A trade area can be described as a geographic area that can be ascribed to a specific shopping centre, and that is primarily determined by its capability to attract customers given the obstructing or enhancing factors (Understanding Trade Areas para. 1, 5). A trade area is further divided into primary, secondary, and tertiary trade areas depending on the customer base and/or rate of spend.
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BestBet store is located 30 KM from Shanghai city, in the junction of two major roads leading to three middle class suburbs with an aggregate population of around 45,000 residents. One suburb is 3 KM westwards of BestBet store, while the second is 4 KM westwards on the same highway.
The third suburb is at least 3 KM on the northern side of the junction, but it is in another administrative district. High-rise residential buildings are sprouting up within the expansive area adjacent to the junction, but most of tenants there commute to Shanghai on daily basis for work-related duties.
It is believed that the junction is home to some 10,000 residents, but most of them work in Shanghai. On the east side of the junction, some 10 KM from the physical location of BestBet, there is an expansive residential complex believed to be home to at least some 25,000 high-class residents, but is separated from BestBet store by a lake.
Based on the above analysis, the primary trade area would be the area adjacent to BestBet store where high rise residential buildings are sprouting up, the secondary trade areas would be the middle class suburbs located on two major highways originating from the junction, and the tertiary trade area would be the expansive residential complex separated from the BestBet store by a natural lake.
The boundaries in this analysis consist of the administrative districts, the lake and the two highways. BestBet will benefit from customers depending on the availability of boats to cross the lake, traffic and transport charges on the two highways, and the northern administrative district customers’ perceptions of buying products from BestBet’s administrative area.
The population living in the primary trade area, in my view, does not provide the most potential for the store due to the fact that there is a considerable proportion of the population who buy commodities from the city since they commute there on daily basis.
However, this population still forms the primary trade area depending on the high number of customers that originate there when compared to the other areas. In my view, more needs to be done, particularly in advertising and marketing strategies, to appeal to the customers residing adjacent to the store to buy products from the store rather than buying from Shanghai.
The store’s marketing executives can also do much more in reaching out to the secondary trade areas identified since they have the numbers needed , not mentioning that they are well connected by the two highways and are within a short distance from the store.
Upon analyzing the site, it is safe to argue that it is a good location for conducting business when population figures, social-economic status of the residents, and the infrastructure are taken into consideration. In terms of the population, it is clear that an estimated 70,000 people reside within a 10 KM distance (maximum) from BestBet’s physical location. In theoretical terms, more customers directly translate into more sales.
The suburbs can be categorized as middle and high class, implying that the people who reside there have high spending behaviors. This is a positive point for a supermarket business. Lastly, the store is at the junction of two major highways, implying that the store can be conveniently accessed and the traffic flow is good.
Understanding Trade Areas. (n.d.). Web. <http://www.directional.com.au/>.