Papa Murphy's Site Selection

Introduction:

This assignment was an extension from the previous lab that was completed related to retail site selection. This project allowed the student to pick a particular store that interested them and perform analysis needed to locate a new location for a particular store. Since there was no actual customer data provided, it was up to the student to develop the different parameters that would be used for analysis. The goal was to use all of the skills developed throughout the semester for the final project. This is a hypothetical situation, but all the analysis performed would be utilized in the site selection process.

Case Study:

Papa Murphy's Take 'n' Bake pizza is looking to expand their presence in area surrounding Rochester, MN. There are currently two stores located in the city. As the city of Rochester, MN expands, Papa Murphy's sees an opportunity to expand their business within the region. Since Rochester, MN is much larger than many of the surrounding towns, many people travel there to shop, for entertainment or employment. The study area (Figure 1) used for this case study consisted of Dodge, Olmsted, Winona, Wabasha and Goodhue counties.

Figure 1. This map shows the greater study are for developing a new Papa Murphy's Store.
The red box within the study area shows the specific area of where a new store could be developed. 

Although the larger study area consisted of 5 counties in southeastern Minnesota, the specific area where prospective stores would be located are in the red box within the study area. This box encompasses Rochester, MN and all of the major roadways leading into the city. 

The first factor that used was to create a trade area. Since many of Papa Murphy's customers will most likely be driving the drive times from the current Papa Murphy's stores in Rochester is important. These drive times show how far a person can travel in any direction away from the store. The figure below (Figure 2) shows the drive time rings around the stores. 

Figure 2. This maps shows the different drive times from the two Papa Murphy's that
are currently in Rochester, MN. 

The rings were designed not to overlap, and there were three different classifications used: 5 minutes, 10 minutes and 15 minutes. Since Papa Murphy's is known for their freshly made pizza you take home and bake yourself, it was important to be accessible to many people. The time rings were developed based on the amount of time people may be willing to drive to pick up a pizza. These rings are most relevant to people that live within the city or in close proximity. People traveling to the city from farther distances may not travel strictly for pizza, but may be more inclined to stop if is is on their way out of town. 

Another important factor used to potentially find a new site was to locate competitor stores. The map below (Figure 3) shows the locations of potential competing stores. 

Figure 3. This map shows the location of the different competitors of Papa Murphy's.

Although the make up of these stores are different, they are still selling the same product. Most of the competitors are located along the major roadways leading in and out of town. They are more concentrated in the central and northwest parts of Rochester, MN. Knowing where the competing stores are located allows for a company to potentially fill an area that is not saturated with places that sell pizza. 

The next important factor to look at is the customer base that will be targeted. Since there was no customer data provided, the student had to develop their own guidelines in helping them find a new site. The three guidelines used to find ideal customers in this lab were household income, household size and population. These numbers were found at the census tract level, and the guidelines created were set at:

      Median Household income: Between 45,000 - 85,000

      Tract Population: 2,000 - 10,000

      Median Household Size: 2.0-5.0

Once these guidelines were set, analysis could then be ran to determine which census tracts met the criteria for ideal customers. The map below (Figure 4) shows the results of which census tract has the ideal customer base. 

Figure 4. This map shows the census tracts that have the ideal customer base.
It also shows the prospective sites for a new store to be developed. 

Also included in Figure 4 are the prospective site locations. These sites were chosen by the student based on all of the analysis performed. Once the sites were selected, the student then needed to rank them. Business Analyst was used to rank the perspective site locations. The tool "Rank Similar Site" was used in order to find the best site compared to the existing site locations within Rochester, MN. When using the tool, different parameters can be set in order to develop a more accurate model. The different factors included, 2015 total population, 2015 median household income, 2015-2020 growth rate: population, 2020 average family size and fast food/drive-in last 6 months at Papa Murphy's. Business Analyst takes these different factors and determines which numbers are significant. It then takes those significant results to rank the different perspective site locations. The map below (Figure 5) shows the results of ranking each point.

Figure 5. This map shows the ranking for each of the perspective sites. 

After locating where a new store should be built, a final factor had to be used in order to determine marketing ideas, such as advertisements for the new business. This final factor is called the point of indifference. This point signifies the point at which people become indifferent in which city or geographical direction they traveled for a particular good. The formula used is shown below (Figure 6).

