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Keep Investing or Move on? How Market Potential Analysis Can Assist With Infill Decisions
From The Buxton Co
For many retailers and restaurants, this is a familiar scenario. Your brand has opened new locations extensively in a market. The market has performed great, but now you face an important decision. Is it time to move on to new markets, or are there still growth opportunities in the existing market?
This challenge is especially common with mature brands who may think they have few potential growth opportunities left, but it also affects emerging brands who are trying to determine if itís time to enter a new market after investing heavily in their home region. Thereís a fine line between overbuilding a market and leaving opportunities on the table. Finding the balance can be difficult.
Market research plays an important role in determining whether youíve maxed out a market or still have opportunities left. There are a variety of approaches for answering the question, but in this article, weíll describe one of the most common.
When conducting a potential analysis, you can ignore all existing locations to see the optimal layout (often referred to as a whitespace analysis) or simply identify new locations that can be added to the existing portfolio (referred to as an infill analysis). To determine if thereís any potential left in a market, an infill analysis typically makes the most sense.
The results were eye opening. Rather than finding a mere 27 new trade areas, which was the brandís original expectation, the analysis uncovered 191 infill opportunities. The brand used the revenue projection for each recommended trade area to identify the store format that would be the best match for demand and accelerated its development in the market.
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