INTRODUCTION
Purpose of Study
The purpose of this study is to find the most profitable location of any given retail store. A bakery was deemed an attractive market in Eau Claire due to the cheapness of the product that can benefit from college students on a tight budget and the attractiveness of a small local shop. Three sites were then ranked within Eau Claire to provide the best possible location for the bakery.
Scope of Study
The scope of the study was limited to Eau Claire, WI. However, to further analyze the trade area a comparison was ran against three other nearby cities--Menominee, Altoona and Osseo. All tools and analysis were limited to ESRI's Business Analyst.
Sources and Methodology
First, to identify the most lucrative markets in Eau Claire, the demographics were analyzed. It is essential to locate the ideal customers and know if this customer base can support a business targeted toward this demographic. Next, the trade area for the product was analyzed and competitors were located to identify market saturation or if the product would have a firm hold on the market. Additionally, a gravity model comparing Eau Claire to Menominee, Altoona and Osseo was made to make further insights about the Eau Claire trade area. This was done using the gravity model. Finally, a ranking between the three most ideal sites within Eau Claire for a bakery was made.
CONCLUSIONS
Based on the demographics, a bakery could potentially have a strong market in Eau Claire, WI.
Not only could a bakery capitalize on a budget eatery, but also from the attention that is given to local shops in the area--downtown is a perfect example of this. Additionally, late-night bar customers could be drawn to the bakery in the downtown and Water Street sections of Eau Claire.
A bakery can appeal to these demographics because a bakery is a cheap little shop that can provide a positive local experience. The low per capita income at $23,887 and high college-aged population would indicate a large consumer base for cheap, on-the-go food. The ideal customer location performed in Business Analyst confirms this with the tracts surrounding campus, supporting the highest customer base.
There are no immediate competitors within the student housing area and in fact, there are no stores specifically designed as a stand-alone bakery. College residents do not have a place to eat for cheap or a quick pick-up eatery in close proximity to their location. Downtown residents and customers who are attracted to the expanding cultural scene of Eau Claire would be attracted to a local bakery and also do not have this option.
The gravity model indicated that most all Altoona citizens would travel to Eau Claire for a product while the product reach towards Menominee and Ossea is much smaller just at 8 miles. For this reason, targeting toward a local market would benefit this bakery.
Not only could a bakery capitalize on a budget eatery, but also from the attention that is given to local shops in the area--downtown is a perfect example of this. Additionally, late-night bar customers could be drawn to the bakery in the downtown and Water Street sections of Eau Claire.
A bakery can appeal to these demographics because a bakery is a cheap little shop that can provide a positive local experience. The low per capita income at $23,887 and high college-aged population would indicate a large consumer base for cheap, on-the-go food. The ideal customer location performed in Business Analyst confirms this with the tracts surrounding campus, supporting the highest customer base.
There are no immediate competitors within the student housing area and in fact, there are no stores specifically designed as a stand-alone bakery. College residents do not have a place to eat for cheap or a quick pick-up eatery in close proximity to their location. Downtown residents and customers who are attracted to the expanding cultural scene of Eau Claire would be attracted to a local bakery and also do not have this option.
The gravity model indicated that most all Altoona citizens would travel to Eau Claire for a product while the product reach towards Menominee and Ossea is much smaller just at 8 miles. For this reason, targeting toward a local market would benefit this bakery.
RECOMMENDATIONS
Based on the conclusions and findings, the demographics indicate that there is a large consumer base for on-the-go cheap items targeted toward college students. A bakery allows for quick pick-up items as well as cheap take home goods that students are likely to purchase. It also allows for additional business from bar-goers looking for a late-night cheap snack option that Water Street food businesses typically benefit from. Additionally, Eau Claire citizens tend to appreciate and support local small shops that promote the culture of Eau Claire. For these reasons, a bakery would be a perfect market in the Eau Claire area. Since the target consumer is college students, the shop should be in close proximity to areas of college housing and the Water Street or downtown bars to benefit from other local shops and bars.
Since there are no bakeries along student housing, the bakery market is not saturated and allows for a controlling share of the customer base. Locations along Water Street would be an ideal site for a bakery. There are no competing bakeries and have limited options for budget eateries. The bakery could also see additional profits from bars and coffee shops. The second-best location would be downtown along the stretch of bars and other local shops. This area attracts many customers who like to experience the culture of Eau Claire and is only going to grow in popularity with the recent renovations and additional businesses.
Eau Claire products typically don't attract a large consumer base outside of the city itself as indicated by the gravity model. Therefore, the bakery should not try to appeal to outside customers, but rather develop a loyal local customer base.
Since there are no bakeries along student housing, the bakery market is not saturated and allows for a controlling share of the customer base. Locations along Water Street would be an ideal site for a bakery. There are no competing bakeries and have limited options for budget eateries. The bakery could also see additional profits from bars and coffee shops. The second-best location would be downtown along the stretch of bars and other local shops. This area attracts many customers who like to experience the culture of Eau Claire and is only going to grow in popularity with the recent renovations and additional businesses.
Eau Claire products typically don't attract a large consumer base outside of the city itself as indicated by the gravity model. Therefore, the bakery should not try to appeal to outside customers, but rather develop a loyal local customer base.
FINDINGS AND DISCUSSION
Demographics
Eau Claire is home to the University of Wisconsin-Eau Claire, where many students with a tight budget live in the same areas. From Water Street north a few blocks is where the majority lives, while downtown has recently experienced renovations that have made the area more popular. During the school session, eateries benefit from bar close, where there are few cheap options.
According to the tapestry segmentation, Bright Young Professionals make up 12%, in which these individuals are concerned about the environment and it impacts their purchasing decisions. This market also focuses on local experiences and eat out often. They are a loyal crowd if online ratings are positive. Furthermore, the Set to Impress demography who make up another 11% always have an eye out for a sale, have less income, and quick meals on the run are a reality of life.
The per capita income of $23,887 indicates that buyers are most likely looking for cheaper grocery items and 30% of the population aged 20-34 indicate the high college population that prefers on-the-go food that a bakery can provide.
Figure 1 shows the largest consumer market based on the 20-24 age group that spend their money on bakery items. This contains both the Water Street and the downtown tracts.\
According to the tapestry segmentation, Bright Young Professionals make up 12%, in which these individuals are concerned about the environment and it impacts their purchasing decisions. This market also focuses on local experiences and eat out often. They are a loyal crowd if online ratings are positive. Furthermore, the Set to Impress demography who make up another 11% always have an eye out for a sale, have less income, and quick meals on the run are a reality of life.
The per capita income of $23,887 indicates that buyers are most likely looking for cheaper grocery items and 30% of the population aged 20-34 indicate the high college population that prefers on-the-go food that a bakery can provide.
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| Figure 1: Ideal Customer Location based on age and bakery expenses |
Market Structure
Figure 2 shows all locations of nearby businesses that hold a bakery. Although there are three within 2 miles of the University of Wisconsin-Eau Claire, none are specifically a bakery and none are located along student housing.
Gravity Model
The gravity model is used to determine the distance from other cities that customers are willing to travel for a product. In this case the nearby city of Altoona, and Menominee and Osseo-both 24 miles away-were used. For Altoona, the gravity model indicated that customers 3 miles in this direction would travel to Eau Claire for a product. For both Menominee and Osseo, the gravity model indicated that customers 8 miles in those directions would travel to Eau Claire for a product.
REFERENCES
All analysis used ESRI's Business Analyst.
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