Market Research: Whose Your Market and How To Serve Them ... Is Our Mar… · Market Research: Whose Your Market and How To Serve Them Better By Larry E. Lund Real Estate Planning

Market Research:Market Research:Whose Your MarketWhose Your Market

andandHow To Serve Them BetterHow To Serve Them Better

ByLarry E. Lund

Real Estate Planning GroupChicago

312-751-1250

How Demographics and How Demographics and Household Expenditures Affect Household Expenditures Affect

Food Buying HabitsFood Buying Habits

Real Estate Planning Group

Family Size Declines as Women Family Size Declines as Women Enter WorkforceEnter Workforce

Real Estate Planning GroupSource: BLS

Expenditure Share of NonExpenditure Share of Non--NecessitiesNecessities(Necessities: Food, Clothes, Housing)(Necessities: Food, Clothes, Housing)

0

10

20

30

40

50

60

1901

1918

1934

1950

1960

1972

1984

1996

2005

Perc

ent

Source: BLSReal Estate Planning Group

Ernst EngelErnst Engel’’s Proposition of 1857s Proposition of 1857

As income increases, the proportion of total expenditures allocated to food decreases., housing and apparel stay constant, and “luxury goods” increases.Ceteris Paribus: Given that all other characteristics are held constant.


Was Ernest Right?Was Ernest Right?

Exp. Shares <$70,000

Exp. Shares >$100,000

% ∆ in Exp.$70K-$100K

Food Home 8.3 5.3 95%

Food Away 5.7 5.5 196%

Furnishings 3.4 4.5 311%

Apparel 4.1 4.1 209%

Entertainment 4.7 5.7 269%

Pensions 7.0 14.6 534%

Source: BLSReal Estate Planning Group

Changes in Expenditure ShareChanges in Expenditure Share1901

Food42.4%

Housing23.5%

Apparel14.0%

Entertain1.6%

Other18.6%

1972

Food19.3%

Housing30.8%Apparel

7.8%

Trans19.3%

Health6.4%

Entertain8.6% Other

7.8%

1950

Food29.7%

Housing27.2%

Apparel11.5%

Trans13.4%

Health5.2%

Entertain4.4% Other

8.6%

2005

Food12.8%

Housing32.7%

Apparel4.1%Transp

18.0%

Healthcare5.7%

Entertain5.1%

Ins/Pen11.2%

Other10.4%

Source: BLS Real Estate Planning Group

Change in U.S. Household Retail Change in U.S. Household Retail ExpendituresExpenditures

22

9.1

23.3

14.1

1.6

28.2

0 5 10 15 20 25 30

Percent Change

All Expenditures

Food Home

Food Away

Furnishings

Apparel

Entertainment

2000-2005

Source: BLS


Increasing Concentration of Increasing Concentration of Retail SalesRetail Sales

2033

4759

3346

5768

020406080

Perc

ent

1997 2002

Supermarkets

4th Largest 8th Largest20th Largest 50th Largest

050

100150200250300350

$ B

il.

2005 Sales

Wal-Mart and the Six Dwarfs

Wal-Mart Home Depot CostcoTarget Lowes WalgreensSears

Source: U.S. Census Source: Forbes


Public Markets at the Crossroads Public Markets at the Crossroads

“So if Everyone loves the Market so much, how come it didn’t catch on?”– Grocery stores copied it– Farmers Markets are Booming


ItIt’’s All About the Customers All About the Customer

Great Markets respond to the needs of the customer– Shopper– Vendor

The Shopper is King


Things You Already Knew about Things You Already Knew about Customer Behavior, butCustomer Behavior, but

DidnDidn’’t Know their Fancy Namest Know their Fancy Names


ZipfZipf’’s Principle of Leasts Principle of Least--EffortEffort

Most people, most of the time, are turned back by modest hurdles that they know could be overcome, with effort. To be habitual, an action must be relatively effortless or carry a particularly LARGEPSYCHIC REWARD.


Law of ConvenienceLaw of Convenience

Every additional step that stands between people's desires and the fulfillment of those desires greatly decreases the likelihood that they will undertake the activity. ICSC’s Top 10 Moments– Convenience as a driver

of customer traffic


LomonosovLomonosov--LavoisierLavoisier LawLawMatter cannot be created or destroyed. Matter cannot be created or destroyed.

So what about Sales?– Markets cannot generate new business or create

new buying power, it can only:Attract customers from existing businesses trade area or extend a trade areaFulfill a demand that has not been met within the trade areaCapture increase in buying power from growth in population, employment, or income.


