Pet Store Site Selection

Introduction:

To the millions of pet owners throughout the United States, the pet industry has evolved into an everyday necessity. Convenient access to pet food, supplies, and services is extremely important for the 72.9 million pet owning households and their companions. More than half of all households in the entire country own pets and therefore, there is a constant demand for the products and services offered by pet stores. In 2011, the total pet expenditure for the United States was 50.8 billion dollars. Within this total expenditure 38 percent was spent on pet food and 28 percent was spent on pet supplies. Pets Unleashed first and new location will offer a wide variety of pet food and supplies for an large assortment of pets as well as grooming services for both dogs and cats. Pets Unleashed will also offer a variety of reptiles, birds, fish, rodents, and puppies that are ready to take home. Pets Unleashed is a new pet store that will provide all the necessary elements pet owners need as well as providing the opportunity to become a new pet owner.  

Marathon County, Wisconsin has been established as a general area of interest for a potential location for the first Pets Unleashed store. Marathon County was considered for Pets Unleashed first store location based on the primarily rural and suburban make up of the county. Majority of pet owners are located within rural and suburban areas similar to most of Marathon County.  Not only is Marathon County made up of rural and suburban areas associated with the pet owning demographic, but the population of the city of Wausau and the growing city of Weston are large enough to ensure customers for a new store. Aside from determining Marathon County as a general area of interest, specific locations have been determined as potential locations based on several factors. Analysis of the competitors, the current market, and pet owner demographics were essential determining factors for establishing potential store locations. From the analysis of the current market and the pet owner demographics three potential store locations were determined for Pets Unleashed first store. Each of the three potential locations were then ranked and assigned a corresponding trade area.

Methods:

The first determining factor for establishing three potential store locations in Marathon County was the location of Pets Unleashed ideal customers. The ideal customers for Pets Unleashed adhere to several specific demographic factors including age, income, and home owners. Individuals between the ages of 30 and 60 are more likely to own pets. Therefore, Pets Unleashed ideal customers are within the 30 to 60 age range. Furthermore pet owners and potential pet owners need a sufficient income to purchase and take care of pets, where ideal customers would have an income greater than 50,000. In addition to a specific age range and income, ideal customers own their own homes as 78 percent of pet owners are home owners. Based on these demographics specific restrictions were place on each zip code within Marathon County displaying the zip codes with median ages between 30 and 60, incomes greater than 50,000, and greater than 500 owner occupied households.  

Ideal Customers 

In addition to locating ideal customers by zip codes hot spot analyses also identify specific areas of interest for potential store locations. Hot spot analyses were used to display areas of high population and income based on 0.5 mile grids. Although rural and suburban areas are more predominant for pet owners, it is beneficial for a store to be located near areas with a considerable population to ensure a sufficient amount of customers. Areas of higher income are also beneficial for a store location as these areas ensure the presence of households with adequate income for pet expenses as well as ensure customer spending.  

Population and Income Hot Spots

Aside from examining areas with specific demographics the location of current competitors and the current market conditions were examined.  Competitors of Pets Unleashed include any retail pet store providing pet food, supplies, and pets in Marathon County. Although Pets Unleashed also provides grooming services, the locations which solely offer grooming services were excluded as competitors since Pets Unleashed offers food, supplies, and pets in addition to grooming. Using the location of current competitors in Marathon County, the current market penetration was established. The market penetration was calculated based on population and number of competitors per zip code and then weighted by the sales volume of each competitor.  The market penetration was weighted by sales volume considering PetCo and PetSmart have high sales volumes which contribute to a more saturated market in the areas near those stores.  The areas with greater market saturation are likely areas to avoid for a potential location.

Market Penetration 

The final element used to determine potential store locations a gravity model calculated between Wausau in Marathon County and surrounding cities. The city of Medford to the North West of Wausau, Antigo to the North East of Wausau, and Stevens Point to the South of Wausau were the cities selected for the gravity model. The gravity model was calculated to determine which of these cities have the strongest connection to Wausau based on population and distance. The direction of the city which has the strongest pull may benefit a potential store location. The results from the gravity model in combination with the results from the ideal customers, hot spot analyses, competitors, and market penetration are all considered when selecting the three specific potential store locations.

