We chose this tagline because good location planning is a science. We encourage our clients to "think in layers", trade area layers that is, when evaluating the best market opportunities.
TRADE AREA LAYERS are the foundation and brilliance of STRATA, our new revolutionary location planning solution. Layers simplify the complexity of supply (competition) and demand (consumer spend) and effectively bring them together into a single powerful solution.
Trade area layers are built where each individual layer accounts for shopping trips to a specific class of shopping centre. The full breadth of consumer choice within a shopping vertical such as Soft Goods is therefore explained with multiple layers. Using Soft Goods as an example, a shopping trip to a Super Regional centre is a specific consumer choice and layer with the largest trade areas. A shopping trip to a smaller Community shopping centre is another potential trip and layer with smaller trade areas.
The result is a measurable system of realistic trade area layers. This allows the accurate comparison of market potential and the prediction of consumer shopping behaviour across vastly different trade area sizes and competition. It's how we guarantee to find the best business opportunities in Canada. Learn more.
This is true location optimization!
We model five food layers ranging from a large Hypermarket Layer to a small Convenience Layer
Four soft goods layers are modeled from Super Regional to Community
Three hard goods layers are modeled to account for all sizes of stores
Trade Area Layers are modeled for unique offerings such as Costco, Alcohol, etc.
1) Layers explain Consumer Choice
Location analysis is complicated because consumers travel different distances to different shopping centres for different goods and services. Shopping is based on consumer choice, not circular trade areas. Layers reduce the complexity of individual consumer choice to a simpler and more defined relationship of trips to various shopping centres. The choice to shop a particular class of shopping centre represents a travel pattern that defines a trade area layer. Multiple choices create multiple trade area layers. Individual layers representing classes of shopping centres are then grouped together to account for all the various choices within a specific shopping vertical like groceries or soft goods.
Using soft goods for example, the first layer represents the choice to shop at the largest Super Regional shopping centre. The second layer is the choice to shop at smaller Regional centres, and the third layer at smaller Community centres. When all the layers are combined they effectively create a list of shopping choices, or a soft goods decision equation, for each postal code in Canada. These choices and preferences create natural consumer shopping movements that can be intelligently measured and accurately predicted.
2) Layers explain Competition
Retail competition further complicates location analysis because you can often purchase similar goods and services in very different shopping centres with very different levels of attraction. From an analytical perspective, this means that the size of each respective shopping centre trade area will need to vary and overlap each other to accurately represent the reality of consumer choice.
STRATA groups similar classes of shopping centres together into individual layers. For soft goods, the first layer is Super Regional shopping centres, which compete only against each other because they have the largest aggregated value proposition and therefore the highest level of attraction. The second, but less attractive Regional centres, compete against other Regional and also against more attractive Super Regional centres. The third, but less attractive Community centres, compete against other Community and also the more attractive Regional and Super Regional centres. Each shopping centre ends up with its own realistic trade area that accurately explains the competitive interaction between very different shopping centre levels of attraction. This means that STRATA is ideally suited to the measurement and comparison of retail performance metrics, market potential and site selection across all trade areas in Canada.
3) Layers are Accurate
The accuracy of all market analysis is critically dependent upon the measurement of supply (competition) and demand (market size). Traditional solutions that rely on circular or drive time trade areas are overly simplistic because they can't account for competition. Layers capture the true nature of consumer purchase behavior (demand) over multiple shopping centre destinations (supply). Leakages and surpluses are quantified and reconciled between trade areas without double counting the population. This allows the model to be calibrated against actual sales data by adjusting leakages between layers. The whole-of-system approach allows the model to be simply calibrated by using aggregated sales data as well as more detailed point-of-sales data when available. Layers impose a new level of accuracy for location and performance metrics traditional methods simply can't match.
4) Layers Mitigate Risk
The value of analytics to make better and less risky business decisions hinges critically on the accuracy of underlying supply and demand estimates...particularly estimates of market size. Layers help mitigate this risk in two ways. First, STRATA is a whole-of-system approach, which means that overestimating the market size in one location means underestimating it in another. It's a reconciliation process that naturally helps create accuracy. Second, all assumptions (i.e. leakages between layers) are analyzed as a range, and not as a single point estimate. This effectively builds sensitivity analysis to critical assumptions explicitly into the analytic process.
5) Layers are Flexible
Unique retail value propositions complicate location analysis because it creates a unique attraction, often for similar goods and services that are available elsewhere. In STRATA, the number of layers is flexible. Layers can be added to account for unique retail value propositions like Costco and Outlet Centres. This allows STRATA to accurately fit the marketplace regardless of complexity.
6) Layers Deliver the Best Opportunities
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. STRATA has the ability to compare all trade areas across Canada with vastly different market forces. It's how we guarantee to find the best business opportunities in Canada. This is true location optimization.
STRATA simplifies the complexity of consumer and competitive behaviour by grouping shopping trips together by the attraction of the destination. This attraction is further categorized into convenience and shopping oriented goods and services. Convenience goods (i.e. groceries) are regularly consumed and typically purchased daily and weekly in localized trade areas. Shopping goods (ie: clothing, home improvement, etc.) have a higher level of attraction and therefore create larger trade areas because they require more research and comparison to purchase. Consumer are willing to travel further for shopping goods, although the trips are less frequent. This means that the appropriate layers for your business depends on where your goods and services fall within the convenience/shopping goods and services spectrum.
We generally think about layers withing four broad groups:
Contact us for a free consultation about which trade area layers are applicable for your business.