Back of the envelope calculations (2) 32 households

32vivs-1

In 2012 each Spaniard spent on average 1.585 euros in food and non-alcoholic beverages, according to INE’s statistics on household expenditure. The average expenditure by household was 4.060 euros. So each week there was an average expenditure of 78 euros. These figures are a national average, taking into account central Madrid and the last rural hamlet, so computing a wide array of costs and expenditure capacity.
According to data from the realtor idealista.com, there is in Madrid a certain amount of retail spaces to be let at about 5€/sq m, usually in peripheral areas with low- middle-income families.
Taking as a criteria that the rent would be equivalent to 5% of sales, a 100 sq m space with a 5€/sq m monthly rent should sell 10.000 € each month; i.e., it should have 32 households spending their whole food budget each week if you want to be in the food segment.
Those figures must be fine-tuned taking into account location, client conditions, retail strategy or shop format. But they are clearly indicating why retail concentrates, and why it would not be realistic to expect large shop numbers in low density urban areas (but for big-box retail). So density matters a lot.

The full picture: density helps

The full picture: density helps

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