riddlemay wrote:
sdbond wrote:
Does anyone know how grocery chains calculate how close together their stores should be?
This is off topic, but your question reminds me that in the strip mall at Division and Clybourn, where there's a large Dominick's, there's a Starbucks a door or two to the west of the Dominick's...and there's a Starbucks a door or two to the east of the Dominick's. I'm not sure if this is because they determined there is sufficient demand, or because they determined that people won't walk more than twenty feet from their cars to go to a Starbucks!
But actually it occurs to me it might not be off topic when it comes to grocery chains. The reason Starbucks has two locations so absurdly close may be not that demand requires it, but that they don't want the space on the other side of the Dominick's going to Caribou or Intelligentsia. The reason there might be two Jewels close together is not that Jewel has determined there are that many Jewel customers, but that Jewel doesn't want Dominick's coming in. Essentially, they're willing to trade off some per-store revenue in return for increased market share. Anyway, you ask an interesting question that I'd like to know the answer to as well.
Hi guys, I actually used to do site & market strategy for a number of years - not for a grocery store but a chain drugstore. (You can probably figure out which one.) While I certainly can't speak for any other retailer, I can tell you that our site selection process was a pretty scientific measure of supply and demand and resulting sales and profit, but the concept of "we should take it just so they can't" was not a part of the equation. Retailers like grocery stores and drugstores run on such razor thin margins that it's really not good business sense to open a loss leader (or even just a relatively weak location) just to build share and keep the competition out. It's funny, because our real estate guys would try to use that argument from time to time ("well, the so-&-so developer is on our heels - if we don't take it, they definitely will") but it really never held any water. If a site couldn't meet the financial standards for a new location, squeezing out the competition was never a valid reason to get the deal through.
That said, having followed Starbucks' retail expansion over the years, their metrics and standards were obviously a bit different, and like I said, every retailer does it a bit differently.