Location Management-Trading Area Analysis

Written by: Nithin Narayanan

Trading area for a store can be accurately measured. As mentioned earlier the size of the Trading area depends upon a number of factors. The location of the major competitors of the retailer is also a factoring determining the size of the trading area. In such a case whenever the customers have a choice between two stores, the size of the trading area of these store decreases and the size increase with the increase in the distance between the stores as the target markets would not overlap.

The amount of time to reach the store also determines the size of the trading area. Barriers like toll bridge poor roads etc can reduce the trading area of the store. But with good and proper promotions a company can increase the awareness among the customers and in turn expand its trading area.

After the size, the retailer should examine the characteristics of the Trading Area. The characteristics of the trading area can be classified under the following headings-

* Population

* Availability of labor

* Proximity to the source of supply

* Marketing

* Regulations

* Nature and size of competition

But one thing should be kept in mind that different kinds of stores have different trading areas in terms of size as well as nature. The trading area of a Department Store would be different from the Trading Area of a high end boutique.

In India the Trading Area Analysis does not hold true, as we have small markets which cater to the local community. Such as South Extention, Lapat Nagar Market, Khan Market and so on. Every locality will have a small market which provides for the customers, unless the retailer offers something unique to the customer which would otherwise be difficult to get.