Geography 352 Business Geographics. Department of Geography UW Eau Claire

Transcription

1 Small Footprint, High End Supermarkets Location Analysis Strategies Brady Foust, PhD University of Wisconsin-Eau Claire

2 Background Downtown redevelopment project. Public/private initiative. Financial i headquarters. Farmer s market. Residential/commercial proposed development. Need supermarket. 2

3 3

4 Phoenix Redevelopment Project Supermarket Feasibility Study Geography 352 Business Geographics Spring Semester, 2007 Department of Geography UW Eau Claire Eau Claire, WI

5 Purpose Supermarket Feasibility Study Standard Business Geographics Techniques Geostatistical Analysis Thiessen (Equal Competition) Polygon Ring Analysis Huff (Gravity Model) 5

6 Assumptions Small footprint store (15, ,000 GLA). Neighborhood market not sufficient to support supermarket. Must be a destination high end brand. Provide basic needs to neighborhood market. Draw from much larger area for specialized products. Brand recognition is critical. Lund s, Whole Foods, Trader Joe s. 6

7 7

8 Definitions Neighborhood Market Definition #1: Equal Competition Polygon. Definition #2: 3-mile ring. Destination Market. 5-mile ring (and beyond). Huff model analysis parameters. 8

9 Geostatistical Analysis Generate density analysis. ¼ x ¼ Mile Cells. Calculate l density (within 3 mile radius) of: Population. Grocery spending. Total Income. Analyze all locations for comparison. 9

10 10

11 Population per Square Mile 4,000 3,500 3,000 Mega East Phoenix Site Store Locations Festival Mega East Copps Gordy's Ron's Target Wal-Mart ALDI Sam's Club Phoenix Site 2,500 Ron's Festival MIN 2,000 Copps Gordy's 1,500 1,000 Target Wal-Mart ALDI Sam's Sams Club Store Locations 11

12 12

13 Income $ per Square Mile 60,000,000 55,000,000 50,000,000 45,000,000 Festival Mega East Copps Gordy's Ron's Phoenix Site Festival Mega East Copps Gordy's Ron's Target ALDI Sam's Club Phoenix Site Income $ per Square Mile (3 mile radius) 40,000,000 35,000,000 30,000,000 25,000,000 20,000,000 Target ALDI Sam's Club 15,000,000 10,000,000 5,000,000 0 Store Locations 13

14 14

15 Festival Mega East Grocery $ Per Square Mile 4,400,000 4,200,000 4,000,000 3,800,000 3,600,000, 3,400,000 Copps Gordy's Ron's Phoenix Site Store Locations Festival Mega East Copps Gordy's Ron's Wal-Mart ALDI Sam's Sams Club Phoenix Site mile radius) 3,200,000 3,000,000 2,800,000 er Square Mile (3 Grocery $ p 2,600,000 2,400,000 2,200,000 2,000,000 1,800, ,600,000 1,400,000 1,200,000 Wal-Mart ALDI Sam's Club 1,000, , , , ,000 0 Store Locations 15

16 Geostatistical Analysis Conclusions Phoenix Site Compares favorably to existing stores Highest population density. Similar grocery spending per square mile. Similar income per square mile. 16

17 Equal Competition Polygon Thiessen Polygon. Edges are equidistant between Phoenix site and each competing store. Extract underlying data using standard GIS techniques. 17

18 Thiessen Polygon Analysis ") ") ") ") ") Legend ") Competitors!. Phoenix Site Thiessen Polygon ") ") ") ") ") Miles ") ") 18

19 Equal Competition Results THIESSEN POLYGON 2004 Population 11, Households 4,839 Food Spending ($) $26,601,429 Grocery Spending ($) $15,908,545 Total Income $191,055, Households $50-60K 326 Households $60-75K 405 Households $75-100K 262 Households K125K 76 Households $ K 23 Households $ K 12 Households $ K 10 Households $ K500K 23 Households $500K+ 6 Households >$50K 1,146 Households >$100K

20 Destination Household Income (Thiessen Analysis) 1,200 1, mber Nu Thiessen Polygon Destination Household Categories 20

21 Income & Spending Totals (Thiessen Polygon) $200,000,000 $180,000,000 $160,000,000 $140,000,000 $120,000,000 $100,000,000 $80,000,000 $60,000,000 $40,000,000 $20,000,000 $0 Food Spending ($) Grocery Spending ($) Total Income 21

22 Equal Competition Conclusions Neighborhood market area is small. Squeezed out by competition in all directions. Not sufficient to support supermarket. 22

23 Ring Analysis Generated 3- and 5-mile rings. Extracted underlying data. 3-mile = neighborhood h market. 5-mile = initial indicator of destination population. 23

