1. Trading-Area
Analysis
Chapter 9

2. Objectives
To Demonstrate Importance of Store Location
To Discuss the Concept of Trading Area
To Show How Trading Areas Can Be Delineated
To Examine Factors in Trading Area Analysis

3. Location
Good Location CAN Overcome Mediocre Strategy Mix
Poor Location Difficult to Overcome
Requires Extensive Decision Making
Least Flexible Element of Strategy Mix

4. Problems with Moving Location
Loyal Customers and Employees May Be Lost
New Location May Not Have Same Characteristics
Store Fixtures and Renovations May Not Transfer

5. Site Selection Steps Evaluate Alternate Geographic (Trading) Areas
Determine
Type of Location
Select
General
Location
Analyze
Alternate
Sites

6. Trading Area Analysis Benefits
Consumer Characteristics Detailed
Promotional Activity Focus Determined
Ascertain Overall Net Increase
Proper Number of Stores Calculated
Geographic Weaknesses Highlighted

7. Overall Net Increase + -
Total Revised Sales Total Sales Total Previous Sales
of Existing Store of New Store of Existing Store + -

8. Trading Area (New & Proposed)

9. Geographic Information Systems (GIS)
Trading Area by Specific Demographics
Derive Sales Potential
Effect of New Location on Existing

10. Trading Area Parts
Primary
Secondary
Fringe (Tertiary)

11. Segments of a Trading Area

12. Size & Shape of Trading Areas
Not Concentric
Two Stores in Same Area Can Have Different Trading Areas (TA)

13. Store Types
Destination
Parasite

14. Trading Areas Influences
Store Size
Competitors’ Locations
New Stores
Residential Housing Patterns
Travel or Driving Time
Promotion

15. Segments
of a
Trading
Area

16. Delineating Trading Areas (Existing Stores)
By Geographic Location
Shopping Frequency
Average Dollar Purchases
Concentration of Store’s Credit Card

17. Delineating Trading Areas (New Stores)
Trend Analysis
Analog Model
Regression Model
Gravity Model
Reilly’s Law of Retail Gravitation
Huffs Law of Shopper Attraction

18. Delineating Trading Areas (Existing Stores)
By Geographic Location
Shopping Frequency
Average Dollar Purchases
Concentration of Store’s Credit Card

19. Trading Area Characteristics
Population
Census
Survey of Buying Power
Effective Buying Index (EBI)
Buying Power Index (BPI)
Economic Base

20. Nature of Competition
Understored
Saturated
Overstored

21. Number of People Per Establishment Average Sales
Measuring Saturation
Number of People Per Establishment
Average Sales
Store
Category
Store Per Capita or Household
Per Square Foot
Per Sales Person

22. What You Should Know
The Importance of Store Location and the Process of Choosing a Location
The Concept of Trading Area and Its Components
How Trading Areas May Be Delineated for Existing and New Stores
Three Major Factors in Trading Area Analysis:
Population Characteristics
Economic Base Characteristics
Competition and Level of Saturation

23. Questions?
Questions?
Questions?