ReillyReilly’’s Law of Retail Gravitations Law of Retail Gravitation

Reilly's Law basically states that people will travel to the largest store/center (selection) most easily reached (convenience). Programs calculate the probability of where customers will shop


NashNash’’s Equilibrium Theorems Equilibrium TheoremIn Game Theory, two stores selling the same merchandise will maximize their locational advantage by locating right next to each other at the mid-point: where half their consumers are located


A Theory of ShoppingA Theory of Shopping

Shopping Demonstrates Social Relationships –What do we care about?Shopping is a Devotional Rite – Pleasing others– Shopping as a “treat” - pleasing oneself

Veblen – “Conspicuous consumption”

– Shopping as “thrift”Hegelian dialectics – household interests vs. community interests. Shopping as a moral act

Shopping as Personal Identity

Source: Daniel Miller writingsReal Estate Planning Group

Physical Aspects of Market Physical Aspects of Market CapacityCapacity


Trade Area by SurveyTrade Area by Survey


Competitive Market AnalysisCompetitive Market Analysis


Pulling PowerPulling Power


Market ShareMarket ShareSelected Store Estimated Area

(S.F.)Estimated %

Market Share (Fresh Food Items Only)

Lexington Market 74,400 (240,000)

30%

Safeway 50,000 14%Superfresh 35,000 13%Hollins Market 15,500 (50,000) 12%The Avenue Market 17,360 (56,000) 6%Stop Shop & Save -

Pratt15,000 5%

Cross Street Market 27,900 (90,000) 4%Real Estate Planning Group

Sizing the MarketSizing the Market

Selected Fresh Category Hollins Market Potential from Huff Forecasting

Model Bakery $234,000

Meat & Poultry $1,342,000

Fish & Seafood $97,000

Fresh Fruit & Vegetables

$219,000


Value KeyValue Key

PriceQualityExperience


Understand Your Customer to Understand Your Customer to Focus on CustomizationFocus on Customization

Market Research is a ProcessNot a Product


Core CustomerCore Customer

GeographicPsychographic


ParetoPareto’’s Principles Principle

80/20 Rule states that for many phenomena 80% of results stem from 20% of the effort. In other words, focus on those who buys more at the Market.


Primary vs. Secondary StoresPrimary vs. Secondary Stores

Primary Store– 64% Conventional

Supermarket– 23% Supercenters– 6% Limited Assortment– 4% Warehouse– 2% Specialty– 1% Conv. Discount

Secondary Store– 63% Conventional

Supermarket– 16% Supercenters– 3% Limited Assortment– 9% Warehouse– 3% Specialty– 6% Conv. Discount


Your NicheYour Nicheas a Secondary Placeas a Secondary Place

Stock-up?In-fill?Proteins?Organics?Local?Ethnic?Experience?Meal Solutions?


Geographic Market Geographic Market SegmentationSegmentation

Live Downtown / Work DowntownLive Downtown / Work Outside DowntownLive in City Outside Downtown / Work Downtown

Live in City Outside Downtown / Work Outside Downtown

Live Metro Outside City / Work DowntownLive Metro Outside City/ Work Outside Downtown

Live Downtown/ Not WorkLive in City Outside Downtown/ Not WorkLive in Metro Outside City/ Not WorkLive Outside Metro/ Not Work


PsychographicPsychographicSegmentationSegmentation

Age– Lifestage

Race/Ethnic TraditionsIncomeEducation


ExperientializeExperientialize your your Commodities!Commodities!

-ing the thing– Experientializing the commodity

Pike Place Fishmonger throwingBaking

– The roasting, grinding, cooking, eating . . . .Make the customer have a good time buying


Knowledge is Experiential Knowledge is Experiential InformationInformation

Learn How to Transform Customer Experience– Customer Surveys – Sample Size/Correlations– Behavioral Tracking – Memory vs. Reality– Focus Groups – Memories

Measuring Sacrifice– What consumer exactly wants and settles for


““Work is Theater & Work is Theater & Every Business a StageEvery Business a Stage””

Create a Stage for Experiences– Workshops for Creating for Individualized

Experiences– Staging the Unexpected!


PPSPPS’’s 10 Qualities of Successful s 10 Qualities of Successful MarketsMarkets

Right vendor Right location Right mix Right mission Right public spaces Right connections Right economics Right promotion Right value Right management


Thank YouThank You

Larry LundReal Estate Planning Group

Chicago312-751-1250

Market Research: Whose Your Market and How To Serve Them ... Is Our Mar… · Market Research: Whose Your Market and How To Serve Them Better By Larry E. Lund Real Estate Planning

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