Determining Site Selection for a $500 Billion Money Machine

The science of supermarket shopping is quite interesting, and centers around consumer behavior, shelf placement, strategically located displays and overall ambiance.  Shopper satisfaction, food demonstration displays with samples, and shopper rewards programs paired with the plain old fashioned feel good factor of satisfying the hunger for great deals, drives consumers to explore aisles of countless items and purchase more outside of their original shopping list.

When we delve deeper into the psyche of the retail grocery consumer, several factors are played out in production style, to entice this target audience into feeding the supermarket money machine. The CNBC primetime feature Supermarkets Inc., Inside a $500 Billion Money Machine, aired early this week, uncovering the psychology of the American retail grocery shopper as well as the story behind a crowded and brutal business generating half a trillion dollars in
annual sales.

The television special also focused on more specific trends used to analyze consumer behavior.  Did you know that some stores use heat maps to track which aisles you walk down — and which ones you don’t?  Or that milk is strategically placed so that you’re forced to pass hundreds of other items on your way to get it?

Take for example our locally headquartered Giant Eagle Market District, which is rapidly changing operational strategies to better serve their customers and differentiate themselves from the large and powerful competitors in the industry.  Many can attest to the shopping experience they deliver, which has evolved to include live entertainment, cooking competitions, food demonstrations and interactive displays.

Prior to the plethora of grocery goods that we obtain on an average of 1 to 3 visits or more per week, supermarket giants need to first determine site location, accessible to consumer target audiences that will not only shop and spend, but will actively participate in the supermarket experience while exploring
roughly 20,000 – 45,000 square feet of retail space (the Giant Eagle Market District store, which is part of the new Settlers Ridge development, is the largest of its chain stores, at 150,000 square feet).

Quality and location of leading national retailers, combined with population density, traffic patterns, traffic counts, competition and median income within a given trade area affect how a site is determined.  Retail development sites, are best selected within a projected trade area.  Site selection includes analyzing the area’s population to determine if it will provide enough shoppers (or dollars available for the purchase of food), as well as identifying the size, location, cost, and development feasibility.  Sites at major intersections with good vehicular access, heavy traffic and close proximity to the population base also provide great visibility and access to retail consumers.  The best suited location will take into account trade area competition as well as feasibility for the introduction of an additional store.  Factors such as development trends, daytime population, and metrics such as the number and value of building permits and home improvement loans also help in determining a retail site.

“Obviously, our retail clients have an unbelievably complex thought process when maximizing their store layout,” said Gregg Broujos, Managing Director and Founding Principal at Colliers International | Pittsburgh.  “And the real estate site selection process is just as complex which is why our clients value our assistance on the real estate side of their business.”

Posted on March 1, 2011, in Economy, Retail and tagged , , , , . Bookmark the permalink. Comments Off on Determining Site Selection for a $500 Billion Money Machine.

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