Hi 29apple-ga,
I will be analyzing the scenario you have presented using the SWOT
(Strengths, Weaknesses, Opportunities, Threats) Analysis method that
is usually taken to consider the situation here, along with some web
resources to fill in the demographic information for the location
being considered.
Let's first look at the location and the nuances associated with it:
MAP:
Here are two views of Horizon Dr. provided my MapQuest:
http://www.mapquest.com/maps/map.adp?addtohistory=&country=US&address=Horizon+Drive&city=Grand+Junction&state=CO&zipcode=&historyid=&submit.x=52&submit.y=11
DEMOGRAPHICS:
I went directly to the Grand Junction Economic Partnership website:
http://www.gjep.org/gjma.cfm
There are several important numbers here...here is a list of a few of
them that will be important in the analysis:
Population (Census July 2001 Estimate) 119,281
Median Age (CO DOLA 2002) 37.95
Labor Force (Colorado DOL, July Pre 2002) 62,207
Unemployment (Colorado DOL, July Pre 2002) 4.4%
Median Income (CO Dept. Labor, 2001) $26,224
COL Index (ACCRA 2002 1st quarter) 99.1
Median Home Price (CO Assn. Realtors Q2 2002) $130,500
We will also need more information wth respect to liquor consumption
in the area. I have found exactly the right stats for determining this
- per capita ethanol consumption for individual states, census
regions, and the entire US. There are displayed below for Colorado and
the entire country for the last few years, but the hyperlink provides
far more segments if you are interested:
----------------------------------------------------------------------------
| Per capita consumption |
|---------------------------------------|
State or other | All | U.S. decile
for
geographic area | Beer Wine Spirits beverages | all
beverages
----------------------------------------------------------------------------
Colorado
1996 1.40 0.38 0.86 2.65 2
1995 1.48 0.35 0.80 2.63 2
1994 1.40 0.36 0.86 2.61 2
1993 1.42 0.37 0.88 2.67 2
1992 1.35 0.36 0.82 2.53 3
1991 1.40 0.35 0.87 2.63 3
1990 1.35 0.29 0.75 2.39 6
[Gallons of ethanol, based on population age 14 and older]
http://alcoholism.about.com/library/nconsum03.htm
This is an article describing how a petition to relax Sunday alcohol
sales was not successful due to lack of support. This does give the
impression that citizens of the area are not extremely supportive of
extensive alcohol sales:
http://denver.bizjournals.com/denver/stories/2002/07/29/daily38.html
We now have quite a bit of data to consider, so let's move on to the
analysis.
If you are not familiar with SWOT analyses, this description sums it
up nicely:
"Quite simply, a SWOT Analysis is perhaps the most effective, and
objective way for you to determine how capable your
company/organisation is, when it comes to surviving ‘threats’ and
capitilising on ‘opportunities’. It is essentially a review of the
Strengths, Weaknesses, Opportunities and Threats as they relate to
your business or organisation.
Typically, a SWOT Analysis would be undertaken prior to the
establishment of a business (during the business plan phase), or at
any other time when a substantial/major expenditure may be required
e.g. when deciding whether or not to expand the premises, or in the
case of increasing your product range/line. Through a SWOT Analysis
you will gain an increased understanding not only of your
business/organisation, but an indication of any critical and remedial
action necessary on your part."
http://maxpages.com/parexcellence/Article_5
Since the whole basis behind a SWOT analysis is to weigh Pros vs. Cons
in an organized and rational manner, the amount of risk you are
willing, along with other undefined situational variables may lead two
people presented with the same SWOT analysis to very different
decisions. In an ideal situation, the group doing the analysis would
have the opportunity to hold a consulting session with their clients,
but since this is not feasible in this case, I will not make
statements, but instead ask questions that you should answer to the
best of your knowledge. These answers can then be classified as
"good", "fair", or "poor". A "good" answer would be a reason to go
ahead and open the store, and a "poor" answer would indicate a
weakness in the situation.
Questions:
1. Do you have experience in retail sales, particularly in the same
industry?
2. Is there some "angle" you can use to differentiate your proposed
operation from the different sources of competition? IF you introduce
this difference, how easy will it be for your competitors to replicate
it?
3. Do the other stores appear to be successful by placing themselves
adjacent to grocery stores? Is there any reason to consider an
alternate location?
4. Is there a large population that does NOT frequent Horizon Dr.? I
realize that this is a major road, but that doesn't mean that everyone
will gravitate towards it. There may be a significant segment of the
population that currently has to go out of their way to get to a
liquor store.
5. How popular is the new Safeway expected to be?
6. Are there any regulations or legal constraints that may hurt the
sales or inflate the costs of this store?
7. What "types" of customers are you planning on catering to, if any?
Do you expect a certain demographic of the population to visit your
establishment?
8. How densely populated is the area centered at your prospective
location at a radius of 3/8 miles? This includes most of the people
who would now be closer to your store than the two smaller stores.
9. Is there a possibility of any other stores offering similar
products coming into the viscinity in the short or long term?
10. How stable are the large outlets? The small outlets? If they are
just getting by you are almost sure to have cashflow problems unless
you differentiate your operation.
11. How would opening a different type of establishment (such as a bar
or tavern) change the dynamic of the area? Is this a worthwhile
proposition?
12. Are operating costs high now? Are they anticipated to
significantly increase in the future?
13. Can approximately 120,000 people (not all of which are employed
and of legal age) keep what will now be 5 liquor stores running
successfully? I know we don't have per capita dollar sales available
to us, but if you think a little bit about how much the average person
spends on this class of product yearly and then multiply it out, you
can get a crude estimate of the town's spending. So this would also be
the revenues of all stores selling these products added up. Dividing
by 5 assumes that all stores do the same amount of business, and since
this doesn't make sense in this case it won't be the best direction to
take. Nevertheless, you will have the size of the market more or less
determined :)
I also have some statements that I can classify based on the
information I have available to me:
PROS:
1. The population is fairly mature, meaning that a larger percentage
of the population is legally able to purchase alcoholic products.
2. The large majority of these people are employed (fairly good
employment rate).
CONS:
1. Average income is quite low - this may lead to a lot of purchases
that have small profit margins.
2. Home values are relatively low in general as well...same
consequence as (1).
3. Possibly saturated market for this kind of store.
4. Alcohol consumption levels are not very high when compared to some
other states....this is an indication of lifestyle choices.
I hope this has given you some insight into the factors that should
help guide your ultimate decision. As you can probably tell, I don't
have nearly enough information to give you a conclusive answer. I know
that your knowledge along with the resources that I've provided, in
addition to the questions I've asked, will lead you in the direction
of a definitive "yes" or "no". Remember that the list I've provided is
by no means complete (although I tried to come as close as possible);
I encourage you to ask and answer yourself other questions that you
may stumble upon yourself that deal with factors not mentioned here.
If you have any problems understanding the information listed above,
please post a clarification and I will try to respond promptly :)
Cheers! (note: this salutation not meant to be taken literally!)
answerguru-ga |
