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Introduction:

A detailed geographic analysis was undertaken on behalf of the plaintiff, a franchisee and owner of site PA4. Site PA4 opened on 27-Oct-04.

The franchisor provides a service/commodity. Businesses of this type are "convenience" locations. Proximity is the key factor in determining customer draw and retention with convenience locations.

The purpose of the study is to determine if placement of a nearby franchise location (site PA16, opened 20-Sep-07)

  • adversely affected or cannibalized the existing trade of site PA4
  • to determine where and why changes may have occurred, and
  • to quantify the effect.

The study evaluated the geographic distribution and characteristics of site PA4 revenue generating clients spanning the two year period bracketed by 20-Sep-07.

Customer data included total sales, and were analyzed separately for each 1-year time period pre- and post- PA16's opening. The customer data were geocoded, a process whereby latitude/longitude coordinates are assigned based on precise street address, enabling the data to be accuarately mapped and analyzed spatially.

  • Pre-site PA16 data covered the period 20-Sep-06 to 19-Sep-07.
    • 1,834 customers
  • Post-site PA16 data covered the period 20-Sep-07 to 19-Sep-08.
    • 1,242 customers

Trade areas for site PA4 were mapped based on the distribution of customers and revenue, for both the pre- and post- 20-Sep-07 time periods. These trade areas were compared to one another, and evaluated with respect to drive times from both sites PA4 and PA16.

. . .Continue to read rest of article (PDF).

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Donald B. Segal, GISP, is an expert in the area of Geographic Information Systems (GIS) and Spatial Analytics as applied to retail trade area delineation, site selection, and demographic analyses. He has worked with spatial data for over 35 years and has developed a unique understanding of trade areas, and the effects of competition and other factors on trade areas and store performance.

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