Assignment 5: Final Project

Camping World

1       What is Camping World?

Camping World is a new business looking to be based the counties of Ada and Canyon in Idaho who contain the Boise metropolitan area. Camping World want to sell tents, camping equipment, as well as backpacking or hiking equipment. This store is going to be more focused on campers who do not campers or RV's. This store is for the adventurer in all of us. Positioned near large wilderness areas like the Sawtooth National Forest, there are ample opportunities for people in this region to explore the great outdoors. The Boise area is also one of the largest metropolitan areas in the Pacific Northwest region of the United States. This large population base offers further business opportunities than just opening one store. With room for possible growth and with camping entrenched as one of America’s favorite pastimes, a future store in this location is a situation that cannot be passed over.

2       Demographics

Ada and Canyon counties have populations of 409,239 and 195,353, respectively. These numbers combined account for nearly 38 percent of Idaho’s population. Add that up with a 7.76% growth rate for the Boise metro from 2010, future customers are not a need for concern. However, due to the large pool of customers available, certain analysis should be run to help narrow the focus and identify the best customers.

The first part of this process would be running a Customer Prospecting tool within Business Analyst. The parameters set to find certain customers were the zip codes within Ada and Canyon counties had to have at least 20,000 people, had to spend more than 80 dollars on camping equipment, and more than 2,000 people had to have gone on an overnight camping trip in the last 12 months. The last two pieces of criteria were created by setting a number that was just above or below the median level for the given statistic.  

The end result shows the contiguous areas of Ada and Canyon counties contain the best areas for potential customers. These suburban cities offer more people who would be more likely to shop at Camping World than the larger city of Boise itself. 

The following image shows customer prospecting. The green areas represent zip codes that have customers who match a given set of criteria.

3       Trade Areas

Focusing in on where the best places for a store would be is a tough task. Figuring out which boundaries or guidelines one uses can be a complicated issue due to the the sheer volume of different parameters. For Camping World, three different trade areas were tested. Equal competition areas and simple rings were both utilized, but the best option was determined to be zip codes. 

The zip codes selected were taken from the customer prospecting analysis completed beforehand. The three cities and their zip codes were Eagle, Meridian, and Garden City due to their centralized location in the counties. Also surrounding Boise gives them a larger customer pool to select from. Kuna was ignored due to it's southern position and distance away from Boise.

This map shows the ideal zip codes that a trade area for a certain store should focus on for advertising and marketing opportunities.

4       Market Structure

Knowing who competitors are is crucial to the success of a store in a new location. Within Business Analyst, one can identify other stores in a certain area based on SIC codes. SIC codes describe what type of goods or services an establishment offers. 

To determine who possible competitors would be in the Ada and Canyon Counties area, the search was applied to specialty stores that sold backpacking equipment or tent equipment. This search included wholesale stores as well. Large-scale operations that included RV equipment were ignored as these are not the customers that Camping World would be worried about poaching from.

The results yield only three stores in the study area that would be considered as possible competitors. As one store is all the way in Kampa, this is not of concern for the ideal trade area that was selected from previous analysis. Market saturation is of no concern as there are still large amounts of people in the trade that Camping World stores can select from. 

This image shows where other camping or backpacking stores are located in Ada and Canyon Counties.

5       Gravity Model/Point of Indifference

The gravity model is used to determine how far customer is willing to travel for a certain good between two cities. Factors taken into account are distance between the cities and size of each city. This "point of indifference" is how far a customer is willing to go between the cities. These numbers can be used to identify where customers are coming from a certain store.

This image shows the formula for the gravity model.

These numbers are for the point of indifference for the city of Meridian.

Kuna: 6.8

Eagle: 5

Nampa: 6.7

These numbers are for the point of indifference for the city of Eagle.

Meridian: 2.6

Garden City: 5.2

Caldwell: 7.6

6       Site Selection

Using information from all of the analysis that had been performed prior, three sites were selected for a potential Camping World location. Sites were carefully selected by taking into account where commercial and residential zones were, as well as where major roads or highways were located. Finding the addresses off Google Earth required them to be geocoding within ArcMap so further analysis could be performed.

