Trade Areas and Customer Origin
What is the maximum distance that the bulk of your customers are ready to travel to get to one of your stores? How does this distance vary as a function of population density (i.e. in urban areas, suburban areas, satellite cities and rural areas)? Can cannibalization be predicted? In other words, can sales from an existing site within your current network merely shift to a new site? The compilation and analysis of data regarding the origin of your customers can help us answer these questions. The data sources are diverse: POS systems, loyalty cards, store intercept interviews, surveys, contests or license plate reports. The key consideration is to pinpoint the origin of your customers, preferably in terms of their complete mailing address, or their Zip Code / Postal Code and the store in which the transaction takes place.
By calculating distances or “Travel Time” between each customer and their favorite store, Indicia can define a precise rule that distinguishes between the local area of influence and so-called in-transit sales. The primary trade area thus defined is the first step in explaining and understanding the performance of the best sites in your network.
Over the years, Indicia has perfected six different methods for calculating a trade area. The three most often used are: the 66th percentile, the inflection points above and the “Winning DA”.