Retail location analysis

Jim Fisher is the founder and CEO of IMST Corp. headquartered in Houston, Texas. IMST Corp. is a retail location analysis firm serving the convenience store/petroleum, foodservice, supermarket, and specialty retail industries. It is the largest research firm serving the independent retailer. Services include retail market analytics, site evaluation, foodservice analysis, car wash and quick lube evaluations, cannibalization impact studies, facility profiling, and custom market research projects.

Web: www.imstcorp.com

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Recent Questions:

1) If I'm looking to add a store to a particular market, what's the optimum traffic count that I should be looking for?
Neither optimum, ultimate, minimal, or appropriate matter in actually answering this question. The relative vehicular volume is important as it relates to the specific targeted trade area. I do hope this does not sound like I am trying to provide a vague answer, however, that statement is exactly true.

The level of vehicular volume that is relative in Dodge City, Kan., is totally different when compared to Phoenix. Likewise, the level of significant traffic can vary within the diverse trade areas that make-up the total Phoenix market. Two other areas of significance are what we refer to as traffic flow (does the volume truly matter and impact the studied site) and the overall quality (type) of traffic.

2) Is there any way I can measure the traffic patterns in my store?
Several ways are used. One of the simplest is to create a flow schematic of the store and chart the movement pattern of every customer that enters the store. This is done within specific time-frames to better understand how patterns (and needs) vary with the time of day(night). The results can help establish what action can be taken in terms of "flow merchandising." This is difficult to describe in written form, but easily understood as it is explained. Another method that is used is reviewing videotapes from a "merchandising perspective" and not simply a security perspective. It is not only the inside of the store that matters in terms of traffic patterns; on-site(lot) studies should also be routinely conducted to determine overall on-site movement, exposure factors, barriers that have been created, etc. Observation is key regarding all traffic patterns. After observation and charting, then one can establish what merchandising actions must be taken.

3) How do I know when it is a good idea to add an ancillary profit center to my site, like a car wash, lube center, foodservice, etc.?
In the majority of cases it is not a good idea. I say this because the highest probability of profit center cannibalization when this action is taken without overall consideration being given to the individual and distinct requirements of each profit center. Physical site conditions determine what can and cannot be accomplished. Too many times commitment is given to a specific action and the resulting impact has not been established. Likewise, many times an ancillary profit center is added in the hopes of saving a facility that cannot be saved, resulting in an even greater loss. Retrofitting onto existing property with an existing facility is one of the most difficult tasks to achieve that will result in greater profitability. Furthermore, what type of market study has been done to determine what ancillary profit center should be added? Is this particular action being taken because any unsatisfied need within the market has been identified? Or is it a case of once again throwing something at the marketplace hoping it sticks? One also must establish the "comfortability factor/level" that must be acknowledged to succeed ... if the market says you should add a sushi bar and you are not comfortable with running a sushi bar then you must determine what your alternative action should be. In many cases, simply thinking "outside of the box" will provide more opportunities than could ever have been "structurally" imagined.

4) How do I know when a site is doing poorly enough to begin looking at the possibility of selling it?
Only after you have totally evaluated the existing market the facility is serving (trying to) and implemented the appropriate market strategies to meet the requirements of the market. In other words, if the facility is 5 years old and has not been significantly improved or updated, then I guarantee you it is out-of-date in very specific ways in relation to the targeted market. That is because the market the facility was built to serve five years ago has changed, however, the facility has not. The majority of all competitive actions that are taken are due to just this reason. Potential competitors analyze the existing level of retail operations within a specific trade area and determine they can enter the trade area and successfully establish a relevant market position. Simply centered on the fact that existing facilities did not stay current relative to the market. Until operators truly know and understand their customers they will never adequately serve them. After all applicable market strategies have been identified and implemented and the facility still does not reverse the downward movement, then it is time to establish what is the "best use" relative to the "dirt strength" of the site. It is at that time the operator must determine his "comfortability factor" relative to what should be offered on the property. All facilities have a determined life span; Difficulties arise when personal emotions become intertwined compromising reality and interfering with established life span patterns and market relativity.

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