Trader Joe's Retail Site Selection

Retail Site Selection for Trader Joe's

Presented to:
Trader Joe's 

Prepared by:

Ian Beal

University of Wisconsin Eau-Claire

Overview:

Trader Joe's is a for profit company looking to open up a new store in the Minneapolis Minnesota area.  They want the customer data from Hennepin and Ramsey counties to analyzed in order to find the best spot for a new store.  They believe this data could provide the information for the best location for a new store.  Business Analyst will be used to run multiple tests to determine the best spot for the new store.  

Process:

To begin the process of finding a new store location the existing stores were created into a map along with the area being examined. The new store will be located within Hennepin and Ramsey Counties.  The black area in the map below (figure 1) represents the two counties merged together into one study area.  This is the area all of the data will be taken from.  

Figure 1

Trader Joe's provided customer information from the area.  This is a valuable resource when finding the best location for a new store.  Figure 2 shows the store locations and where all the customers are located.  

Figure 2

Business Analyst allows for ideal customer locations to be located based off parameters entered.  This creates zones that identify the best areas based off the parameters.  Figure 3 identifies the zip codes within the study area that have the highest average population and the highest average household income.  This allows for the most ideal customers to be located.  The most ideal customers are within the areas that are green in the map below.  This is crucial for finding the best location for the new store.  A store that is nearest these areas will produce the most customers and revenue.  Business Analyst allows for the user to easily find the mean center of all the customers.  This is represented in figure 3 by the large yellow circle. Figure 3 shows that there are stores currently located in some of the areas with ideal customers.

Figure 3

To find where the current store locations are best reaching the current customers a market penetration report can be ran.  Market penetration takes the customers in each zip code and divides this by the total population of that area.  After this was done a map (figure 4) was created to show the areas that are being utilized the best by the current store.  The areas that are lighter green are areas that could be targeted better to get them into the store.  These areas are also spots that could be targeted for the new store location.

Figure 4

Figure 5 is a graph that was created by the market penetration report.  It is a bar graph of the percent of population that is currently customers and what areas they are in. 

Figure 5

To find new possible store locations the market penetration map (figure 4) and the ideal customer locations map (figure 3) were utilized.  With these maps in consideration, google maps was used to find a building in a suitable area that could be used for a new store.  The buildings chose were located near the ideal customers and in areas where there are already known customers.  These buildings were geocoded then added into Business Analyst.  The map below (figure 6) shows the possible new locations marked by a red star.

Figure 6

To find the best possible location for a new store the 3 potential new store locations were ranked by a set of data that could determine the highest amount of customers.  These variables were: 2016 Total income, 2016 median household income, individual average spent per week by a household at food stores of $150 or more, and customers who have shopped at a Trader Joe's for more than 6 months.  Business Analyst then ranked the 3 possible locations from best to worst.  Figure 7 shows that the possible possible location south of Maple Grove has the best chance of being successful based off those parameters. 

Figure 7

Conclusion:

Business Analyst is a powerful tool that allowed for customer and population data to be used in finding the best location for a new Trader Joe's in the Minneapolis, St. Paul area.  A variety of tools were ran in BA, Market Penetration, Mean Center, Locate Ideal Customers, and Ranking Sites.  These tools provided the information needed to find the best location for a new store.  Beyond just the information that BA provided, the location of store number one is in between two wealthy areas of the twin cities.  Maple Grove and Minnetonka contain demographics that are favorable to be Trader Joe's customers.  The locations provide a template to find a building in that area that is for sale and can be turned into the most profitable Trader Joe's in the area.  The information is provided now it is up to Trader Joe's to make a decision based on the information they have.