Strategy to Action: Creating a Plan

By Jeff Campbell, Director of Marketing and Business Development Carlsbad Department of Development

Planning in economic development requires sound strategy. Many factors play a role in determining which businesses are recruited and how efforts are directed to maximize results. What often goes unnoticed are the many tools used behind the scenes to formulate strategies that can be carried out through actionable plans.

Focusing on Recruitment

People often look around Carlsbad and wonder why certain businesses are not here. There are several reasons for that, and we’ll explore some key ones below.

Population: The official US Census released in 2020 reported Carlsbad’s population at 32,264. The Carlsbad Department of Development (CDOD) took that analysis a step further by reviewing census tract data, which indicated a population of just over 43,000.

This data leads to two important takeaways. First, anyone living or working in the market can see that there are well over 43,000 people here on any given day. Second, it raises the question: how did the census arrive at such a low number?

Several factors contributed to the undercount. The 2020 US Census began at the same time the COVID-19 pandemic hit the world. In Carlsbad, that meant census efforts were paused while agencies figured out how to operate in the pandemic. Perhaps more importantly, many members of our workforce temporarily left the area and returned to their home communities. When census counting resumed, significantly fewer people were physically present, resulting in a much lower official count.

Another major factor was non-response. People who do not complete the census, whether by accident or by choice, directly impact growth efforts. Many companies rely heavily on census data when evaluating new markets, and inaccurate counts can make communities appear less viable than they truly are.

One way the CDOD overcomes these limitations is to use alternative data sources to paint a more accurate picture of Carlsbad’s true population. Methods used include traffic counts, water usage data, and geo-fencing numbers. Some Carlsbad intersections see daily traffic counts of 50,000 vehicles or more, well above the official census population. Water usage data indicates an average daily population between 88,000 and 92,000 people. Geo-fencing data, which tracks app usage on cell phones, shows counts nearing 56,000 on average. While none of these methods are exact, every one of them reflects a population significantly higher than what the census reported.

Franchise vs. Corporate: More often than not, many businesses operate under a franchise-based model. A franchise is a business structure in which a franchisee pays a franchisor for the right to use its brand, business processes, and proprietary knowledge to do business under the franchisor’s name. For example, HTeaO in Carlsbad is not a corporately owned location, it is operated by a franchisee. Franchisees typically control a defined territory, which may span multiple cities and across states. If there is no franchisee willing or able to invest in a particular market, that business often will not locate in our market until one emerges and takes ownership.

On the other hand, businesses like Wal-Mart and Albertson’s fall under corporate ownership, wherein decisions about new locations are made directly by the company itself.

Recruiting franchise-based businesses is often easier than recruiting corporate locations but both present their own challenges. Corporations evaluate many factors, such as population, income levels, demographics, household counts and more. Even if Carlsbad meets the population threshold, every other metric must also align and even then, there is no guarantee. Companies follow their own growth strategies, and if our market doesn’t fit their plans, the project won’t move forward.

Trade Routes, Tourism and Opportunity: When recruiting a business, CDOD develops maps showing Carlsbad’s location relative to a company’s existing location(s), as well as interstates and highways. This helps demonstrate trade routes and logistics advantages for inventory and supply chains.

Carlsbad receives more than 500,000 visitors annually, primarily due to the Carlsbad Caverns National Park, along with nearby attractions such as the Guadalupe Mountains, Brantley Lake, and the Living Desert Zoo. While these visitors are not permanent residents, they do represent significant spending. A recent National Park Service study showed that visitors to Carlsbad Caverns spent $35.7 million in communities near the park, supporting more than 350 local jobs and generating a total economic benefit of $38.5 million. These figures are critical in showing site selectors the value of Carlsbad from a tourism standpoint.

Finally, CDOD uses third party retail data analytics to identify opportunity gaps in the local economy. These studies show how much money Carlsbad residents spend outside of Carlsbad in various categories, such as clothing, entertainment, and dining out. Once those gaps are identified, recruitment strategies are developed to target businesses that can capture that spending locally.

Economic development is a practice. Recruiting businesses is not an exact science. Many variables influence outcomes, and the importance of each factor can shift based on external forces such as national economic conditions and corporate strategies. CDOD continuously monitors these factors and works to position Carlsbad as a competitive, informed, and opportunity-ready market.