Retail Site Selection

Overview

Trader Joe's is looking to open a new location within Hennepin or Ramsey Counties within Minnesota.  To accomplish this task of figuring out a new location Business Analyst in ArcGIS will be utilized along with customer data that was provided.  Therefore, "blah blah analyst company" was hired to figure out what is going on in the MSP area.  The questions that need to be answered are: What is the Market penetration, where are the ideal customers, ranking three sites, and finally find the optimal store location based on all of the above answers.  Through Business Analyst these questions will be answered and a site selected.

Methods:

There are four main goals to help accomplish this task, these include:

1. Locate Ideal Customers
2. Market Penetration Report
3. Find the Optimal Store Locations/Mean Center of all Consumer
4. Ranking Sites

The first one to deal with is finding the ideal customers.  This was done using Business Analyst found in ArcGIS.  To do this the Customer Prospecting tool to find regions that have ideal populations and annual income ranges was used.  For the annual income of 60k/yr was used along with a population of less than 65 years of age (Figure 1). 

Figure 1: Ideal Customers map by ranking.  The red  has the most ideal customers, whereas the yellow has the second most ideal customers and the green has the least ideal customers.  

The next step was to solve for the market penetration.  This was also done by using the analysis in Business Analyst to create a market penetration analysis.  This created using zip codes and the customer data that was provided (Figure 2).

Figure 2: Market Penetration data. 

Next, the Optimal store locations/Mean Center of all consumers is created.  This is done through the analysis tool in business analysis using a site analysis.  This is done by choosing the customers layer and having 1 mean center chosen.

Finally, the last step was to geocode three locations that makes sense for a Trader Joe's to move into.  Once these sites are geocoded, the rank markets market analysis can be performed.  This had four variables to go along with it which included 2016 total income, 2016 Median Household Income, Ind: Avg. Spent per Week by HH at Food Stores $150+, and Shopped at grocery store/6 mo: Trader Joe's.  There was also a 1.5 Mile buffer added to each of these (Figure 4). Therfore the best ranking site would be the 3 or dark blue.  

Figure 3: Customers within their area. 

Results

Figure 4: Ranking

 The results that were come up with show that the area in the South Western Region would be an ideal spot to introduce a new Trader Joe's This is located right in Eden Prairie Minnesota where there is going to be a large enough population from the surrounding area making its way to this location due to having a few large cities without a close enough Trader Joe's.  This is also far enough away from the closet Trader Joe's making it not steal customers from the other locations.   Therefore, this location has great demographics for the new store. For these favorable locations it is up to Trader Joe's to come up with which area they could like to expand into along with working with the city to get the best deal they can make.