Thursday, August 26, 2010

The Power of Demographics!

Demographic information is a vital component to not only describe a market area but to analyze a market area. In order to mitigate risk, retailers have invested time and money in going beyond the basic market snap shot to build in-house geographical information systems (G.I.S.). Today, retailers are blending the understanding of the general market with their own customer understanding and market expectations. G.I.S technology goes beyond the basic 3 ring trade area which illustrates basic information such as: population base, competitors and traffic counts. Data is indeed a commodity; however, it is what you do with the data that is critical to understanding both a market and a customer perspective. A well planned G.I.S. is focused on the customer and provides insights into: Who is the ideal customer? How many exist? What is their share of wallet? Where do they live, work?

Collection of the right types of data is instrumental to ensuring a G.I.S. remains vibrant and plays an integral part of the strategic planning process. There was always the traditional source of data collection – the government census. However, many governments have stretched the collection and analysis of data across a 10-year time span which, in the case of emerging or fast growing markets, makes it difficult to capture the true market potential or opportunity. As a result, many companies have reverted back to the collection of raw data through field work in order to bridge the census gap. In addition, reaching out to universities or financial institutions (investor relations departments) represent non- traditional avenues but provide a more recent market picture.

As organizations expand beyond the borders of the U.S., access to quality and timely information is critical. Retailers with a U.S.-based G.I.S. system need to adopt the metrics used in the U.S. to other markets and recognize that data availability and technology tools are not consistent in their collection around the world. A G.I.S. system today should be nimble to adopted new markets, new types of data from around the global marketplace.

A key component to the future success of retailers in the international landscape is to utilize the power of demographics in order to build a foundation of knowledge not just about markets but customers. Understanding a retailer’s market capacity and store capacity in any given market is vital to the execution and expectation of what a country/city/market holds. Demographics are about knowledge and power to make informed decisions.
By - George Anderson

NAI Rio Grande Valley's team of commercial real estate professionals has the resources to assist in this process. Visit us online or call to learn more about NAI RGV and our team.

George Anderson is based in Toronto, Ontario, George Anderson is Vice President of Market Analytics for NAI Global, and works closely with retailers and financial institutions using geodemographic analyses to identify and evaluate markets for expansion around the globe.

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