How do you align your market analysis with your retail strategy and objectives?

1 Define your target market

Before you start looking for new locations, you need to have a clear idea of who your target market is and what they want. You can use various sources of data, such as customer surveys, loyalty programs, social media, and online reviews, to segment your market based on demographics, psychographics, behavior, and needs. You can also create buyer personas to represent your ideal customers and understand their pain points, preferences, and motivations.

2 Assess the market size and potential

Once you have defined your target market, you need to estimate the size and potential of the market in each of the areas you are considering for expansion. You can use secondary data, such as census, industry reports, trade publications, and online databases, to get a general overview of the market size, growth, and trends. You can also use primary data, such as interviews, focus groups, and field visits, to get more specific insights into the market demand, preferences, and expectations.

3 Analyze the competition and positioning

Another important aspect of market analysis is to identify and evaluate your competitors in each of the potential markets. You can use tools such as SWOT analysis, Porter's five forces, and competitive matrix to assess their strengths, weaknesses, opportunities, and threats. You can also compare their products, prices, promotions, and locations to yours and identify any gaps or niches in the market. Based on this analysis, you can determine your unique selling proposition and positioning strategy for each market.

4 Evaluate the location and accessibility

The location of your retail store can make or break your expansion plan. You need to consider factors such as traffic, visibility, accessibility, convenience, and compatibility with your target market and brand image. You can use tools such as geographic information systems (GIS), location scoring models, and gravity models to analyze the spatial distribution of customers, competitors, and other relevant variables. You can also use site visits, customer feedback, and local experts to validate your location choices.

5 Estimate the costs and benefits

The final step of market analysis is to estimate the costs and benefits of expanding to each of the potential markets. You need to consider the initial investment, such as rent, utilities, equipment, inventory, and marketing, as well as the ongoing expenses, such as labor, maintenance, taxes, and insurance. You also need to project the expected revenue, based on the market size, potential, and share, as well as the pricing, promotion, and distribution strategies. You can use tools such as break-even analysis, net present value, and return on investment to compare the costs and benefits of each market and prioritize the most profitable ones.