Results:   

The final potential Pets Unleashed store locations in Marathon County were selected based on the results of the above demographic and market analyses. All three of the potential locations are located within a zip code determined to be the locations of ideal customers. Each potential location is also near an area of sufficient population and high income based on the hot spot analyses. Furthermore the potential locations were selected in areas away from competitors, specifically away from the Rib Mountain area which has a highly saturated market contributed by PetCo and PetSmart. The gravity model being the final component determining the final potential locations determined that Medford and Stevens Point had an equally stronger connection to Wausau compared to Antigo. Therefore, the potential locations were selected in the southern and western halves of Marathon County.  The three potential store locations have also been ranked based on specific demographics. The rankings were determined by population of age between 30 and 60, household income, total population, owner occupied homes, and households with pets in a two mile radius of each potential location. The rankings determined that the potential location in Schofield being the best location in regards to the selected demographics and the location in Marathon being the least desirable.

Potential Locations 

In addition to ranking the potential store locations based on select demographics, a trade area for each location was established with a five, 10, and 15 minute drive time. Not only does the trade area display the areas within each drive time interval, but a report was generated providing specific demographic data for each area.  The data from the reports indicate that the trade areas for each potential location are consistent with the desired demographics. Considerably more than half of all households for all trade areas are owner occupied and within both the age and income requirements. Moreover within all parts of the trade areas for each potential location shows that around 60 percent of all households own at least one pet.  

Potential Location Trade Areas

Schofield

Data	5 Minute	10 Minute	15 Minute
Total Households	1,252	8,859	20,477
Household With Pets	63.1%	57%	58%
Median Age	36.6	37.5	39.1
Owner Occupied Homes	980	5,895	14,429
Median Income	$69,732	$56,223	$55,866

Stratford

Data	5 Minute	10 Minute	15 Minute
Total Households	743	2,443	12,120
Household With Pets	70%	64.7%	60%
Median Age	43.1	43.5	40.9
Owner Occupied Homes	574	1,931	8,770
Median Income	$61,221	$63,270	$53,106

Marathon

Data	5 Minute	10 Minute	15 Minute
Total Households	905	2,377	6,188
Household With Pets	59%	64%	59%
Median Age	38.4	40.1	40.2
Owner Occupied Homes	666	1,974	4,401
Median Income	$52,732	$56,058	$52,090

Recommendations:

All of the potential locations along with their given trade areas would be more than suitable for Pets Unleashed first store. However, the potential location in Schofield is the most desirable location based on the rankings given for all three locations and the reports generated from the assigned trade areas. The Schofield location has the greatest population within its trade area ensuring the most potential for customers. In addition to having a trade area with a larger population than the other two locations, the Schofield location has the greatest household income within its trade area. The only problematic aspect to the Schofield location is its closer proximity to the market area saturated by PetCo and PetSmart compared to the other two locations. Despite its closer proximity to PetCo and PetSmart, the Schofield location has an actual location within a zip code with a fairly low market penetration. Overall, the Schofield location is the most promising location with the most promising trade area for Pets Unleashed in Marathon County.  

Trader Joe's Retail Site Selection

Introduction:

Recently the Trader Joe’s Company has been particularly successful. The current success of the company has established an interest in opening another store. The Minneapolis, Saint Paul area in Minnesota has been a specific area of success for the company and is an area of particular interest for a new store location. Investigation of current demographic and marketing trends in Hennepin and Ramsey County is necessary in order to determine the most desirable location for a new store in the Minneapolis, Saint Paul area. Upon Investigation of several marketing and demographic factors in Hennepin and Ramsey County, three potential Trader Joe’s Store locations will be determined and ranked based on their potential.

Methods:

Before various marketing and demographic trends can be investigated, it is necessary to determine the current locations of the existing Trader Joe’s Stores as well as each stores respective customers. The current store locations will provide an understanding of the areas to avoid for a new store location as Trader Joe’s does not want to take away sales from their current stores. Also, understanding the location of Trader Joe’s customers not only provides information on which customers utilize which store, but establish a mean center that represents an ideal store location.

