Trade Area Analysis and Site Selection without Customer Data (Part 1): Recommending a first store using spatial analysis of potential sites

Introduction

Janice Brown and Steven Bent plan to open a new home center in the Minneapolis-St. Paul area. The center, called Living in the Green Lane, will offer a variety of environmentally friendly building products, home improvement products, and construction technologies. They have identified their target market as "green consumers," some of whom are motivated by environmental concerns and some of whom are seeking savings in energy costs resulting from green technologies (Schaefer 2007). As these customers generally have higher levels of income, education, and home value than the general population in the United States (Kannan 2007), these factors have been chosen to evaluate the market area and specific sites.

As Living in the Green Lane's business geographic information system (GIS) analyst, you are working with Janice and Steven to complete the firm's business plan. This process is nearing completion. The business model is clearly defined, the target customers identified, and their distinctive characteristics profiled. In the environmental scanning process, you have identified concentrations of target customers in the Twin Cities area as well as attractive potential locations within it. You also examined Living in the Green Lane's competitive environment by exploring the distribution of shopping centers and competitive home centers relative to the Minneapolis-St. Paul transportation infrastructure.

You will now turn your attention to the final element in the business plan, the selection of a specific location for the company's first store. Janice and Steven are seeking an existing, freestanding retail facility of 40,000 to 60,000 square feet. This is a relatively compact size for a home center, but Janice and Steven believe that a smaller store size is consistent with their environmental vision and would serve a smaller but more attractive market area.

Janice and Steven also require ample display and warehousing capabilities and substantial space for parking and outdoor demonstrations. Specifically, they wish to have four or five parking spaces per 1,000 square feet of retail floor space. They plan to convert the facility to a green building with green parking. This would illustrate the benefits of their business concept and create a comparatively modest footprint for a retail site, improving opportunities for replicating the facility in other neighborhoods. These criteria will guide your selection.

Your objective, then, is to recommend a site for the first store and design map documents that support your conclusions and recommendations.

Location

Minneapolis-St. Paul core-based statistical area

Time to complete the lab

Four to six hours

Prerequisites

An understanding of the importance of trade area analysis and site selection in retail management

Access to Esri Business Analyst Desktop Premium 10

Data used in this lab

Demographic and consumer spending data at various levels of geography

Major highways and streets

Business listings

Shopping center listings