How to Know Where NOT to Lease Retail Real Estate

Retailers frequently fall into one common site selection trap— overestimating the value of a large quantity of consumers, rather than zeroing in on and identifying the right consumers first. 

11/18/21

By Isabella Yalif

The biggest mistake retailers make in their site selection process

Retailers frequently fall into one common site selection trap— overestimating the value of a large quantity of consumers, rather than zeroing in on and identifying the right consumers first. 

Modern site selection starts with knowing your customers. With mobile data, you can build rich customer profiles to identify locations specifically suited for your store’s business hours. Leveraging mobile GPS data can tell you: 

  • Whether your customers are traveling on foot or by car
  • Where they live and work
  • Businesses they frequent
  • Where they come from before entering your store and where they go afterward

When you layer in psychographic data broken down by the time of day and the day of the week, as well as other shopping behaviors, you can not only identify who is going into your existing locations, but also who is NOT. 

In this article, we’ll take a look at a grocery store that opened a store at a location that would give us pause based on our understanding of customer profiles. 

By taking a closer look at customer psychographics and corresponding life modes, we’ll help you understand what to look for when opening up new locations, so you can avoid making similar mistakes. 

Whole Foods’ Customer Base

Whole Foods is one of the largest supermarket chains, but they aren’t immune to the occasional store closure. We sampled several Whole Foods locations in the country and identified their top consumer psychographics — Boomburbs, Up and Coming Families, Metro Renters, and Young and Restless (What we call “Laptops and Lattes, Metro Renters, and Trendsetters”).

In 2017, Whole Foods closed a store in Prescott, Arizona. Betsy Harden, Whole Foods Corporation Communication Coordinator, stated in an email:

“As part of yesterday’s Q1 earnings, we did announce the close of nine stores including our Prescott, Arizona location. This was part of an overall evaluation of our portfolio of stores as we work to position Whole Food Market for long-term success.”

When we examine the types of Whole Foods customers in Prescott, Arizona, we can identify a red flag that would have made us hesitate to open a store in this location. 

Compared to the general consumer population in Prescott, which is “Silver & Gold, Set to Impress, Old and Newcomers,” Whole Foods’ main audience is “Laptops and Lattes, Metro Renters, Trendsetters” — two very different demographics. 

As you can see, there is little overlap between the consumer base of Whole Foods’ main audience and the people of Prescott, which would lead us to believe the Prescott location might require further investigation before opening a store at this location. 

Retailers need to understand store performance at granular levels, details that only data analysis can provide. With the power of A.I., machine learning, and predictive analytics, Locate can process and analyze large retail data sets to inform the site selection process and forecast future store performance. 

If you’d like to build a site forecasting model customized for your brand, fill out the form below.

 

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