Ethan Nauman

Geog352.001

Final Retail Site Selection

 

Cabela’s Retail Site Selection for Minneapolis Area

Cabela’s Store:

                The store that I am choosing to do for this final retail site selection is a Cabela’s store for the Minneapolis area. The reason that I am choosing the Cabela’s store to find the retail site selection is because recently I have visited the Minneapolis area and every time I have passed the Cabela’s store in Woodbury Minnesota. I also thought that this was a funny place to have a big name brand store as it is on the east side of the twin cities just as you crossed the border to get into Minnesota. Now I am not from Minnesota so I don’t know the demographics for the Woodbury area or for the Minneapolis area for that matter, but I always thought that Cabela’s would pick a wealthy suburb of the twin cities to be able to support their store. I wanted to know if this was the only store in the Minneapolis area, because if that is the case I believe that this area could easy support if not one, but more stores. The Minneapolis area is a perfect location to support a Cabela’s store because it’s a store for outdoorsmen and women. With a thriving hunting and fishing community surrounding the Minneapolis area, I believe that Cabela’s is a must stop location for the surrounding population around the twin cities. With that being said, this allows for the Cabela’s store to have a large area to pull customers from. With just one store currently on the eastern side of the cities that I found this allowed for other outlet stores to cut into Cabela’s customer base. After doing some more research, I found that there is also another Cabela’s store on the northwestern edge of Minneapolis in Rogers MN. With Cabela’s having two stores now on opposite sides of the twin cities, it allowed for them to broaden their customer base while hopefully not competing with each other. I want to find that if another Cabela’s store came into the area if it would be able to thrive, or would it just be taking away from the two stores that currently occupy the area.

Demographics:

                What is being sold at Cabela’s stores suits the needs for the outdoorsmen and women alike. Although my study area, Ramsey, Hennepin, Anoka, Washington, and Dakota counties, are surrounding the twin cities with much of the area being suburbs, these two stores are able to survive in the area. My study area supports over 2.5 million people. Now not everyone is an outdoorsmen, but with 2.5 million people and only two Cabela’s stores to support those outdoorsmen, I believe that there is an area that another store would be able to be placed and not take away from the other two stores while still attracting enough customers and make a profit. The ideal customers for a Cabela’s store would be people living in the suburbs I believe. Although there are people living downtown the twin cities who are outdoorsmen, they need to get out of town to be able to do anything outdoors. With the two stores on major highway routes it is easy access for them. I want to concentrate on the suburb area that is outside of the twin cities that allows the customers to go straight from the store to the field and use the products.

Market Structure:

                With market structure always being a concern, the Cabela’s store market tends to be the top of the line head guy on the block. There are many competitors with the outdoors business especially in a study area so big. It seems that every hardware store now has an outdoors section, and you can’t forget about the Gander Mountain’s, Walmart’s, and small town business’s that are selling these outdoors products. I believe that many of these other stores are able to take away the customer base from Cabela’s because they are smaller stores and are usually more convenient within these cities. It’s less stress and much quicker to be able to run inside your hardware store five minutes from home and get what you need, instead of making a half hour drive to Cabela’s were you know it will be packed but you also do have a larger selection of product to choose from. One thing I would bring up to Cabela’s would be is to maybe think about opening more stores with smaller store locations. Cabela’s is known for being an enormous store full of outdoors displays and animal mounts with the top of the line product. It wouldn’t be a bad idea to look at opening smaller store locations within two large cities that allow customers to have the feel of a local hardware store. The other question would be is would these small store locations be able to survive with just selling outdoors products.

First map:

figure 1

                The first map that I created was of the two store locations of Cabela’s, along with the Gander Mountain stores that are within my area of interest. The reason I choose to show the Gander Mountain stores was because these are the biggest competitors to the Cabela’s brand. Along with showing the Gander Mountain stores, I also performed a proximity analysis on the Gander Mountain stores. I wanted to see the stores that were within a 20 miles drive distance to the two Cabela’s stores. There were four stores that were within that 20 mile distance. By being able to single these stores out, I thought that it would help to narrow down the three store locations of my new proposal sites for Cabela’s. It did help me narrow down my three store locations to a certain extent. I wanted to be able to keep these store selections on major highways as well. The three store selections that I proposed were in Eden Prairie, Bloomington, and Lino Lakes. Although each of these site selections would also be within 20 miles of Gander Mountains, I realized that I needed to propose a fourth site selection allowing me to place this fourth store location on a major highway yet far enough away from having two Gander Mountain stores as competitors. My fourth store location that I propose is just up the street from Eden Prairie. This will have one Gander Mountain within 20 miles, but that shouldn’t cause an issue compared to having two stores within that 20 miles.

Gravity Model/ Point of Indifference:

figure 2

                The gravity model and point of indifference allows me to show the shopping characteristics of my given study area. It is an equation that shows the extremity of a city’s trading area where households would be indifferent between shopping in that city or going to an alternative shopping area in a different geographical location. With the point of indifference calculations that I performed, the trade area for the Minnetonka Cabela’s location look like a triangle. The trade area from Minnetonka to the Rogers Cabela’s would be 19.33 miles, the trade area from Minnetonka to the Woodbury location would be 22.02 miles, and the final trade area from Minnetonka to the proposed Cabela’s in Bloomington would be 13.47 miles. With a point of indifference being so large, the proposed Cabela’s site for the Minnetonka location would be the best fit.

