Geography Reference
In-Depth Information
share as estimated above. This gives rise to
estimates of trade draw .
APPLICATION: SALES FORECASTING
FOR RETAIL STORE LOCATION
Adjust for trade drawn from outside the 20-
minute isochrone, usually using a simple 'rule
of thumb' such as an additional 10 or 20 per
cent of the sales as derived above. This
percentage accounts for 'random' visits by
people living outside the catchment area and
may be established through analogies with
existing stores.
A typical problem in retail planning practice is to
determine the likely volume of sales to be derived
from a new retail outlet of a given size at a given
location. On such calculations may rest the
ultimate profitability of the store as well as the
amount that the company concerned is willing to
pay for the site (Guy 1995).
The calculation of sales embodies the principles
discussed in the previous section, including
definition of a catchment area, recognition of
competition from existing stores, and the
influences of both the transport network and the
socio-economic composition of the area
surrounding the store site. Clarkson et al . (1996)
show how these geographical principles underlie
the range of methods typically used by major food
retailers in the UK.
Broadly speaking, there are two ways of
calculating store sales. The first is one of the market
area analysis family of techniques, which rest upon
the principles of traditional marketing geography.
The process, which is described in more detail in
Figures 33.3 and 33.4, may be summarised as follows:
The second method involves use of a shopping
model, typically a spatial interaction formulation
as discussed in the previous section. Penny and
Figure 33.3 Estimating sales in a large food store using
market area analytical methods.
Define 'drive time' isochrones around the store,
typically at 10 and 20 minutes distance. Relate
these to residential areas and, using population
census data, estimate the total population living
within these drive time zones.
Estimate the probable market penetration (or
market share) of the new store within each of
these zones, dividing each zone if necessary
into smaller areal units such as census wards.
Estimation uses simple rules based upon
analogies with existing stores owned by the
same company, and also on a knowledge of
the locations of rival stores, existing and
proposed.
Calculate the amount of expenditure made at
the store from within the 20-minute drive
time zone by multiplying the population of
each small area by its assumed expenditure per
head on the goods likely to be sold in the new
store, multiplied by the percentage market
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