Trader Joes Site Selection

Table of Contents.

I.                     Introduction

II.                   Market Penetration

III.                 Optimal store locations/Mean Centers

IV.                Ideal Customers

V.                  Site Ranking

VI.                Conclusion

I. Introduction

                Purpose:  

The purpose of this report is to summarize the site selection process for a new Trader Joes store in the Minneapolis/ St. Paul area which would allow the company to build a new location that would maximize potential profits.

                Methods:  The site selection was determined with analyses performed using E.S.R.I Business Analyst software.  The analyses that were performed include a market penetration report, a mean center calculation, an analysis of ideal customer locations and a ranking of the purposed sites

II.                   Market penetration

A market penetration analysis was done to determine where the Trader Joes Company is best able to penetrate their market within the Minneapolis/St. Paul area. It was determined that the company is best able to reach their target market in the cities directly surrounding the Minneapolis and St. Paul, and less so in the further outlying towns. The results can be seen on the map below. A darker color and higher decimal value on the legend indicates better ability to penetrate the target market.

Figure 1. Market Penetration.

III.                 Optimal locations/ Mean centers

The Purpose of this analysis was to determine three optimal locations for a potential trader Joe’s store. This was done using the site analysis tool in the ESRI business Analyst software. The analysis was performed within a study area that included Hennepin and Ramsey counties. The software then calculated the three areas within this study area were customers were centralized. This was calculated using customer location data. It was determined that the three mean centers were outside of the cities of Roseville, Edina and Maple Grove. This is further illustrated below in figure 2.

 Figure 2. 

Optimal Store Locations

IV.                Ideal Costumers.

Using the market analysis tool in Business Analyst, a report of locations for potential customers was generated. The report shows the locations of potential customers based on certain criteria. The criteria used in the analysis included customers between the ages of 30 and 39 years of age with a median annual income of $55,000 or higher and individuals who have purchased organic food within the past 12 months. The results can be seen below in figure 3. The green shaded areas represent regions with customers who fit the above criteria. The majority of these customers are located within the suburbs directly adjacent to the twin cities, more so around St. Paul

Figure 3.

Prospective Customers.

V.                  Site ranking

Using the site analysis tool, the three selected mean centers were ranked in terms of how well the met certain criteria. The criteria included population, household income and individuals who had shopped at Trader Joes locations within the past six months. The site closet to Roseville was ranked number 1, the site closest to Maple Grove was ranked second and the site closet to Edina was ranked third. Using this information, three locations within the surrounding area of the ranked sites were chosen as potential locations for a new store. Each of these sites are located within close proximity of a retail center, such as a shopping district or mall. The locations of these sites may be seen below in figure 4.

Figure 4. Site ranking and purposed locations

VI.                Conclusion

Based on the information that was obtained in the analyses, it was determined that the site located at 10 Rosedale Shopping Center in Roseville would be the ideal location for a new Trader Joes store. Based on the market penetration report this site is well within the ideal range for penetrated the target market. It is also located very close to one of the three determined mean centers. Based on the prospective customer report, this site is centrally located within a large area of potential customers who fit the desired criteria. Finally, this location is within close proximity of the highest ranked potential site yet is far enough away from existing Trader Joes locations that it will not be stealing potential business. I believe that this location would be the best choice for the company to build a new store in order to maximize their potential profits.