Market saturation. Two words retail and restaurant organizations both crave and dread. But are you sure you’ve really maximized your footprint? There may be room to infill a market if you look closely. That means thinking scientifically, not just with your gut.
Start with a reality check of your current stores. Look at the layout of all locations by population density in the market. A logical step, you say. Doesn’t everyone already do that? Surprisingly, no.
Second, understand your core customers in the market. Identify them by population density breaks — urban, suburban, metro.
Then determine the percentage of that core customer base that you’ve already tapped, assessing whether you’re at maximum reach or have not yet achieved diminishing returns.
With those three pieces of information in hand, start to identify opportunities. Determine how far potential customers are willing to drive. If you’re a convenience store, the answer is not very far. Destination stores, on the other hand, can handle longer drive times.
There’s a high probability that any infilling is going to cause a certain level of cannibalization. So prepare to lower your sales threshold slightly for the new stores. While average unit value may drop a bit, overall revenue should increase.
At this point, if you have modeling capabilities, you can take it a step further to score the site and get a forecast for each location you’re considering.
Even without modeling, you’ll have a more accurate snapshot for determining infill possibilities, reaching your entire customer base and optimizing your business.