Assignment 4: Site Selection

Trader Joe's Site Selection

Presented to

Trader Joe's

Prepared by

Andrew Jeffers

April 26, 2017

Executive Summary 

Purpose and method of this report

Trader Joe's is a company whose goals, among many, include making a profit. They are interested in what is going on in the Minneapolis and St. Paul, Minnesota area, and they believe another store is needed and wish to expand their business and add another store in an advantageous location. The purposes of this report are to:

• Analyze the relationships between the six Trader Joe's location in the MSP area with the surrounding area using customer information provided by Trader Joe's and their store locations
• Determine and recommend three potential site locations for a new store and rank them from most to least favorable 

Using ESRI Business Analyst, a number of analyses were executed as a way of determining the best possible locations for a new store. The analyses were conducted within Hennepin and Ramsey counties. These analyses include:

• Market Penetration: calculates market penetration by dividing customer data by demographics
• Hot Spots: creates a custom-sized grid over an area and calculates demographics
• Optimal Stores: finds an optimal store based on cluster distribution
• Customer Prospecting: finds geographies within a set demographic range
• Optimal Store Locations (Mean Center): determines the optimal location for a site based on the concentration of surrounding customers
• Rank Markets: markets are ranked based on selected attributes

Findings and Conclusions: 

The results of the analyses provided mixed patterns concerning the relationship Trader Joe's has with the surrounding area. It was up to the user to analyze the results to the best of their ability and choose three locations in which they think would be ideal to open a new store based off of these results. 

Recommendations of sites in which a new store could potentially be built

Recommendations for which sites would be ideal for adding a new store include (from most to least favorable):

1. 13625 Technology Dr, Eden Prairie, MN 55344
2. 800 Xenia Ave S, Golden Valley, MN 55416
3. 2365 Wayzata Blvd W, Long Lake, MN 55356

Introduction

Purpose of this analysis

Business Analyst will run a number of analyses that will assist the user in determining where the best location will be to build a new Trader Joe's store based off of customer data, current Trader Joe's store locations in the study area, and demographic and business data provided by BA.

Scope of this analysis

The extent of this study includes the Minneapolis and St. Paul, Minnesota region. More specifically, it is restricted to Hennepin and Ramsey counties. 

Sources and methods

Trader Joe's six store locations and customer data within the extent area were provided by Trader Joe's. Google Maps was used as a way to determine which specific sites would be an ideal location to build a new store on. Demographic data was provided within Business Analyst and it is with Business Analyst that the analyses were conducted. The analyses that were conducted are as follows:

1. Market Penetration: A market analysis was run using the customer data as the input layer and Zip Codes as the base layer used for calculations. The selected data collection was the 2016 Total Population. After running the initial analysis, some of the zip codes were then consolidated to produce a result that was easier to understand and interpret. 
2. Hot Spots: A market analysis was run using 1 mile grid cell sizes and 2016 Total Population for the symbolization field. Also, 2016 Median Household Income was used as an added variable. After the analysis was ran, two hot spot maps with graduated color symbols were produced: one showing population and the other showing income. 
3. Optimal Location (Mean Center): A site analysis was run using the customer data as the input layer where one mean store center was calculated using customer locations. 
4. Customer Prospecting: A market analysis was run using zip codes as the input level of geography and the customer data layer as the input as well. 2016 Total Households and 2016 Population Age 18+ were then used as variables. 2016 Population Age 18+ was used in particular as a way of targeting people who are more likely to go shopping since most people younger than 18 do not have the finances to support extensive shopping habits. 

After these analyses were run, each one was manually compared and contrasted with the other to determine which three areas may be ideal locations to set up a new store. After the three areas were selected, Google Maps was used to find specific sites for a store where considerations included how big the lot was, what the proximity was to other retail and commercial outlets, and well traffic flowed through that particular area. Using the addresses provided by Google Maps of each site, an Excel table was used to normalize the address data so that it could be geocoded in Business Analyst. Two final steps were then completed which included:

1. Appending Data: In order to rank the sites, certain demographic and BA data needed to be added to the Potential Trader Joe's Stores layer. A market analysis was run using the Potential Trader Joe's Stores layer as the layer that inherits the data. The variables that were added included 2016 Total Population, 2016 Median Household Income, Avg spent per week by HH (Household) at food stores: $150+, and Shopped at grocery store/6 mos: Trader Joe's. The analysis was run and these variables were added as fields in the layer's attribute table.
2. Rank Markets: A market analysis was run using Potential Trader Joe's Stores as the layer used to rank the boundaries in the market area. The primary field for ranking was 2016 Total Population and the additional selected fields included the other three variables. The analysis was ran and the three potential store locations were then ranked 1 to 3 from most to least favorable.  