24 Ring Analysis ") ") ") ") ") Legend ") Competitors!. Phoenix Site RINGS ") ") ") ") ") distance 3-Miles 5-Miles Miles 24

25 Ring Results THREE MILE RING FIVE MILE RING 2004 Population 54, Population 75, Households 21, Households 29,530 Food Spending ($) $161,551,900 Food Spending ($) $235,647,464 Grocery Spending ($) $96,758,646 Grocery Spending ($) $141,600,149 Total Income $1,198,013,932 Total Income $1,753,660,650 Households $50-60K 2,041 Households $50-60K 2,919 Households $60-75K 2,452 Households $60-75K 3,513 Households $75-100K 2,414 Households $75-100K 3,487 Households K 955 Households K 1,492 Households $ K 150K 407 Households $ K 150K 690 Households $ K 303 Households $ K 498 Households $ K 163 Households $ K 252 Households $ K 194 Households $ K 295 Households $500K+ 37 Households $500K+ 62 Households >$50K 8,969 Households >$50K 13,199 Households >$100K 2,044 Households >$100K 3,251 25

26 Destination Household Income Data (Ring Analysis) 14,000 12,000 10,000 Num mber 8,000 6,000 4,000 2,000 3 Mile Ring 5 Mile Ring Destination Household Categories 26

27 Income & Spending Totals (Ring Analysis) $1,800,000,000 $1,600,000,000 $1,400,000,000 $1,200,000,000 $1,000,000,000 $800,000,000 3 Mile Ring 5 Mile Ring $600,000,000 $400,000,000 $200,000, $0 Food Spending ($) Grocery Spending ($) Total Income 27

28 Ring Conclusions Neighborhood ring (3-mile) still insufficient. Destination ring (5-mile) much better results. True destination market probably bl miles. 28

29 Gravity Model Analysis Huff Model. Calculates shopping probability for any given location. Based on: Distance to all sites in analysis. Attractiveness of competing sites. Attractiveness generally measured by GLA. 29

30 Gravity Model Assumptions Attractiveness (mass) has three components. GLA (store size): Bigger stores can attract consumers over greater distances. Price: Consumers will travel greater distances for real or perceived lower prices. Quality: Consumers will travel greater distances for higher quality (meat, produce, specialties). Distance is not linear, but a power function (D 2 ). 30

31 Gravity Model Formula P ij A j 2 = D ij n 1 A D 2 ij Where P ij = Probability that Consumer i will shop at Store j. A= Attractiveness D ij = Distance from Consumer i to Store j. Attractiveness = (GLA * PF) + (GLA * DF) Where GLA = Gross Leasable Area PF = a price factor DF = a destination factor Attractiveness = (GLA * PF) + (GLA * DF) Where GLA = Gross Leasable Area PF = a price factor DF = a destination factor For standard supermarkets, PF=1, DF=1 For low price supermarkets, PF>1, DF<1 For destination supermarkets, PF<1, DF>1 Examples: Festival Foods = Standard Walmart = Low Price Lunds = Destination For t standard d supermarkets, kt PF=1, DF=1 For low price supermarkets, PF>1, DF<1 For destination supermarkets, PF<1, DF>1 Examples: Festival Foods = Standard Walmart = Low Price Lunds = Destination 31

32 Determining Model Parameters Devil in the details. Price factors. Destination factors. How to determine each? How to scale each? 32

33 Price Factors Random sample survey. High = 10 Low = 1 How do you rate each brand? Average results for each brand. Scale the results. 33

34 Destination Factors How far will you drive to visit this brand? How close to make a majority of your purchases at this brand? Brand awareness of Lunds. Distance people would drive. 34

35 GIS = ESSENTIAL Calculate distances Cartesian Manhattan Road Store spending data Visualize results Feed scenario spreadsheets 35

36 Gravity Model Parameters NAME GLA (SQ FT) TYPE PRICE FACTOR DESTINATION FACTOR TOTAL ATTRACTIVNESS FESTIVAL FOODS 74,000 STANDARD ,600 MEGA WEST 66,000 STANDARD ,400 MEGA EAST 67,000 STANDARD ,300 COPP'S 63,000 STANDARD ,700 GORDY'S 60, STANDARD ,000 RONS 68,000 STANDARD ,200 HAHN'S 11,000 DESTINATION ,000 TARGET 175,000 STANDARD ,000 WALMART 195,000 LOW PRICE ,500 ALDI 15,000 LOW PRICE ,500 SAM'S CLUB 90,000 LOW PRICE ,000 PHOENIX SITE 15,000 DESTINATION ,000 Microsoft Office Excel Worksheet 36

37 37

38 Conclusions Destination market can locate almost anywhere lacking direct competitors in the market. Grow the brand into smaller markets. Pick development locations. Property tax and other considerations. Minimize the supply chain. 38

39 QUESTIONS? 39