Conducting a Market Analysis for Your Next Retail Location
As a tenant’s representative, one of our main tasks is to assist our clients in determining the best trade areas for their concept to perform in. This process involves understanding our client’s customers, identifying the demographics that align with their target market, and determining the optimal location for their business within that trade area. Below, we delve into the various factors considered in a market analysis, including the maximum distance a customer is willing to travel, co-tenancy requirements, foot traffic, visibility, and competition in the area. We also share how tools such as Placer enable us to analyze shopping center visits, and the importance of understanding whether a freestanding pad site or having close proximity to anchor tenants would be more beneficial for our clients. Join us as we take a closer look at the key factors which go into determining the perfect trade area for a tenant’s concept.
Determining the Best Trade Area
Determining the best trade areas for a tenant’s concept is crucial in ensuring the success of their business. As a tenant’s representative, it is our job to assist our clients in identifying trade areas which align with their customer demographic and specific business requirements. Understanding who our client’s customers are, we research locations within trade areas that cater to those specific demographics, which might include factors such as age, income level, and even lifestyle choices. Having a clear understanding of the customer profile allows us to identify the ideal trade areas to target, increasing the chances of success for our clients’ businesses. Additionally, by understanding our client’s specific business needs, we can assess which trade areas can best support their co-tenancy requirements, desired level of foot traffic, and visibility needs. With this information in mind, we are able to confidently recommend locations that are most suitable for our clients’ unique business models.
How Far Will Our Client’s Customers Go?
In addition, it’s also important to understand how far customers are willing to drive to visit our client’s business. Knowing the average drive time or distance customers are willing to travel allows us to make informed decisions about the proximity to the client’s other locations. This is particularly important when considering the potential for cannibalization, which occurs when multiple locations of the same business are too close together and end up competing with each other for customers. By understanding how far customers are willing to drive, we can ensure that our client’s locations are spaced apart in a way that minimizes the potential for cannibalization and maximizes the potential for success.
Determining the Best Location in a Trade Area
Once the best trade areas have been determined based on demographic requirements, the next step is to identify the ideal location within those trade areas. We look for locations that offer the best ease of access, and visibility. We typically favor sites that are located at a signalized intersection allowing full access to the site. We take into account co-tenancy requirements, as some clients may only want to locate in a center with a supermarket or other big box tenants which draw consistent daily traffic. To help in this process, we have been using Placer, a tool that helps determine which shopping centers receive the highest amount of visits. It’s also important to understand the client’s specific needs for the location, such as whether they would benefit more from a freestanding pad site with great signage, or from being located near an anchor tenant’s entrance so that they might benefit from foot traffic. These are all important factors to consider when finding the best location for the client’s concept.
What Demographic Reports Are the Most Helpful?
When considering a new location for your business, it’s important to review demographic reports to better understand the characteristics of a potential trade area. One valuable report to look at is a drive time report, which assesses the number of customers within a specific distance and time from the potential location. This information can be more valuable than a traditional 3 or 5 mile ring demographic report because it takes into account the convenience and likelihood that customers will visit the location. Additionally, it’s important to consider the density of population in the trade area, as a high population density can lead to a greater number of potential customers, even if the average household income is slightly lower. Other important demographics to consider include the ages of your target customer, as certain age groups may be more prevalent in certain trade areas. For example, if your concept is geared towards young adults, it may not perform as well in a trade area primarily made up of retired communities.
Benefits of Competition in Trade Areas
When it comes to selecting a location for your business, it’s important to consider the level of competition in the area. However, competition is not always a bad thing. In fact, many successful businesses actively seek out locations where other similar businesses are already located. For example, many restaurants do better in areas where there are already several other restaurants. The reasoning behind this is that people aren’t going to eat at the same place every day; having a variety of options for those customers in a particular shopping center or trade area can actually be beneficial. This variety gives customers more reasons to visit the area, increasing the probability that they’ll visit a restaurant in a center with other, comparable restaurants. The same goes for furniture concepts. Furniture operators often cluster together in the same trade areas because they know that customers will want to see all of their options before making a significant purchase. When our client is seeking a location in a trade area where there are multiple competitors, it is key to find a superior location to the competitors, whether it be greater visibility or ease of access.
Additionally, it is important to consider the number of customers who visit a specific trade area. Furthermore, while overlap in services offered may exist, such as when a nail salon also offers waxing services, a tenant specializing in waxing may not consider the nail salon to be direct competition, and may even benefit from the additional foot traffic. In assessing competition, it’s important to not just consider the number of competitors, but also the location of their storefronts and the quality of their offerings. By taking these factors into account, businesses can strategically position themselves to succeed in a competitive market.
First to Market vs Proven Success: Navigating Trade Area Choices
When it comes to finding the perfect location for your business, being first to the market can be a huge advantage. This is especially true if the trade area is already proven to be successful. One way to determine if a trade area is successful is by looking at the “who’s who” of retailers in that area. If you see big names like Target and TJX concepts, it’s a good indication that the area is doing well. However, if you’re considering a new, up and coming trade area, being first to the market can be risky. These areas are often referred to as “tweener” areas and may not perform as well. In these cases, it’s often best to follow the herd and wait for other successful businesses to move in first. Finding the right location in a mature, built-up trade area can be difficult, as vacancy rates are typically low. Keeping an eye out for tenants whose leases are expiring or who may be struggling and looking to leave is an important part of the process of finding and securing ideal locations for clients. This requires patience, time, and networking.
In conclusion, determining the best trade areas for a tenant’s concept is a critical step in ensuring the success of their business. By understanding our client’s customers and their specific business needs, we are able to identify trade areas that align with their target market and recommend the most suitable locations within those trade areas. The use of tools like Placer, drive time reports, and other demographic analyses helps to inform our decision-making process and enables us to provide our clients with the most comprehensive market analysis. By also taking into consideration important factors such as co-tenancy requirements, level of foot traffic, visibility, and competition, we’re able to better identify ideal locations for our clients. With this approach, we are able to provide our clients with the most comprehensive market analysis and help them make informed decisions about the perfect trade area for their concept.
Looking to open another location for your business? Get in touch with us today to find your next perfect location! Contact RJ Brunelli & Co at 732.721.5800 or fill out the form on our contact page!