Findings and discussion

Figure 1: Trader Joe's market penetration

Market Penetration

The result of the market penetration (figure 1) is displayed as a 5-class choropleth map with very light brown representing the lowest values to dark brown representing the highest values. The values indicate the percentage of customers within the zip code area compared to the total population within that area. Trader Joe's is penetrating the market well in all of Ramsey County and east Hennepin County. However, sales are somewhat lacking in west Hennepin County where the lowest percentage area are the westernmost sections and the section directly north of Lake Minnetonka. Trader Joe's stores are represented in this and subsequent maps as neon green stars. It's clear to see from this map that Trader Joe's may want to consider adding a location in the mid to western area of Hennepin County which may then allow for better market penetration in that area of the county.

Hot Spots - Income

Figure 2: Trader Joe's hot spots based off median household
income

The result of the hot spot analysis based off of median household income (figure 2) is displayed as a 5-class choropleth map with bright yellow representing areas with the lowest income to bright red representing areas with the highest income. Most of Ramsey and eastern Hennepin counties feature areas with lower incomes while northern Ramsey County and mid to western Hennepin County feature areas with much higher incomes. Trader Joe's may want to consider locating in the higher income areas of Hennepin County, seeing as how there is a location within close proximity to the high income location in northern Ramsey County.

Hot Spots - Population

Figure 3: Trader Joe's hot spots based off total population

The result of the hot spot analysis based off of total population (figure 3) is displayed in the same manner as the previous hot spot map. For this map, however, population is represented where the lowest populations are represented by bright yellow and the highest populations are represented by bright red. Most of western Hennepin County has the lowest populations out the entire study area. The most populated areas are in eastern Hennepin County around Minneapolis and in the lower part of Ramsey County around St. Paul. Based on this map alone, Trader Joe's may want to consider adding a location within the heart of the highly populated region perhaps somewhere between Minneapolis and St. Paul. 

Optimal Location (Mean Center)

Figure 4: Trader Joe's optimal store location 

The result of the optimal location analysis based off of customer data (figure 4) is displayed as a neon pink circle and is located just west of Minneapolis in Hennepin County. Since this is the geographic mean center of all of Trader Joe's customers in this region, Trader Joe's may want to consider adding a store in this location or very close to it.  

Customer Prospecting

Figure 5: Trader Joe's ideal customer areas

The result of the customer prospecting analysis (figure 5) is displayed as a 5-class choropleth map where the best ranking is represented as bright red and the worst ranking is represented as bright yellow. The two best areas fall within the Golden Valley, Edina, Minnetonka, and Eden Prairie circle, the third best area includes St. Paul and west of St. Paul, and the least best area is in northern Ramsey County. There are already two locations within the third and fifth best areas, and the other three locations are located in close proximity to the first and second best areas. Based of this map, Trader Joe's may want to consider looking at an area slightly southwest of the first best area, perhaps in or near Eden Prairie.

The Three Potential Sites

Figure 6: Potential Trader Joe's store locations

Looking at all of the previous results together, three locations were chosen as potential sites for a new store, represent on the map in figure 6 as yellow stars. Site 1 is located in Eden Prairie (figure 7). Site 2 is located in Golden Valley (figure 8). Site 3 is located in Long Lake (figure 9).

Figure 7: Eden Prairie location

   Figure 8: Golden Valley location

Figure 9: Long Lake location

Once the cities were decided upon, choosing a specific site location was based on where an empty lot could be found in an area where other retail is located and is within close proximity to high traffic flow, such as a major highway.





Rank Markets

Figure 10: Ranking table

After the ranking analysis was ran, the results for site locations 1, 2, and 3 were ranked in that same order, respectively (figure 10). Site 1 (Eden Prairie) had the highest numbers in all categories except for median household income where it was ranked second among all sites. Site 2 (Golden Valley) had the second highest numbers in all categories except for median household income where it ranked last among all sites, just behind site 1. Site 3 (Long Lake) by far had the lowest numbers in all categories except for median household income where it ranked first among all sites by a large margin.

Assignment 3: Real Estate Analysis

Presented by

Andrew Jeffers

Jack Mielke

Michael Lewis

Address: 330 Roosevelt Avenue

Image 1: 330 Roosevelt Ave as seen from Wilson St

This house is located at 330 Roosevelt Avenue in Eau Claire, WI (Image 1). According to Zillow.com, the house is currently priced at $209,900. This ranch-style home has 4 bedrooms, 2.5 bathrooms, is 3,718 square feet, a large basement, and an attached two car garage. It is conveniently located on a corner lot one block off of State St and is within close proximity to Putnam Park, Clairemont Avenue, Water Street, and downtown Eau Claire. The lot size is a large 12,800 square feet, and as of 2016, net property taxes totaled $4,666.74.

