Process
Village Solution's Market Survey Process
Step 1
Conduct a comprehensive review of the potential market area surrounding the subject site. Estimate travel times to major retail districts, clusters and shopping centers to subject site.
Step 2
Determine the boundaries of the potential trade area for your site based on natural break points, drive time, natural and man-made barriers and competitive locations.
Step 3
Refine the Primary Market with a retail gravity model which adjusts the trade area boundaries based on the anticipated appeal of a preliminary merchandising strategy for the subject property, which fulfills unmet needs.
Step 4
Collect basic demographic data to include population, households, and average households, and average household income. The end result is an estimation of the total household incomes in the Trade Area.
Summary
At the conclusion of the Market Survey Process by Village Solutions, a preliminary primary and second market has been determined. The competitive strengths and weaknesses of retail concentrations have been determined and a preliminary merchandising strategy has been created. To conlude this market survey process, the basic demographic information of the trade area has been assembled and the total household incomes from the primary and secondary market has been calculated.
Village Solution's Sales Projection Process
Step 5
The sales projection process begins with a closer look at the Primary and Secondary Trade Areas by dividing the market into sectors. In the this step, comparable neighborhoods are grouped together based on incomes, lifestyles, life-stage, and household density.
Step 6
In this step the demographics of each sector are collected to include households, average household income and total household income for the entire sector. Additionally, education, home values, age, and household make-up are also analyzed since retail expenditures vary by the make-up of the household.
Step 7
The retail sales potential of a shopping center location is calculated as a percentage or capture of non-auto retail sales in a trade area and inflow sales from shoppers not living in the trade area. The potential of a trade area may be spent outside of the trade area as shoppers may travel outside of their neighborhood if a shopping center is not located in the neighborhood or the existing ones do not meet their needs or they may turn to the internet or catalogues to make their purchases.
Summary
Total retail sales are 56% of total household incomes and non-auto sales are 72% of total retail sales. Non-auto sales are captured by various categories such as grocery, hardware and GAFO (General merchandise stores, Apparel, Furniture and furnishing, and Other such as books, sporting goods), hardware, and miscellaneous retail stores. As an example GAFO sales are 35% of non-auto sales and Summary grocery sales are 14%, dining and drinking is 13%. Various formats such as catalogues, the internet, free standing shops and shopping captures capture various percentages of the category sales. A regional mall captures 25% to 45% of the GAFO potential from its trade area which represents of the mall's total sales.
Village Solution's Merchandising Process
Step 8
Determine the preferred retail, entertainment and dining characteristics of each sector by conducting a PRZIM analysis which locates and groups like consumers into common clusters. Clusters are based on factors such as income, education, and employment. Additionally, the PRIZM analysis identifies lifestyles based on a variety of consumer behaviors such as product, media choices and recreational choices, travel, investments, and types of vehicles. Other variables include cultural and social institutions, regional characteristics, employment, and density.
Step 9
In this step we target consumer clusters that are projected to produce the highest potential sales for the subject property. A careful analysis of the target consumer lifestyles and buying behavior creates a vivid profile of their aspirations and consumer needs.
Step 10
Uses, activities and shops that are not fully represented in the market are programmed for the new shopping center. In this step compatible merchant clusters are planned in a manner that defines a “Unique Point of View” for the project and meets a clear need in the marketplace.
Step 11
The retail composition of the subject property is tested against an overall market position proposed for the new development. In this step a clear and unique point of view is created that differentiated from all other choices in the market.
Summary
The conclusion of the preliminary merchandising phase results in the definition of a unique point of view for the development through the creation of a merchant mix that is highly responsive to the unmet needs of the marketplace. In this example the broad themes of the river walk, urban living, creative expression, cultural production are the primary building blocks. The fine grain elements of the plan become the integration of music, art, and creativity into the plan. These components are used to further refine the merchandising strategy of the plan.
Village Solution's Project Process
Step 12
The proposed merchant mix and their ability to pay the required rent to provide an adequate return on the required capital to develop the project is analyzed in this step. In brief the sustainable rent that can be paid by a merchant is a factor of the sales that the tenant can reasonably pay. In general restaurants can pay 8% of sales in total rent and specialty shops can pay 10-12%.
Step 13
The retail composition is refined in Step 13 where a continuity of retail, restaurant and entertainments uses are placed on the plan in a manner that facilitates traffic flow and cross shopping. A major part of this step is to model the ideal combination of merchants in order to provide a balance of store choice, critical mass, destination anchors and an economically viable plan.
Step 14
The final step circles back through the entire process but with a holistic view of the results of the previous steps. In this step trade areas are revised based on the projected pull of the merchant mix. Finally, compatible merchant clusters are finalized in a manner that defines a “Unique Point of View” for the project and meets a clear need in the marketplace.
Summary
The end result of this process is the creation of an economically viable and market responsive project concept and conclusion of the preliminary merchandising phase results in the definition of a unique point of view for the development through the creation of a merchant mix that is highly responsive to the unmet needs of the marketplace. In this example the broad themes of the river walk, urban living, creative expression, cultural production are the primary building blocks. The fine grain elements of the plan become the integration of music, art, and creativity into the plan. These components are used to further refine the merchandising strategy of the plan.