Figure 6. This is the formula used to find the point of indifference between two cities. 

This formula compares the distance between each city to the population. The end result is the distance in miles to the point of indifference. In this study, three different cities were compared to Rochester, MN. The three cities and their point of indifference are listed below:

      -Austin, MN          29 Miles

      -Winona, MN        30 Miles

      -Owatonna, MN    27 Miles 

These distances could represent the distance marketers should send out advertisements or the distance people are willing to travel for a particular good.

Conclusion:

As shown in the many figures above, there is opportunity for expanding Papa Murphy's in Rochester, MN. Not only does the city have a growing population to support expansion, there are many people that travel there from out of town who could frequent a new establishment. The location of a new store is key to its success and there were a few options presented that will help the franchise continue to grow.

Retail Site Selection

Introduction: 

When deciding to build a new retail store, location is critical to the success of a business. If a business is not placed in an ideal location it could have a very negative affect. The store must be near the target customer base and typically the more people living around a store will increase the chances of having more sales. The location criteria varies depending upon the type of retail store as well as who the target customers are. The purpose of this lab is to showcase the different things necessary for successful retail site selection.

Case Study:

This particular case study will be looking at putting a new Trader Joe's in the area surrounding Minneapolis and St. Paul Minnesota. The customer data used was created by the instructor given to us to use. This case study is a hypothetical situation designed to give the student a background in retail site selection. The goal of this lab is to go through the different important factors that influence the location of a new store and then use Business Analyst to come to a final conclusion.

Figure 1. This is the study area used to find a new location
for a Trader Joe's in Hennepin and Ramsey counties. 

The first step in finding an ideal location is to narrow down your study area. In this particular case study, the study are will be Hennepin and Ramsey counties in Minnesota. These two counties encompass Minneapolis and St. Paul, which is where Trader Joe's would like to develop a new store. The map to the left (Figure 1) shows the study area with the other Trader Joe's stores already in operation.








The next step is to determine the market penetration of the stores that are currently in operation. Market penetration compares the number of customers to a particular variable, total population is typically used as the variable. This lets a company know if they are doing well with the population living in a particular area or if there is room for improvement. The figure below (Figure 2) shows the market penetration for Trader Joe's stores.

Figure 2. This map shows the market penetration
that Trader Joe's currently has in the study area. 

Based off of this map, the darker the green, the greater Trader Joe's is doing in that particular area. This analysis used zip codes as the defined geography. There were more zip codes than what is actually shown. The reason there are fewer now is the zip codes were grouped by the name of each city. Grouping by a city name, instead of strictly zip code, allows for a company to find what cities in particular they are reaching.

Figure 3. This map shows what areas of the city
are the most densely populated. 

The next step is to do a hot spot analysis and look at the population of the study area. Hot spot analysis identifies areas that have a high proportion of a particular variable at a specified geographic scale. In this study, each grid square is 0.5 miles by 0.5 miles. As the map to the right shows (Figure 3), the most densely populated areas are around the central and east central areas of the study area.

The next step was to locate where the ideal customers for Trader Joe's lived. There can be multiple variables chosen in order to locate a specific demographic group. Similar to market penetration, the geography used for analysis can be changed. Zip codes were used again in this example. For this study, the two variables selected were total population and median household income. Within the variables chosen, floor and ceiling values can be set. This allows for a very specific demographic to be identified. After this tool is run, a layer is produced with the results. Since this example uses zip codes, if a zip code area is showing on the map, that means there is a high number of your ideal customers living in that geographic area. The map to the left (Figure 4) shows the ideal customers.


The final step is to run the rank site tool. After looking at all of the different analysis results, the user is able to choose multiple different sites to be ranked by Business Analyst. In this example, three different sites were chosen and then ranked. When the sites are being ranked, different variables can be used to help the program make the best decision on where the new store should be located.


Conclusions:

The ranking of a potential store location is shown in Figures 2, 3 and 4. As is shown, the most ideal location for a new Trader Joe's is located in the eastern portion of the study area. This area is surrounded by an ideal customer base as well as a fairly high population. As shown in figure 2, it is in an area where Trader Joe's is already doing well. Although it may saturate the market slightly, it also has the ability to pull other customers from outside of the study area.