Comparable Homes

Other Houses for Sale in the Area

Table 1: Comparing other houses for sale

Table 1 shows this house compared to other houses in the area that are for sale. With the exception of the two outliers on Oakwood and Marston, 330 Roosevelt has the most square feet (3718)  of any house and also the cheapest prices per square foot ($56) which is well below the average amount of $94.90. It also has among the most bedrooms with four. 

Corner Lots

Table 2: Comparing other houses on nearby corner lots

Table 2 shows this house compared to other nearby houses on corner lots within one block of State Street. It has the largest lot with 12,800 square feet and the lowest price per square foot ($3.42) which falls below the average of $3.67. It also has very low tax per square foot ($0.36) which is below the average of $0.47.

The Third Ward

Figure 1: Eau Claire neighborhoods

Figure 2: The Third Ward

 The house is located in the Third Ward Neighborhood in Eau Claire (Figure 1). The Third Ward is a unique neighborhood that offers a variety of benefits to its residents (Figure 2). The neighborhood is centrally located so that it is close to downtown Eau Claire, parks, and services. Many of the houses have a historic architecture that is not resembled by any other neighborhoods in the city. The neighborhood is within walking distance to the University of Wisconsin-Eau Claire, which provides the neighborhood with ample amounts of events and amenities such as close bus routes and a respectable educational institution nearby.  Putnam Park is a 230-acre park that is located along the east and south sides of the Third Ward. This park offers the ability to walk along trails and enjoy many different types of animals and plants. It is not common that a neighborhood in the middle of a city has the benefit of a park nearby where residents can enjoy the peace that is associated with the park. Along with having the park nearby, the neighborhood is also close to the Chippewa River.  The river has parks along its banks that are within walking distance of the neighborhood and there are also spots where you can walk right up to the river.  The Third Ward also has Demmler Community Garden.  This garden allows families and individuals to buy plots and plant what they want in the garden.  The garden helps to keep the neighborhood looking nice and adds to the green spaces that help give the neighborhood its uniqueness.

Third Ward Neighborhood Association

Most neighborhoods in the city have their own neighborhood assocation. The Third Ward is no exception and arguably has the best association in the city. The association meets every second Wednesday of the month and has strict regualations on what is and is not permitted in the Third Ward. This group not only protects the ideals of the Third Ward but also protects property values. The group maintains a level of expectation that keeps the Third Ward being known as an upscale neighborhood. The regulation topics that they discuss are as follows:

• Sanitation - All trash, recycling, and yard waste must be disposed of in a clean and visually appealing manner
• Parking - Limit on how long you can park in the street and requirements for parking on driveways (not on grass or dirt)
• Building Upkeep - Owners are required to keep their home in a visually appealing state, including repainting and updating homes

Schools

Figure 3: Drive time for Manz Elementary

 There are many schools in the area that service the Eau Claire area.  For this property, the three schools are Manz Elementary, Delong Middle, and Memorial High.  These schools get a rating from GreatSchools.org, a third party that evaluates schools based on test scores.  This evaluation is used to help judge the quality of education in the surrounding area.

       Figure 3 shows the drive times from Manz Elementary School.  Our house is on the border of the 4-minute and 6-minute range making the drive to this school about 5 minutes.  Manz Elementary has a rating of 6 out of 10 according to GreatSchools.org. 

Figure 4: Drive time for DeLong Middle

  Figure 4 shows the drive times for Delong Middle School. Our house is in the 12-minute range.  Out of the three schools, Delong has the longest drive time from 330 Roosevelt Ave. Delong Middle School has a rating of 4 out of 10 according to GreatSchools.org.  

Figure 5: Drive time for Memorial High

 Figure 5 shows the drive times from Memorial High School. The house is on the border of the 4-minute and 6-minute ranges making the drive about 5 minutes. Memorial High has a 7 out of 10 rating according to GreatSchools.org. Having a quality high school so close to the house is a great benefit.

Our Price - $220,000

Based on our house and all of the factors associated with it, we came to a final price of $220,000.

There are other houses in the area that have a lot less square footage and are priced higher than our house's Zillow price of $209,900. It is in a great neighborhood and close to downtown Eau Claire which is a nice feature.  It does not appear that much work has been done to the house over the years which is why we did not price it higher.  

Sources

"Schools in Eau Claire," http://www.greatschools.org/search/search.page?q=eau+claire

"Third Ward Neighborhood," http://thirdward.org/

"2015 Comprehensive Plan," last modified September 22, 2015, http://www.ci.eau-claire.wi.us/departments/community-development/planning/comprehensive-plan.

"330 Roosevelt Ave, Eau Claire, WI 54701," last modified March 21, 2017, https://www.zillow.com/homes/330-Roosevelt-Ave,-Eau-Claire,-WI-54701_rb/