Trade Area Analysis

Topics: Greater Toronto Area, Household income in the United States, Highway 401 Pages: 6 (1944 words) Published: March 26, 2014
1.Spatial Distribution of Lowe’s stores in the Toronto Area From Map One, we can see that Lowe’s stores are spread out across the Toronto area, covering large areas of the GTA and each store has its own large service area without overlapping with adjacent Lowe’s stores. This arrangement allows Lowe’s to develop healthy and non competitive trade areas. The large distances separating each store apart prevents internal competition forming up by individual stores wanting to gain more market control. The main locational strategy that Lowe’s utilizes is accessibility. Highly accessible retail locations are popular amongst the general shoppers and can effectively increase the customer flow and increase in sales. In order for stores to be highly accessible, retailers will have to choose locations that can be easily reached by public and private transportations. One locational strategy Lowe’s store incorporated is that almost all of its stores are located near major highways. The ones in Brampton, Vaughan is close to highway 410, while other locations like Toronto and Scarborough are easily accessible by public transit. The second strategy utilized by Lowe’s is the distance decay model. Each Lowe’s store is spread across the GTA, providing maximum coverage of the large area and minimum overlaps. With such a spatial distribution of the stores, shoppers from across the Toronto will be able to access the Lowe’s store closest to their homes. 2.Thiessen Polygon Approach

Thiessen Polygon model assumes that distance is the only factor that determines the location which the customers will shop at. The Line of Indifference is divides the shopper in individual trade areas and assuming all the stores are the similar size and attractiveness. Based on the Thiessen model, the best new site for Lowe’s stores is drawn on Map One [Appendix A]. The theoretical best sites are the locations at the vertices where the Line of Indifference intersects. These are the most poorly serviced areas and opening stores in these locations can allow the shoppers in the area to have access to a closer Lowe’s. Although the Thiessen model points out area of least service, however not all store expansion is necessary as some regions have lower population density or is expensive to setup new store. By applying the Thiessen model, 3 new sites can be selected for store expansion, but the locations of the new sites are not all ideal. Site A is situated around an airport and shipping and storage warehouse area with few residential household in its vicinity. Site B is better situated area where there are many household in its surround and shopping centers are nearby. Site C also seems to be feasible as it is near a community area and the highway is very close by. 3.Thiessen polygon is drawn on Map two in Appendix B.

4.New sites on map two
The new sites are at the intersection of the Line of Indifference and the locations are more tightly group together. These new site are the best new locations to setup new stores where they will be able service the area more closely and the travel distance between the customer and the stores are shortened even further. 5.Site Characteristics and impact

Site A is located to the east of highway 404 (Appendix C). Birdwood mall and several large retail stores are within the area. The area is well connected by public transit (TTC) and can be easily reached by driving through Sheppard Ave or the highway. The location is reasonably well to establish a new Lowe’s store where there are not many competition stores close in the area as the local market is not saturated with home improvement stores. It can be beneficial for Lowe’s to open at this location as the site is equally far away from nearby Lowe’s stores and can effectively reduce the distance people will have to travel to a Lowe’s store. On the other hand, Site B (Appendix C) is located west of the Downsview airstrip. The surrounding area is largely gold course with a large retail...

References: 1) Stephen Swales. (2008). Marketing Geography 3rd. Pearson Custom Publishing
2) Statistics Canada, census tract profile. [Last Updated June 1, 2010; accessed March 5, 2011]. Available Online:
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