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Topic created : 31.01.2010, 05:01

cloud59

What is the major determining factor when it comes to where to open a new store?
I know the basic rule that the more high end products you're selling, the higher the wealth index should be for the district. However, would opening a food store in areas of higher wealth index be of any benefit?

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31.01.2010, 06:09

yuga_ninjie

Yuga_ninjie Ltd.

Onion Corporation

cloud59
What is the major determining factor when it comes to where to open a new store?
I know the basic rule that the more high end products you're selling, the higher the wealth index should be for the district. However, would opening a food store in areas of higher wealth index be of any benefit?

Same thing for the food store, but consider more factor like: the price, the quality and brand your selling, competitors you have in the cities, the size of your store and the reputation it has in there. It would be best if you study the market on the specific place before you open it, or you could test the water if it could bloom in there.

The best store to open is less competitor for your product so that the price will increase significantly...
Its like in the "LAW OF SUPPLY and DEMAND" Very we!

31.01.2010, 07:33

Company 2.0

I usually look for a decent wealth index no matter what goods I plan to sell there. I generally don't have stores in cities with a wealth index under 3-400.

Population is also a large factor, depending on what you want to accomplish.

A large population will mean a lot of customers, but also likely more competition.
A small population will result in less sales, but comparative market share will be much higher.

If you have a small number of units to sell you are better off in a high population area, the extra customers will allow you to set a higher price, whereas if you have a lot of units you can try to capture the market in a low population area and push prices much higher (you will need quite a large market share to push prices up).

31.01.2010, 09:31

ccm_tsang

i have found in areas where there are not too much (or no) competition, i can push the prices up with market share < 1%.
problem with that is, when another store opens in the area and the prices are set lower (for whatever Q and brand), then the average price will drop, and so will my sales unless i drop my prices as well.

if all stores in the area sell for higher than average regardless of Q and brand, then prices will get pushed up as well, as it would because it is 'average price' !

31.01.2010, 19:12

sawasawa

You should also look at the local suppliers share of the market in any area. In many areas the local suppliers have the largest share of the market with relatively low quality. They can be considered as the major competitor. If you can offer products with superior quality and brand compared to the local suppliers, it's likely that you can gain significant market share and push prices up at the same time. You also need to ensure your shop is large enough and is advertised to attract sufficient customers.

1.02.2010, 05:00

Company 2.0

In most cases if you have the resources to sustain a large store with advertising, quality or brand of goods is not that important.
You can still do very well with quality 1.00 brand 0.00 goods provided the city average is quite low.

2.02.2010, 09:50. Subject: For Starters

light76212001

I would recommend doing business with the local businessmens. If it sells good most likely it would sell easily. I would think you are a small company, so if you want to start stong to look at the reports. But if you really like learn some great new things and would like to get adventureous. I would go where NO man as ever gone BEFORE. OR I would go would go where no man has gone before but didnt STAY.

2.02.2010, 11:53

kavidyan

It really depends on the strategy you are going to take. As what posted above, different players have different ways of looking at the potential market. Basically, you can make money in all the market. Evidently, all the advices given are from those players who have been successful in covering various market. What really matters is HOW you run it. Frankly, you can start any store selling only one Q1 product and still make money. Yes

2.02.2010, 12:10

Company 2.0

Also try to remember that sales volume is strongly connected to store size.

Small stores will sell few units, large stores will sell many.

A big problem I see with a lot of newer players is the tendency to underprice their goods to try and get the volume in a small store.

If you use small stores, use more of them. Less units sold at a higher price in more locations will result in higher revenues.

3.02.2010, 06:13

cloud59

Thanks for the feedback.

Here's an interesting observation:

If there's limited competition in a certain area (i.e. Outskirts) and lots of competition in Residential areas, would having a store in the Outskirt be more beneficial than opening another one in the Residential area?
Could it be possible to sell at a higher price in the outskirts due to less competition?

3.02.2010, 12:39

thesupertramp

cloud,

I have not experimented with that, pretty new myself, but I think it is important to take into account sales volume too. You might be able to jack up the price but if you sell less, it might be better to sell low but more.

It'd be a pain to experiment and see what is the best balance point.

Generally, I find that as long as the "local suppliers" still have majority of the market share, going into that market does not require you to compete with the other big boys. You can easily wrangle market share from the local suppliers.

5.02.2010, 07:12

Company 2.0

cloud59
If there's limited competition in a certain area (i.e. Outskirts) and lots of competition in Residential areas, would having a store in the Outskirt be more beneficial than opening another one in the Residential area?

It can be beneficial having a store in a different area, but only when the market has heavy competition. If local supplier has any market share at all you probably won't see any benefit.

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