Expanding into new or changing territory is a common occurrence for retailers of all sizes. To be successful, a retailer needs to be able to measure the market capacity and store capacity of a trade area. Market Discovery is the critical first step any retailer needs to complete in order to understand the market potential of a city or country.

Market capacity quantifies the number of potential customers that exist in a trade area, aligning with the retailer’s current customer base (look-a-likes). Store capacity looks at the competitive landscape with the potential customer base to determine how many new locations the market can sustain. Combine the two, and you get the share-of-wallet potential, answering the crucial question: “How much money exists in the marketplace for our product?”

The other benefit to Market Discovery is an understanding of customer habits if you are unfamiliar with the market. While a proposed site may look great on a map, there may be innate tendencies in the market that would prevent that location from being successful. Perhaps the customer base doesn’t enjoy crossing a river to reach the new location. Or maybe traffic during rush hour is too prohibitive to make entrance and egress from the proposed parking area feasible. Market Discovery can help you identify these barriers.

For retailers looking to expand internationally for the first time, Market Discovery can help you identify the different consumer habits in the new market. For example, if a client with a large retail network in the U.S. was considering entering into Canada, Market Discovery is vital to determine clear market expectations. How many locations can you realistically open? Getting a true sense of the market opportunity gives you the time to set realistic revenue expectations, plan capital budgets, delineate trade areas for franchises, etc.

Whether you are a local retailer expanding national or a national retailer expanding abroad, the key stepping stone to a well planned expansion strategy is know who your clients are today, and more importantly who they are tomorrow.

-George Anderson

Based in Toronto, Ontario, George Anderson is Vice President of Market Analytics for NAI Global, and works closely with retailers and financial institutions using geo-demographic analyses to identify and evaluate markets for expansion around the globe.
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