Anyone, including retailers, can track demographics and trends. But sometimes the most important criteria in site selection comes from local knowledge.
In the career of every retail real estate owner, asset manager, developer and leasing agent, the most difficult question to answer is: What do retailers want? Some think they know and give the retailers ubiquitous data, like demographic reports and traffic counts, which the retailers already have. Others guess and give the retailers lots of aerial maps and photos in hopes of swaying the retailer to select their site. But at the end of the day what retailers really want is what they don’t know.
Retailers, like the rest of the industry, have access to countless demographic, psychographic, consumer-spending, market-potential and gap-analysis reports. Thanks to all the advances in technology, most of that data is served up for free. All of this can be accessed from the comfort of one’s office and requires very little effort to obtain. Since it is so prevalent, retailers are now flooded with this information.
In comparison, what retailers have a really tough time obtaining is the deep understanding of a trade area that comes from primary research and systematic observation. It is time-consuming and expensive to pound the pavement and figure out how a market trades and works.
A useful analogy is to think about how long it took you to find the best route to your office when you started a new job. Like most people, it probably required multiple trips before you figured out what side street to take or exit to get off at that would cut down your overall commute. Similarly, a retailer requires multiple site tours to truly understand why what seems just OK on paper could actually be a great opportunity for their business.
For example, Duluth, Minn., is a city that stretches 26 miles along the coast of Lake Superior but is only a few miles wide. It is a huge regional draw for shopping and tourism. If a retailer were to do a desktop analysis, they might be unaware how inadequate a radius is to estimate the trade area population. Further, what retailers don’t know is that the Menards in West Duluth pulls 30 percent of its sales from Canada. A demographic report based on the U.S. census would never take those neighbors to the north into account.
Another example can be found in Colorado Springs, Colo. Jimmy John’s didn’t see the full potential of an available site in the Austin Bluffs neighborhood when it simply ran its reports and algorithms. What they didn’t know was that there was a Subway store located across the street in a failing shopping center that was enjoying sales that were more than double the national average and was very profitable. When Jimmy John’s found out, thanks to an intrepid leasing agent who had taken the time to talk to that Subway manager, they purchased a pad site to build a free-standing store that is now very successful.
Retailers don’t know the local geography, traditions, customs and history that make a trade area unique. They don’t know who is coming and going and all the planned and proposed developments in a market. They don’t know all the local competitors, the mom-and-pops, which have earned the love and money of the surrounding residential population.
There is a lot retailers don’t know about a market, and it is your job to inform them. Forget the stats about income levels or average household size. Tell them something they don’t know and see what a positive difference it makes in their site-selection process.
— Jeremy Striffler is a market analyst on Cushman & Wakefield/NorthMarq’s Retail Advisory Services team. He focuses on marketing, research and busines development.