Site One: (2045 E Overland Rd, Meridian, ID 83642)

Site Two: (1001 S Bridgeway Pl, Eagle, ID 83616)

Site Three: (3600 E Fairview Ave, Meridian, ID 83642)

7       Ranking of Sites

To determine which sites would be most suitable for a new Camping World store, a site rank was performed. Using zip codes as the site which would be ranked upon, a variety of factors were utilized to discover which site would be best. The factors used were 2015 Median Household Income, Consumer Spending on Camping Equipment, and people who went on an overnight camping trip in last 12 months. The results show that the Eagle site, Store Two, is the best option. 

The map depicts which site is most likely to succeed based on Business Analyst calculations as determined by the user.

8       Selection of Site and Conclusion

After all analysis had been completed, the best location for a new store is clear. Store Two located in Eagle, Idaho should be the future location of Camping World. Eagle is sits in a good area with high income and city of Eagle itself is one of the fastest growing cities in Idaho. Along with it's distance away from potential competitors, this is the most attractive site option. Set up for success, Camping World can become firmly entrenched as one of the premier camping stores in the Boise area.

Assignment Four: Retail Site Selection

Trader Joe’s Retail Site Analysis

1       Expansion of a Franchise

Trader Joe’s is one of the most sought after grocery store franchises in the Midwest. This image has been carefully crafted by a selective process in how the chain selects its new store locations. Having a large presence in the suburbs surrounding the Twin Cities of Minnesota has blessed Trader Joe’s with a relatively wealthy customer base. Suburbs are considerably more attractive options for grocery stores compared to large urban cities as many people buy their groceries after work or after picking kids up at school. The large city is a place to work, not a place to eat at home with a family.

Six Trader Joe’s stores currently call Hennepin and Ramsey counties home. While this may seem like a significant presence, there are some gaps that remain. A host of factors can help determine where the next Trader Joe’s will be placed to fill in these gaps. It is essential to remember that one cannot possibly make an educated decision by only looking at one factor. One must gather all the data together and make a decision taking every factor into account.

2       Market Penetration

Market penetration is one of the greatest tools a business can use to see if its stores are reaching its full potential. Market penetration is a method that examines how well you are reaching your market area. It is performed by taking the total number of customers and dividing that number by the total number of people in each area to give a percentage of how well that store is penetrating its market.

For Trader Joe’s to be able to accurately see how they are reaching their market, a study area had to be established around Hennepin and Ramsey counties. This study area would be used in the subsequent types of analysis performed. Regions of the map were separated by their zip codes and then a dissolve tool was used to group zip codes touching one another with similar values.

The map clearly shows that the center of the counties is well served by Trader Joe’s. When it comes to the periphery around the Twin Cities, there are some areas that are under served. Focusing on the western end of the counties, it is clear there are some market penetration values that are lacking. By strictly looking at this date, one would want to place a store in the vicinity of under served Wayzata to also access places like Long Lake and parts of Minnetonka.

The following map shows the Market Penetration values for the counties of Hennepin and Ramsey.

 3       Hot Spot Analysis

The next tool used to help determine the best location for a new store was a hot spot analysis. A hot spot analysis makes it possible to find areas with high values at certain geographic scale. These values can be anything from population to income levels.

For the Hennepin and Ramsey counties, median household income was used. The grid on the map uses cells that are 0.5 miles in size.  

Looking at the map, one can see that the distribution of wealth is greatest around the suburbs, especially in the west-central and southwest of the two counties. A noticeable area of high income levels can be found far in the southwest near Eden Prairie and Minnetonka. A lack of stores around this area makes it an attractive option. 

The following map shows the Hot Spot analysis for Hennepin and Ramsey counties.

4       Mean Center of all Consumers

This type of analysis is more straightforward than the previous two. The mean center shows the exact middle of all consumers. As expected, the middle of all consumers is near the heavily populated city of Minneapolis. This large population base shifts the mean center to the east central area of the two counties.

On paper, this looks like a good place to open a new Trader Joe’s. However, using the analysis that has already been performed, the area near Minneapolis is not as viable as it seems on the map. These areas are already well served by surrounding Trader Joe’s and besides one small pocket, a lower income level compared to the suburbs.

However, moving too far away from this customer base could lead to a store that is not surrounded by enough people. Knowing where the mean center of customers is useful to know how a certain area is divided up demographically.

