Purchasing Power & Centrality

Annotations
Data for 2013, extrapolation bulwiengesa
Current data published by MB-Research was revised due to the Census 2011 population figures and is now based on annual average population data. As a result this data cannot be compared to previous publications. As at September 2013 there is only base purchasing power data (no retail related or retail spending data). Therefore data published in RIWIS, at the moment, is an extrapolation by bulwiengesa based on the new MB-Research data. As soon as we have additional data this will be published in RIWIS.

Data 2005-2012
The data from MB-Research starts at 2005, any data before 2005 is based on calculations by bulwiengesa using the disposable income figrues of the National Accounts Group (VGRdL). As the methodology of both sources differs, data before 2005 can only be taken as rough estimations indicating trends compared to the more current figures.

Definition:
Purchasing Power
Most common are three different values describing the purchasing power of a region. Firstly the Purchasing Power Index which gives information on the level compared to Germany, as it is an index with average purchasing power set to 100.
Secondly the Purchasing Power per Capita, given in Euro. This is more or less the disposable income, not restricted to retail orientated spending, and also includes spending on housing, vacation, savings, etc.
Thirdly there is purchasing power as a share of Germany, this is simply the total absolute purchasing power of a region as share of the total purchasing power of Germany (per thousand).

Retail-Related Purchasing Power, Retail Spending
The retail-related purchasing power is the part of the purchasing power or disposable income, which can be spent in retail.

Centrality The Centrality is calculated by dividing the retail sales index with the retail-related purchasing power index and multiply it with 100.
A Centrality Index of 100 and more indicates that people from outside a region spend their money in this region (high centrality) whereas a index of below 100 indicates the contrary.

Definition from MB Research:

Purchasing Power Indices are a suitable indicator for the distribution of all products and services, whose demand depends largely on consumers' incomes. Sales figures of items like consumer goods, durable goods, personal services or homes are to a large extent a function of purchasing power. So Purchasing Power Indices are used as a broad indicator for regional market calculation by consumer goods manufacturers, retailers, banks, insurance companies, saving banks and consumer-oriented service providers.

Purchasing Power refers to disposable incomes of households (i.e. income after taxes and social contributions, including received transfer payments) of a certain region. Consequently the following items are taken into account in calculating Purchasing Power Indices:

• Net incomes from employment and assets (after taxes and social contributions)
• Pensions
• Unemployment benefits, benefit payments and other transfer payments

Purchasing Power Indices are computed as current year forecasts. For this purpose income projections are carried out with the help of macro economic data and statistic indicators for regions. The Purchasing Power for Germany in total is carried out on the basis of the economic experts' report "Frühjahrsgutachten" in April each year.

MB-Research develops an updating of the previous years values of Population and Purchasing Power.

Retail Spending relates to the proportion of Purchasing Power of a certain area's population that is available for spending in retail; it is measured at the consumers' place of residence. In assessing potential demand of consumers for products, demand is not only determined by purchasing power. A high proportion of the purchasing power is also used for savings, expenditures for services, accommodation, energy and mobility.

Retail Spending figures restrict the amount of purchasing power on expenditures in the retail sector (including mail order expenditures).

As a general rule, areas with high proportions of higher income groups spend in absolute figures more for retail trade than poorer regions, but in relation to their income they spend in most cases a lower share of their income, since they have a substantial amount left for other purposes like savings and nonretail related expenditures.

Retail Turnover measures the turnover of local retail trade. In comparison to Purchasing Power and Retail Spending it is measured at the Point of Sale and quantifies the purchases at the consumers' place of expenditure (instead of the consumers' place of residence). The calculation of the Retail Turnover figures are based on the turnover of the stationary retail trade inclusive bakeries, confectioneries and butcheries. Mail order expenditures and retail with motorcars, motor bicycles as well as retail in petrol stations is not taken into account. Calculating the Retail Spending by definition the turnover concerning the stationary retail and the mail order valued at endusers' prices is taken as a basis. Calculating the Retail Turnover by definition the mail order is not taken into account. Therefore the sum in million Euro concerning the Retail Spending is higher than the sum in million Euro concerning the Retail Turnover. The calculation of the Retail Turnover is carried out on the basis of expert's reports and a number of current official statistics, Desk Research and special retail databases.

Centrality Index is the ratio between Retail Turnover Index and Retail Spending Index multiplied by 100. It describes the ability of an area to pin the Retail Spending of its population and of other areas' population down to the local retail trade. Cities having a great shopping appeal show a Centrality Index of more than 100, because they tie more Retail Spending of surrounding areas to themselves than they emit to those areas.

Data:
annual sum