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How would you determine if a specific block in your neighborhood is suitable for a new grocery store?
+3 votes
in Strategy by (717 points) | 636 views

3 Answers

+8 votes

Use Porter’s framework of company, customer, competition, suppliers, environmental factors loosely here. Lets take company – Lets assume that this is a grocery chain that’s well suited to open a grocery outlet in that block. Do they have the infrastructure (freezer, cooler, shelving), labor, tech infrastructure (POS system), Sales and marketing capability all figured out? Are there any other outlets of the same grocery store within a certain radius? Is there any opportunity for cannibalization or is there enough demand?
Customer – Who are the people in this neighborhood? What is there spending capability? Does our grocery store match with the customer segment – Is this a Whole Food’ish’ neighborhood or is this is a local mom and pop grocery store type neighborhood? Is the neighborhood spending power growing or it is saturated? Any macro-economic factors coming up near term that might change customer behavior – new office opening, new BART station opening? etc?
Competition – Do we have any other grocery stores near by? Do we have just one strong competitor? Do we have fragmented competition from a lot of stores that offer part of the assortment? Whats our unique selling proposition going to be?
Suppliers – A grocery store will need a fresh supply of goods transported every morning. Can we get the Supply chain – trucks, vendors/suppliers lined up to meet forecasted demand? I touched upon Labor – but are we going to hire full time employees or get contractors to run the store or both? Can we easily hire local talent or import talent?
Environmental – Are there any regulations associated with this block that we need to know about? How long will this store be open? If 24/7 – do we need special permit? Is it a safe neighborhood – if not- do we need to think of additional security
I would sum it up by looking at our capability to meet these needs, costs associated with running the business and profitability or break even forecasts to make the decision

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real estate availability,
other customer drawers,
threat of online fresh offerings in the neighborhood
+1 vote

Clarifying questions-
1. Is this a chain grocery store or mom and pop shop?
2. Does it cater to specific segment of population or generic?
3. Does it specialize in a specific type of groceries or generic?

I would consider the following –

1. Company: Does the location align with brand image of the store. e.g. If you are an upscale grocery store then location should be upscale too or vice versa.
2. Customer: Who are the target customer base of your store. e.g. Your store may be catering to a specific section of society. Is this location a good catchment area for that customer base.
3. Competition: Is this location already having stiff competition or it’s a greenfield opportunity? Some grocery stores prefer to scatter their stores across the city rather than a specific neighborhood – is this location too close to another store by the same location?
4. Collaborators: Is this location a good location for your suppliers, vendors, staff etc…
5. Climate: Is this a safe location, is this within budget, are there any other environmental or seasonal factors influencing the sales? Does it have sufficient parking, does this have parking/space for large trucks coming to store etc…

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–1 vote

Clarify Questions:Any shopping mall or supermarket in that block or nearby?What kind of block? Is it a military port, airport, or living block?How many grocery stores already there?How many people live in that…See more

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