Trade Area Analysis

The five important elements for retailers to develop sustainable competitive advantages are:
customer loyalty, location, vendor relations Management information and distribution systems, and low cost operations

Store-location decisions involve two major considerations

Deciding on the general area to locate, that is, the city or trading area; and Selecting the specific site within that trading area.

 The customers major criterion in selecting a store is convenience, i.e. convenient location, convenience in cost and convenience in shopping

A careful retailer seeking a location considers several aspects of a prospective area such as:
Population Factor Literacy Factor Trading Performance Factor Accessibility Factor Facility Factors

Various methods are employed to assess the trade area and related factors. These methods include
Using checklist Using census data Survey of Buying Power Using Market Research Datas

A trading area is the geographic area from which most customers are drawn. Three types of trading areas are important to retailers
That of the store itself i.e. primary trading area. That of the shopping centre or area where the store is located i.e. secondary trading area. That of the city or metropolitan area i.e. fringe trading area.

Attempts have been made to quantify the degree of saturation. Some approaches are:

Sales per square foot of existing stores The ratio of store vacancies to total number of store The number of consumers per retail establishment

Financial planning for new ventures involves examining

cost of new premises, cost of fixtures cost of inventory