Trade Areas:

                This is a map of the trade areas of the two existing Cabela’s, along with my fourth Cabela’s location proposal. I wanted to map the trade areas of 5 and 10 mile radius’s for these sites. This would allow me to see if there is any overlap when targeting customers. When looking at the map, there is a small overlap between trade areas for the fourth proposed site and the Rogers Cabela’s location. Although there is overlap, which is never good, it is so small that this won’t cause much of an issue. The only proposed location that wouldn’t have any overlap with the two existing Cabela’s would be the proposed site in Eden Prairie. All the other proposed sites would have a greater overlap then the Minnetonka proposed site.

figure 3

         



Assignment 4

Trader Joe's Site Selection

 

Introduction:

    This was a very unique assignment dealing with the site selection of Trader Joe's in the Minneapolis area. I was given five Trader Joe's locations in Hennepin and Ramsey Counties in Minnesota, and was asked to analyze them to see if another store is needed. For the assignment I was asked to look at market penetration, find the optimal store locations, locate ideal customers, and rank new sites for a new Trader Joe's store.

    Like I have with all the other assignments, the first order of business was to narrow my study area down to just Hennepin and Ramsey Counties. This allowed me to bring in the data for the five Trader Joe's stores along with all the customer data that was provided. After the data was brought in the first map I wanted to focus on was the Market Penetration Report. Market penetration is based on the number of customers in an area compared to a demographic variable such as total population. This is a useful tool to show the areas that you are doing well in sales, along with the ones that need improvement. Looking at figure one is the completed market penetration that I ran. You can see that the darker green areas are areas that show that Trader Joe's is doing a good job with reaching out to the market area. The light green areas show that Trader Joe's could do a better job of reaching out to customers in these areas. You can see from figure one that there are few customers out in the light green areas. One reason for this is due to a large commute time just to get back and fourth to a Trader Joe's. These light green areas are ideal places for a new store for Trader Joe's to expand in.

Figure 1

     The next process of finding a new site for a Trader Joe's store location was to find the mean center of all the consumers of Trader Joe's. By finding the mean center, this will allow me to analyze and see what direction Trader Joe's has the most pull in. By taking the pull of Trader Joe's into account I will be able to determine what direction expansion would be key to go in. In figure two the mean center of all the customers is shown by a pink dot. This dot is located just northwest of Minneapolis. By taking into account the customers that Trader Joe's already has, shown by the little blue dots, and the area's that these customers come from. It is very easy to see that there is lots of room for expansion of Trader Joe's in the Northwest and western part of the counties. With at least one more store on the western half of the counties, Trader Joe's would expand their customer base.

 Figure 2

    Now that I have the mean center for all the customers, I wanted to locate ideal customers or do customer prospecting. This located regions with ideal demographic characteristics for targeting new customers. I was looking at areas with the minimum population and annual income between $18,000 and $60,000. The reason I chose these values to use was because I wanted to locate areas outside of downtown Minneapolis and Saint Paul. I want to see the suburban areas that Trader Joe's can target to expand their retail with. Now I know that there is a large margin between the floor and ceiling of the price range, but without knowing the suburban areas around the cities well enough I wanted to keep I vague. In figure 3 you can see that Trader Joe's would be able to expand there retail store area to a larger range with the breakdown of the map. Looking closer at location of ideal customers in bright green, at first going back to the other maps my expansion was only set for the western area of the counties, but now taking into account figure three I believe that there is room for another store as well in the northeast corner.

 Figure 3

    The final process I wanted to run was to pick three locations based off my maps to add a new Trader Joe's. The first step for me to choosing a new Trader Joe's was to analyze my three other maps. Both figure 1 and 2 lead me to believe that a new location should be put in the western part of the counties, with figure 3 leading me to that as well. Figure 3 also shows that I could put a store location in the northeast corner. I would look at putting a store there if the population would justify for having two stores relatively close and pulling from the same customer base. I decided to go off of  figure 1 and 2 instead. The three locations I chose that would support a Trader Joe's expansion store were: 21550 S Diamond Lake Rd, Rodgers, MN. The second store location was 270 St John St, Loretto MN, and the third store location was 5575 Shoreline Dr, Mound MN. Instantly after looking closer at first store location in Rodgers MN, I knew that a Trader Joe's wouldn't be a good idea there. The reason I came to that conclusion was that there is already a Trader Joe's just down the highway in Maple Grove. Although for a new store location you want easy accessibility with a highway, I feel that the stores are to close together and would be pulling from the same customers more then likely. This left me with the new locations in Loretto and Mound MN. When looking on goggle maps at the Loretto store, the surrounding area was mostly farming community. This would be ideal if there were enough customers in the region. When looking at the potential store location in Mound MN, the surrounding area was suburbs and also had a large chain of lakes surrounding the area. Usually houses on lakes allow for a higher customer potential along with a bigger wallet. The store location that I feel that would best support a new store for Trader Joe's would be the location in Mound MN.

 Figure 4

    When taking into account of figures 1 through 3, it was easy to justify were a potential new store could be located. Looking at all the customers on all the maps I could see that Trader Joe's had a significant pull to allow me to put a new store location not on a major highway. This allowed me to narrow my new store locations to Loretto and Mound MN. Taking into account Loretto being a farming community I realized that Mound was the best place out of the three that I had for a new Trader Joe's location.