This map shows the location of the hypothetical optimal store location based on location for Hennepin and Ramsey counties.

5       Locate Ideal Customers

Locating ideal customers is a powerful tool within Business Analyst that allows a user to set his or her own variables to identify potential revenue streams within a certain geographic area. Using only two variable for this part of analysis, allowed the data that was to be presented was succinct.

The first variable was searching for areas at the zip code level where the median household income was above 100,000 dollars. This would allow the user to which areas had families with larger disposable income levels. The second variable would be the amount of people who have shopped at a Trader Joe’s in the last six months, but with a twist. The average amount of consumers who shopped at Trader Joe’s from each zip code was approximately 2,222 people. The second variable’s floor was set at 2,500 people to find an even greater amount of people shopping at Trader Joe’s

This analysis showed that the suburbs, with an exception to suburbs in the north, had the most amount of money and shopped the most at Trader Joe’s. These areas were unsurprisingly where the current Trader Joe’s stores for the most part resided. These areas would be the focus on where to place the next set of stores.

The map below depicts which zip codes best match the given criteria above.

6       Site Selection

Using information from all of the analysis that had been performed prior, three sites were selected for a potential Trader Joe’s site. Sites were carefully selected by taking into account where commercial and residential zones were, as well as where major roads or highways were located. Finding the addresses off Google Earth required them to be geocoding within ArcMap so further analysis could be performed.

Site One: (8015 Den Rd, Eden Prairie, MN 55344) The first site was selected in Eden Prairie in an area where there is a large shopping center. The site was also selected due to its proximity to an intersection of two major roads. This site is close to large population with a very high household income. The town of Eden Prairie is also under served when looking at the market penetration. The location of the store also allows it to tap into southern Minnetonka which is under served as well. These two areas also have higher than average amount of people shopping at surrounding Trader Joe’s.

Site Two: (6060 Clearwater Drive Minnetonka, MN 55343) The second site was selected with the same geographic information in mind as the first site: located near a major road and a large retail district. This store is situated farther north than the Eden Prairie site. Located in southern Minnetonka, it has access to towns such as Hopkins with large population bases as well as desirable income levels. These cities also have shoppers who want to spend their money at Trader Joe’s stores.

Site Three: (4150 Berkshire Ln N, Plymouth, MN 55446) The third site was mainly selected due its location in Plymouth which splits the distance between the two cities of Minnetonka and Maple Grove. While the central part of Plymouth where site three is located does not high income level compared to other parts of the city, its location on the intersection of 494 and Highway 55 could make it an attractive option to suburbanites leaving the city from work to home.

This map shows the position of the three possible sites for Trader Joe's. Site Three is the northernmost, Site Two resides in the middle of the two other sites, and Site One is the furthest south.

7       Ranking of Sites

A ranking of the three sites by Business Analyst would allow the user to determine which site may outperform the others given a set of criteria the user selects. Variables used to determine how the site would possibly perform are as follows: total population, median household income, average amount of money spent per week by households at food stores over 150 dollars on an individual basis, and number of people who shopped at a Trader Joe’s in the last six months.

The sites were ranked in the order that I thought they would appear. Site One’s high income level base as well the number of shoppers who shopped at Trader Joe’s made it the most attractive option of the three. Option Three was in a location that had much lower income levels compared to the other two options so its ranking of third is not surprising. 

This final map shows the ranking of the three sites with each site possessing a 1.5 mile buffer.

8       Selection of Site and Conclusion

Based on all the data presented, I believe the best site for the new Trader Joe’s location is quite clear. Site One in Eden Prairie is the best option to open a new location in Hennepin and Ramsey counties. Its position near some of the highest income levels in the area means consumers would be willing to spend money at a high end grocery store. With a large population in Eden Prairie as well as Minnetonka and Shakopee, there is ample room for growth. Its position near 494, a major thoroughfare in the Twin Cities, and its proximity to a large retail center makes it a viable area for consumers to access the store. With a large amount of customers already residing in Eden Prairie who spend their money on Trader Joe’s, it is only logical to make this the home of the newest Trader Joe’s. This site will allow the chain to continue to keep hold of its image as the preeminent grocery store in the Twin Cities area.