Trader Joe's Site Selection (Geog 352)
Trader Joe's Site Selection
Introduction:
In Hennepin and Ramsey counties, Trader Joe's Grocery store are very successful. So successful that they are looking to expand and put in an additional store in a ideal area. The confines of this study are the two counties, which encompass the Minneapolis and St. Paul metropolitan areas. Using the customer data of Trader Joe's, the following processes reflect my results and site selection. Using variables related to Trader Joe's key target market, I narrowed down what areas would be best for selection.
Methods:
First, I used Business Analyst to run a Market Penetration Report. By running this with my customer data, I was able to see where the existing Trader Joe's locations were already doing well. The report helped to show me where the Trader Joe's stores were doing the best, and the top two stores were the Bloomington and Maple Grove Stores.
Figure 1 - Market Penetration Map
Next, to locate my ideal customers I used the customer prospecting analysis tool. The zip codes that match my selected criteria were displayed on the map. The criteria I chose to go with were two attributes that are common in Trader Joe's target market, 2016 Total Population greater than 20,00 and Household median income greater than 75,000. Trader Joe's are traditionally located in areas with considerable population density, so the figure of 20,000 was a good match. Next, Trader Joe's attracts an upscale clientele often with a greater income than most, so I chose $75,000 to be the cut off. This figure was larger than most, but still considerate to many middle class households. The zip codes in blue stripes are places that matched both, and thus are area's meeting the target criteria.
Figure 2 - Map of Customer Prospecting
Continuing on, to get a better idea of where customers are located in relations to each store, I used the buffer tool to create a zone with a 5 mile radius around each store. This zone indicated which customers lived within 5 miles of a Trader Joe's location. By doing this, I can better see which customers would benefit from having a store closer to them, without cannibalizing the existing stores.
Figure 3 - Trader Joe's Locations Buffer
To find the optimal store locations based upon the given data, I used the Optimal Store Location analysis tool. This is otherwise known as the mean center. As I am looking for 3 possible locations, I had the analysis set for 3 mean centers. As shown in figure 4, the blue circles represent the optimal sites for the locations of a new store. This however, is a rough suggestion, as Business Analyst did not take in to consideration whether or not those locations were zoned for commercial use, or if they meet Trader Joe's target market. Still, it is a good tool to get a better sense of where it should go.
Figure 4 - Optimal Store Locations
Lastly, taking all of the variables into account, population size, median incomes, distances from other stores, appropriate zoning, suitable structure, and along a major road, figure 5 shows the locations of each of my 3 selected sites. They are also ranked. To do this, I checked with current zoning maps in each location, then proceeded to look for a stand alone structure, as most Trader Joe's are their own building, and once found the spot, took the address and geocoded it in ArcMap.
Figure 5 - Selected Sites
Results:
Based upon the task at hand, and the criteria for the store to be met, the site I chose for a new Trader Joe's grocery store is 8773 Columbine Rd, Eden Prairie, MN 55344. This new Eden Prairie location fit many of the criteria. The population is relatively dense, it have a higher median household income, it is more than 5 miles from another Trader Joe's, and it has a number of already established customers. Located on the corner of two major roadways, it is located in a small business park of sorts with other businesses bringing in additional traffic. Pre-zoned for commercial use, the address currently is a small cultural grocery, so the transition into a Trader Joe's would be that much easier. I pick this location as it met the most of the criteria. While the second site may have been accessible to more people, it did not fit the target market as much as this location in Eden Prairie does.
Introduction:
In Hennepin and Ramsey counties, Trader Joe's Grocery store are very successful. So successful that they are looking to expand and put in an additional store in a ideal area. The confines of this study are the two counties, which encompass the Minneapolis and St. Paul metropolitan areas. Using the customer data of Trader Joe's, the following processes reflect my results and site selection. Using variables related to Trader Joe's key target market, I narrowed down what areas would be best for selection.
Methods:
First, I used Business Analyst to run a Market Penetration Report. By running this with my customer data, I was able to see where the existing Trader Joe's locations were already doing well. The report helped to show me where the Trader Joe's stores were doing the best, and the top two stores were the Bloomington and Maple Grove Stores.
Next, to locate my ideal customers I used the customer prospecting analysis tool. The zip codes that match my selected criteria were displayed on the map. The criteria I chose to go with were two attributes that are common in Trader Joe's target market, 2016 Total Population greater than 20,00 and Household median income greater than 75,000. Trader Joe's are traditionally located in areas with considerable population density, so the figure of 20,000 was a good match. Next, Trader Joe's attracts an upscale clientele often with a greater income than most, so I chose $75,000 to be the cut off. This figure was larger than most, but still considerate to many middle class households. The zip codes in blue stripes are places that matched both, and thus are area's meeting the target criteria.
Continuing on, to get a better idea of where customers are located in relations to each store, I used the buffer tool to create a zone with a 5 mile radius around each store. This zone indicated which customers lived within 5 miles of a Trader Joe's location. By doing this, I can better see which customers would benefit from having a store closer to them, without cannibalizing the existing stores.
To find the optimal store locations based upon the given data, I used the Optimal Store Location analysis tool. This is otherwise known as the mean center. As I am looking for 3 possible locations, I had the analysis set for 3 mean centers. As shown in figure 4, the blue circles represent the optimal sites for the locations of a new store. This however, is a rough suggestion, as Business Analyst did not take in to consideration whether or not those locations were zoned for commercial use, or if they meet Trader Joe's target market. Still, it is a good tool to get a better sense of where it should go.
Lastly, taking all of the variables into account, population size, median incomes, distances from other stores, appropriate zoning, suitable structure, and along a major road, figure 5 shows the locations of each of my 3 selected sites. They are also ranked. To do this, I checked with current zoning maps in each location, then proceeded to look for a stand alone structure, as most Trader Joe's are their own building, and once found the spot, took the address and geocoded it in ArcMap.
Results:
Based upon the task at hand, and the criteria for the store to be met, the site I chose for a new Trader Joe's grocery store is 8773 Columbine Rd, Eden Prairie, MN 55344. This new Eden Prairie location fit many of the criteria. The population is relatively dense, it have a higher median household income, it is more than 5 miles from another Trader Joe's, and it has a number of already established customers. Located on the corner of two major roadways, it is located in a small business park of sorts with other businesses bringing in additional traffic. Pre-zoned for commercial use, the address currently is a small cultural grocery, so the transition into a Trader Joe's would be that much easier. I pick this location as it met the most of the criteria. While the second site may have been accessible to more people, it did not fit the target market as much as this location in Eden Prairie does.
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