What’s the Best Business for a Location: Retail Analysis in Washington, D.C.
A researcher for a midsize commercial brokerage in Washington, D.C., is performing business analysis on behalf of a local client. The researcher is deciding what type of business would be successful in a vacant retail location in a northwest Washington neighborhood and is examining retail patterns and spending habits in the area.
The researcher uses RPR to run a commercial analysis called “What’s the Best Retail Business for a Location?” This analysis uses RPR’s consumer spending pattern data to pinpoint potential business opportunities. RPR partners with leading B2B data providers, such as the data and GIS software company ESRI, to power this analysis.
To run the analysis, the user simply enters the name of the neighborhood: Dupont Circle. RPR returns a chart showing the types of retail businesses that are over- and underrepresented in this neighborhood (referred to as a “trade area” on RPR Commercial). (Go to the Homepage > Search Tools tab OR Go to Analysis button > “What’s the best retail business for a location?”)
The analysis uses ESRI’s Retail Market Place Data as a foundation. The marketplace data compare retail sales to demand. The retail demand information is derived from household-level consumer spending data, while the retail sales information is from Infogroup business point-of-sale transactions. The tool calculates the number of residents who are leaving their home neighborhood to find a retail business type elsewhere — it compares supply and demand.
The chart shows an index with 0 as the midpoint and 100 as the maximum over- or under-supply of these businesses. RPR ranks the results, from greatest under-supply to greatest over-supply, so it’s easy to see what businesses would likely be most successful in this vacant location.
In the analysis, you can see that vending machine operators and car dealers top this list, but those aren’t appropriate businesses for the size and zoning of this space. But what might work is a sporting goods or music store. (Go to “What’s the best retail business for a location?” > “Washington, D.C.” in search bar > Run Analysis button > Analysis Results page)
For context, the researcher can navigate from the chart to the Trade Area Details page for Dupont Circle (Analysis Results page > View Trade Area Details button > Trade Area Details for Dupont Circle, http://www.narrpr.com/commercial/tradearea/summary?id=40003102). On a Trade Area Details page, demographics and psychographics are shown for a trade area. In Dupont Circle, the dominant demographic segment (a composite description of the type of resident most common in the trade area), or Tapestry segment, is called “Metro Renters.” The researcher can review Metro Renters’ spending habits and other lifestyle information as compiled by ESRI.
The researcher can also look at the Population, Age, Housing, Married, Income, Education, Economy and Home Values tabs within the Demographic Facts and Stats section to see a lot of area facts at once. This section draws from American Community Survey data from the U.S. Census. It shows that 48 percent of Dupont Circle residents hold a graduate or professional degree, a very high number.
Another helpful section to review is the Consumer Segmentation component. Exploring the Tapestry segment information here, the researcher can see that the Metro Renters demographic group is the overwhelming majority here, echoing the D.C. metro area overall. The median home value for this segment is about $271,000, although a minority of this group are homeowners. Tapestry is a data product developed by ESRI. Tapestry classifies U.S. residential neighborhoods into unique market segments based on socioeconomic and demographic characteristics. Users who want more background and information about Tapestry can find detail in RPR’s Knowledge Base (http://support.narrpr.com/forums).The Knowledge Base contains a variety of articles to assist RPR users.
It’s insightful to enlarge the map on this page and display a map layer. (Trade Area Details > Bigger Map link > Heatmap dropdown > Median Disposable Income) The user will see that the Dupont Circle trade area falls at about the midpoint of median disposable income, or in the neighborhood of $3,500-$4,000 per month, perhaps arguing for a 20s-oriented, value-based retail operation.
The researcher can return to the Analysis Results bar chart for DuPont Circle and run a search for property listings so the client can see how other space in the area compares to the client’s vacant location. A distressed commercial property for sale is: http://www.narrpr.com/commercial/property/summary?id=93278871
The researcher visits this listing’s Property Details page and sees that it’s a restaurant. The researcher can review the basic facts about the property, learn about its distressed status, and more. The client will be interested to see a Commercial Property Report for comparison with the vacant property. The researcher chooses the elements to include in the report and generates a PDF on the spot, or emails it directly to the client. (Go to Property Details page > Reports tab > Choose elements > Get Report button). By sharing the report, the business under- and over-supply chart, and information from the Trade Area Details page, the researcher can educate the client and drive a decision about the vacant space.
This analysis can be performed independent of a property, too. Using the same steps as the previous example, an RPR user can help an entrepreneur identify investment opportunities. The entrepreneur is looking for an investment opportunity near his home in Charlotte, NC 28216. A broker could run the analysis called “What’s the Best Business for a Location?”, noting the businesses that are strongly represented, so the entrepreneur can consider business opportunities that match them. The broker can also identify listings for the entrepreneur. (Go to “What’s the best retail business for a location?” > “Charlotte, NC” in search bar > Run Analysis button > Analysis Results page)
When the broker runs this analysis for the ZIP 28216, he will see the saturated categories include clothing and shoe stores. These show on the bottom of the bar chart on the Analysis Results page, the ones with the longest orange lines. There are, however, ample opportunities for bars and specialty food stores. The broker can help the entrepreneur brainstorm the specific business types that would serve consumers within the ZIP code 28216 based on the area’s demographics by going to the Trade Area Details page or looking for a specific listing in this area.
The broker clicks the button at the bottom of the chart to search for property listings in this ZIP code. The broker can review the information about each property and generate a Property Report for the entrepreneur. (Property Details page > Reports tab > choose elements > Get Report button)