Building a market map or trade area network defines the size and shape of the trade area. Our solution is a national breakthrough market optimization model for Canadian retail businesses. Its our proprietary data driven solution to location analytics. It connects detailed competitor and consumer spend data within a comprehensive layered trade area algorithm to pinpoint and rank the best retail opportunities currently invisible using conventional methods.
Figure 2 maps out the radius trade area definitions of the super-regional, regional, community, and neighbourhood shopping centres as defined by the International Council of Shopping Centres. The large radii reveals the mobility of consumer shopping patterns. But it creates a chaotic map with major accuracy problems for the science of location.
Layers allow the model to quantify the complex nature of consumer purchase behavior. Each layer represents a decision to shop at a specific class of shopping centre, when available. The first layer the largest of shopping centres, the super regional class. The second layer smaller regional centres. The third layer, smaller community centres, and the fourth layer the smallest neighbourhood centres. The power of the model is that the combined intersection of layers form polygons that represent consumer shopping choices or decision equation (Figure 3).
The power of our model is accuracy, but it first requires a change in how primary trade areas are defined. Instead of isolated radii, non-overlapping areas are now based on the surrounding size or attraction of competing shopping centres (Figure 4). Sales inside the boundaries represent the primary trade area and sales outside secondary.
It reduces the complexity of individual consumer choice to a simpler and more defined relationship between shopping layers. Layer numbers that can be increased for unique retailers such as Costco while imposing accuracy by quantifying leakages. The model is then calibrated against actual sales by adjusting leakages between layers. This maximizes profit by accurately measuring site performance and finding the best new sites.
How do you know that your business is located to maximize profits? The simple answer is that you can’t know without true location optimization. Layered trade areas deliver a guarantee that you pursue the best consumer business opportunities.
1. Measure network performance: Estimate target revenue and market potential by individual site.
2. New site selection: Estimate target revenue in all potential sites to guarantee we find the best business opportunity.