Richmond, Virginia

Target Cluster Analysis

The Greater Richmond Partnership (GRP), a strong public-private partnership representing the City of Richmond and Chesterfield, Hanover, and Henrico counties, has been successful in increasing the economic development of the area since the Partnership’s formation in 1994. However, like all high-performing organizations, the Greater Richmond Partnership continually evaluates its effectiveness and proactively looks for ways to improve results.

In 2004, Market Street partnered with the Greater Richmond Partnership (GRP) to conduct a Competitive Assessment, Target Cluster Analysis, and to develop a business retention program, which has evolved into a world class program known as Business First. The Greater Richmond Partnership has had notable success in business retention and expansion through the Business First program, and gained the capacity to adjust seamlessly to the changing needs of the economy whether by strengthening regional partnerships or updating the research needed to inform target business strategies. From 2005 to 2008, Greater Richmond gained half of its net new jobs from existing business expansions within the region. These net jobs were from small businesses (firms with less than 100 employees), which added 24,609 jobs during the three year period.

 

In the six years since this collaboration, there have been drastic changes to the local, national, and global economies. More than simply a downturn in the economy, the Great Recession reflects a restructuring of our economy and the way that communities of all sizes position themselves to succeed in an even more competitive economic landscape.

In 2011, in a changed national and regional economic landscape, the Partnership again sought to reassess their economic development target clusters. The focus of this effort was threefold:

1. To validate and refine GRP’s existing targets in a way that clearly identifies the best way to focus efforts in the post-Great Recession economy.
2. Ensure that the strength of GRP’s Business First program is leveraged to the full extent in the recommended action items.
3. Ensure that target recommendations are closely tied to workforce skills and that targets and action items are informed by what educational institutions can and should be providing.

The process began with a Competitive Snapshot which served as a precursor report informing the Target Cluster Analysis of diverse critical data indicators about the Greater Richmond’s assets and challenges. Extensive qualitative input from GRP staff, volunteer leaders, and critical stakeholders supplemented the quantitative analysis. The one-on-one interviews and an online survey found that while business leaders were very satisfied with the quality of life, well-educated and skilled workforce, the incredible growth and innovation of Virginia Commonwealth University, and business climate in Greater Richmond and Virginia, challenges such as the need for a more diversified business base and getting the word out about Richmond’s strengths still persisted.

A two-phase Target Cluster Analysis was the cornerstone of the process. Market Street identified five target clusters and corresponding niches of competitive opportunities for GRP to focus its marketing and recruitment, existing business, and talent development efforts. Aligning and streamlining GRP’s existing targets and adding new specialized niches, the proposed target clusters were Supply Chain Management, Advanced Manufacturing, Finance and Insurance, Professional and Creative Services, and Health and Life Sciences. These targets build off historic economic drivers of the region – including manufacturing and banking – and newer clusters, such as advertising and energy technology, to expand GRP’s focus into the research and development, innovation, talent development, small business and entrepreneurship, and cross-cluster opportunities of existing and emerging targets and niches.

The final Target Cluster Analysis took a “bottom-up” approach to target cluster and niche identification, examining the attributes of Greater Richmond’s competitive talent pipeline – the occupations, skill sets, and types of knowledge that support the region’s business activities – rather than beginning with an examination of the region’s business activities. It is Greater Richmond’s competitive advantages with respect to its talent base and quality of place factors that will support the development and continued growth of its target sectors. The last component of the process was an Action Agenda which outlined key strategic activities related to cluster development and target growth for the short- and mid-term future in Greater Richmond. These efforts will be led not just by the Greater Richmond Partnership but also by local governments, universities and colleges, workforce development resources, business incubators, and other key partners playing critical roles in the future and advancement of Greater Richmond.

In June 2011, the Greater Richmond Partnership announced the location of Emerson Ecologics, a professional-grade nutritional supplement distribution center, to Chesterfield County, adding 35 immediate jobs to the region. This win leverages the cross-cluster implications of the Target Cluster Analysis’ Supply Chain Management and Health and Life Sciences targets. In August, Fareva, a privately-held international contract manufacturing firm announced its acquisition of a regional Pfizer plant, which will add 90 jobs to the Greater Richmond area. A strong example of the regional collaborations that increase Greater Richmond's competitiveness was the recent expansion of Ironworks, a technology consulting firm.  GRP regional partner Henrico County Economic Development Authority worked with Ironworks to ensure that the company would be able to announce its plans to add 34,000 square feet of office space (a $20 million investment) and hire 300 employees over a three year period.