Trade Analysis
There is certain information a business needs to configure before opening if it wants to be successful and remain successful. Whether the business is big or small, relocating or stating up, the business life’s longevity and success is dependent on detailed research. A good source of information for this topic would be US Census . Key elements of this research include:
- Location- researching location is important to make sure there will be enough traffic to be profitable. Traffic alone may not be enough. Be sure to analyze competition and whether your store has a need/want in that area. Rent, taxes, accessibility, parking, and store size also have a large affect in making this decision.
- Demographics & geographics- Includes age, gender, income, interests, buying habits. Population alone may not be enough, for example, REI may not be a good fit in a town with 500,000+ people if there aren’t many outdoor attractions nearby. Bike trails, mountains, hiking trails, and other recreational activities.
- Store layout- Product placement (big ticket items in the back in an electronics store), store layout (room between isles, flooring type, branding) accent (colors of floors, walls, and displays)
- Consumer behavior- Wants, needs, spending habits, affordability, marketing strategy, eye catching, brand image.
- 4 P’s- Place, product, price, promotion
These are the top five elements to research before a business should decide to relocate or startup. There are many other factors that need to be researched beforehand, it’s likely that you will hire professionals to do this work which has to be accounted for in startup costs.
Hypothetically let’s say I want to open a REI store (backpacking, biking, camping, fishing… outdoor gear) and I have two locations in mind, La Crosse, WI and Wisconsin Dells, WI. I would create a simple chart (below) and possibly a spreadsheet to compare numbers such as age, population, income, and traffic. The location in La Crosse would be at the old K-mart lot, location in the Dells would be an addon of the Outlets at the Dells.
The consumer profile of an ideal REI customer would best be defined as an outdoor enthusiast.
Source: (DeWan)
REI Location Comparison
| Location | La Crosse, WI
2415 State Rd |
Wisconsin Dells, WI
210 North Gasser Rd Baraboo, WI. |
| Population
(Data Commons)
|
Total: 51,666
South Side: 9,713 |
Total: 12,138
Immediate: 2,841 |
| Median Income
(Data Commons) |
Male: $43,000
Female: $29,000 |
Male: $34,000
Female: $27,000 |
| Median age | 28 | 38 |
| Population by age | 18-24: 16,000
25-34: 7,000 35-44: 4,000 |
18-24: 1,000
25-34: 1,500 35-44: 1,500 |
| Median household income | $47,000 | $51,000 |
| Nearby business | 20+ in the immediate area | 60 in the immediate area |
| Direct Competitors | Dicks Sporting Goods
|
Columbia Outlet |
| Outdoor Activities |
The information gathered from the above table tells us that there are pros and cons to an REI in each location. The table may not provide all external factors. For example, the La crosse location is located on one of the city’s busiest streets next to a village shopping center. It includes restaurants, grocery stores, cell phone stores, coffee shops, gas stations, and a high school just blocks away. External factors of the outlet mall would include the 60 other stores within the mall, restaurants, coffee shops and gas. It is also near Mt. Olympus and Noah’s ark, making this one of the largest tourist areas in Wisconsin. It is also near Devils Lake, a popular hiking and camping area. However, this may not necessarily bring traffic to the store since consumers interest lie elsewhere. Since the REI would be an addition to the mall, it may not be the size needed for success as typical stores are similar in size to Walmart.
In conclusion La Crosse would be the best fit for an REI to achieve longevity and success. The main target market are millennials. It is located blocks from a high school, in one of the busiest areas of La Crosse. Total population and individual median income are higher than Baraboo. The lot size of which it would sit could fit a Walmart and all the parking that is needed. La Crosse is located on the Mississippi river surrounded by bluffs with a large variety of hiking and biking trails and public parks. The closest REI to La Crosse is a two-hour drive and there is little to no competition in the immediate area.