paper Products, and Pet Food. – Some fluctuation in PCW is found with Household Size, Income, and Racial Characteristics. This data is derived from the Consumer Expenditure Survey sent out by the Bureau of Labor and Statistics. Once PCW is determined we simply multiply by population to get our estimates of POTENTIAL.

8. Phase I: PCW Demographics Demographics needed for PCW calculation The overall median age of 46 is significantly older than the nation and the State of North Carolina both with median age of 37 years. PCWAfrican Am AsianHispanic Origin Persons Per Household % Inc. <$35K % Inc. >$100K Median HHI Chowan County $50.1734%0.4%3.3%2.4150%7%$33,800 Perquimans County $50.6128%0.3%3.0%2.3659%4%$31,000 Study Area$50.3231%0.3%3.0%2.3853%6%$32,400

9. Phase I: Potential Determination Overall WEEKLY Supermarket Merchandise Expenditure Potential for the Study Area is: $1,111,209. – Chowan County estimate: $658,614. – Study Area portion of Perquimans County Estimate: $452,595 We estimate that of the Chowan County estimated $755,354 potential, about 50% is spent at non-channel operations or in other cities. Given this, we felt during Phase I there were indeed enough potential for another supermarket.

10. Phase II: Evaluate the Competition

11. Determining Potential Locations Concurrent with the competitive evaluations we looked at the road patterns, traffic and overall population density to determine the best possible new supermarket opportunities. After thoroughly driving the area we identified the most likely candidates. After our initial analysis we determined that two sites had the best chance in being selected by a retailer for a supermarket.

12. Site #3000: Virginia Ave & USHY 17 Well located by USHY 17 which aids in access throughout the Study Area traffic counts of 9,600. Virginia Avenue gives good access to the population centers within Edenton traffic counts of 11,000. Already zoned and approved for a shopping center. Near an area of existing retail. 52 acre development by Wheler Real Estate Company called the Edenton Commons. Overall good visibility and accessibility make this a site that a retailer would find attractive.

13. Map Key 3001: Virginia Rd and Broad St Virginia Road has strong traffic counts at this location with 11,000 vehicles per day. Broad Street is the main route into Edenton with traffic counts of 7,888 vehicles per day. Actually an assemblage of three properties for a total of 5 acres. Gets cut off by Food Lion on Virginia Road from population from the north, east and west traveling on USHY 17. Limited ingress/ egress from Virginia Road. All access will come from Broad St and W. Hicks St.

14. Assumed Supermarket Attributes Perishable Departments Targeted selection of locally sourced produce and meats. Have an outstanding meat selection especially in pork, chicken and meat. Organics are not necessary but should have some offering if grown locally. Good offering in frozen and dairy foods. Deli and Bakery area have a hot food bar with meat and 3 deals along with the Bakery offering special occasion desserts. Grocery Department Good selection of national brands along with a quality private label. Limited selection of international foods with a focus on foods. The grocery department should also offer good selection of pet foods, cleaning supplies, paper products, but a limited amount of general merchandise. Beer and Wine departments with a focus on lower price points and NASCAR varieties but still offer finer vintages and craft/import beer.

15. How the Sales Forecast was Derived Used an industry standard forecasting tool called Sites:Plus. – This is what is called a spatial interaction model. This modeling has population sectors (through a centroid) and relevant characteristics such as population and PCW and demographics. Also supermarket locations are in the model with their relevant characteristics (location, size, volume, and percent explained from the Study Area). Barriers to travel are also in the model (interstate highways, rivers, cemeteries, etc.). – Once the model is calibrated, we forecast for competitive change, and then we forecast for our potential locations. – Following Table illustrates our potential sales forecast at the specified locations for various operators of supermarkets.

16. Sales Forecast Summary Proposed Supermarket Edenton, NC Map Key Scenario AWV Year 1 (1,000) AWV Year 2 (1,000) AWV Year 3 (1,000) AWV Year 4 (1,000) AWV Year 5 (1,000) 3000 IGA or PIGGLY WIGGLY or other Independent at Virginia Rd and USHY 17 at 30,000 Total Sq. Ft. $170.0$187.2$193.0$205.3$211.0 3000.1 Wal*Mart Neighborhood Market at Virginia Rd and USHY 17 at 42,000 Total Square Feet $259.7$283.0$291.7$308.8$316.7 3001 IGA or PIGGLY WIGGLY or other Independent Supermarket at N. Broad St and Virginia Rd. at 30,000 Total Square Feet. $153.3$168.9$174.1$185.4$190.4 Note these sales forecast do not include Pharmacy or Fuel Sales.

17. The projected sales forecast compare favorably when compared to the Independent supermarket averages. With a first year forecast of $170,000 per week 31% higher than the average IGA sales, 17% higher than the Piggly Wiggly and 43% higher than the unbranded independent in the database. This makes for an attractive location to an independent operator.

18. Summary There is enough potential for another supermarket in Edenton, NC/Chowan County. Of all the vacant properties reviewed the Wheeler Properties location (Edenton Commons) and Virginia Rd and N. Broad St show the most promise. Either an independent (such as Piggly Wiggly, IGA or similar) or Wal*Mart Neighborhood Mkt would be the most likely to want to locate in Edenton/Chowan County.