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.