Trade Area Analysis: The Example of Best Buy in the Toronto Area
Part A: Trade area delimitation for Best Buy stores
1. There are 10 Best Buy stores shown on the map. They are almost evenly distributed all over Toronto. However, those stores are a little more concentrated in the southwest part of Toronto city, where are more densely populated. Apparently, Best Buy aims to serve all customers in Toronto. Each store is relatively some distance away from another to avoid overlapping market and at the same time cover larger market area.
2. Possible new locations can be identified, by applying Thiessen polygon technique to Map One. In theory, the vertices of boundary lines are considered to be the best sites for new stores. These locations are identified as poorly served areas as people in these areas have to travel a relative long distance to reach a Best Buy store. Moreover, stores in such locations are less likely to compete with other Best Buy stores around it.
Possible new stores are identified by little triangles. There are nine spots identified as possible new locations of Best Buy stores. Among all the locations, West Site location seems rather unrealistic. Although it falls right on the junction of boundaries, it is right where the Pearson International Airport is. People are sparsely populated in this area. If opening a new store there, the market area will be mainly occupied by the airport. It will not make much difference. Similarly, spot six falls on the Toronto Zoo. The whole area is covered with green space. Thus, there is not much point of opening a new store there. Location West Site, number two and number three are quite close to each other so choosing only one of them seems more appropriate. The same idea applies to location East Site, number four and number five.
4. With the two possible new sites, the East Site and the South Site, on the map, the market areas for existing new stores changes. The stores that are not under the...