In addition to understanding the locations of the current stores, it is also necessary to understand the market penetration of the current Trader Joe’s Stores in Hennepin and Ramsey County based on zip codes. The market penetration is beneficial for understanding how well Trader Joe’s is reaching their market area in a particular zip code. Understanding which areas are successfully penetrating their market and which ones are not offer insight on specific areas that would benefit from a new store.   

In combination with Trader Joe’s current market conditions, a hot spot analysis of Hennepin and Ramsey County is used to understand demographic information in the Minneapolis, Saint Paul Area. The first hot spot analysis displays total population data in 0.5 mile grids. The second hot spot analysis displays median household income in the same 0.5 grids. Comparing the population hot spot analysis to the median income analysis provides the means to determine any correlations between income and population in Hennepin and Ramsey County.

Aside from the hot spot analyses providing beneficial demographic information for Hennepin and Ramsey County, it is also necessary to determine which zip codes possess ideal customers. The ideal customers are determined by several factors including population, income, and family size. In terms of these factors the ideal customers are located in areas with a population greater than 15,000, have a median income greater than 65,000, and a family size larger than two. Zips codes that meet all three of these requirements are areas set aside as ideal customers.

After analysis of the methods above three potential Trader Joe’s Store locations are determined based on ideal location, market penetration, population and income data, and the location of ideal customers.  Based on the data, the general area of each potential store location is determined and then specifically selected based on locations that are suitable to build a new store. Once the specific locations are selected they can be ranked. The rankings for the potential stores are based on total population data, median household income data, average amount spent per week above $150 by household, and the amount of individuals shopping at Trader Joe’s over 6 months. The specific data is used to rank each store in comparison to the ideal store location set at the mean center of all Trader Joe’s customers.

Conclusion:

Trader Joe’s is successfully penetrating their market for much of Ramsey County and just over half of Hennepin County. The high market penetration in the zip codes in the western part of these two counties can be explained by the location of four out of the six stores in this area. These four stores are utilized by the majority of all the Trader Joe’s customers causing a high market penetration. The zip codes in most of the eastern part of the Hennepin County is below 32 percent as there two less stores and fewer customers.

The hot spot analysis for total population show that the higher populated areas are also located on the western half of these two counties, which account for more stores and customers’ existing in this area. The population of east Hennepin County is significantly less than the western half of the two counties as it is further away from the cities of Minneapolis and Saint Paul.

The hot spot analysis for median income shows an inverse relationship compared to the hotspot analysis for population. The areas with high income are located in east Hennepin County where the population was significantly lower than the rest of the two counties. As the population increases toward the western half of the two counties the income appears to decrease. Overall, the less populated areas appear to have a higher median income compared to densely populated areas of Minneapolis and Saint Paul.

The hot spot analysis portrays population and median income data for all of Hennepin and Ramsey County, which are essential demographic factors for determining potential store locations. In addition to population and income data, it is necessary to incorporate average family size for determining ideal customers as families tend to utilize grocery stores more often than singles and young couples. The zip codes that have a population greater than 15,000, a median income greater than 65,000 and an average family size greater than 2 are located primarily in the center of Hennepin and Ramsey County and north Ramsey County.    

Recommendations:

The three potential locations for new Trader Joe’s Store were determined based on analysis of the above conclusions. Based on the ideal customer locations, the areas of higher median income further from the cities, and sufficient population, west Hennepin County was selected as a general area for potential store locations. Not only is west Hennepin County appropriate in terms of income and ideal customers, but it is away from the market area that Trader Joe’s is already successfully penetrating. Specific locations for potential stores were selected within the general area of west Hennepin County based on closest possible proximity to the ideal store location as well as a sufficient distance away from current stores. The specific potential stores are then ranked compared to the ideal store. The southernmost location near Chanhassen is determined to be the potential store location with the best rank of the three potential stores.