Whether you are a brand in the market for a site for your new store or are looking for a way to determine market potential, there is a way to get the answers that you need with data. Data analytics is a concept often brought up in data-driven marketing, most marketers use it to some degree, but not everyone utilizes its full potential.
A type of analytics that marketers should consider as part of their data-driven strategy toolbox is trade area analysis. We all know that it’s important to keep healthy data about what is happening within the walls of your brand’s brick-and-mortar shop, but what about outside? The best way to describe trade area analysis is to think of the area around your location: the traffic, the people, the competitors in your vicinity — and make data-driven decisions based on those analytics.
Here are some of our favorite benefits of using trade area analysis.
A Comprehensive Look at Consumers
A lot of things go into deciding the perfect location for your business. Things like store location, proximity to highways and neighborhoods, and who your customers might be. A lot of the time, the question of who your customers are can only be answered once your store is open and you begin attracting business. What if you could have this information before you build on-site?
With trade area analysis, you can get an overview of consumers who are actually shopping where you want to build. This type of analysis can answer questions such as:
- What are they interested in?
- What are their brand affinities?
- Will they be the right population for your brand demographic?
A comprehensive look at potential customers has the benefit of a custom and detailed market research analysis, except its data only shows you the people who are the most likely to visit your store.
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Two is Company
Let’s say that you are a brand that specializes in women’s athletic wear and your target market is middle-aged suburban women. You’ve found a seemingly perfect location to build your brand’s new store from the location’s demographics to the proximity to a local gym. To make sure that all of your T’s are crossed and I’s are dotted, you run a trade area analysis of the location. What you find is both shocking and a relief:
Just a mile down is a large retail chain that specializes in athletic wear at an affordable price. In the opposite direction is your top competitor, and on the other side of them is a Walmart and a Target virtually sitting right next to each other. Had you selected this location, your brand’s store would have spent quite a bit of money trying to compete with the larger more established stores in the area.
You decide to build in a different part of town where your trade area analysis tells you that there are no other retail stores that cater to your audience. It’s a newer neighborhood with just the right audience for you to build a relationship with. Crisis averted.
Supply and Demand
Jumping off of our last point, trade area analysis can also give you direct insights into the supply and demand of a certain location. When you get to know what your potential customers need, and what competitors are in the direct vicinity of the location you are interested in, you have the upper hand.
If an area of interest already has several large retailers but sorely lacks in arts and crafts stores, especially when there are a lot of stay-at-home parents in the neighborhood, then this is precisely the spot for your brand’s store! Your new customers would likely be relieved to avoid the long lines and general chaos of the big retailers in favor of your specialty store where everything they need is only an aisle away.
Choosing the right place for your business is crucial to its success, why not have the answers you need to succeed before making the commitment? Contact us to learn more about how you use location intelligence to conduct a trade area analysis.