Your trade area approach probably needs a makeover.

pexels-photo-88725-largeThe retail industry is going through a lot of disruption. As we at Alexander Babbage continue to push the boundaries on consumer insights, it has become apparent that many shopping centers do not understand the ROI that an investment in state-of-the-art research can provide. During the next several weeks, we will break down the ways research like TruTrade™ technology can change the way shopping centers do business.

First up, we are calling for the end of traditional trade areas. As retailers begin to bulk up their online offerings, they are recognizing the importance of building certain kinds of relationships with consumers: deepening relationships with existing consumers, striking up new rapport with potential consumers, and winning back old customers by identifying why they left. This is easy to track in online retail sales, but in bricks and mortar sales, there has never been an efficient way to organize this information.

Instead, bricks and mortar retailers rely on store performance and the people who live in the market, known as the trade area. The problem here is that the actual shoppers in a trade area are anyone’s guess. Sure, throwing a three-mile ring or a 20-minute drive time around the shopping center might tell you who has the easiest path to becoming a shopper, but it does not tell you who the actual consumers are. Are they young people? Are they high-income? Are they bargain shoppers, or are they looking for high-end shops? Without data, we do not know. But in all of the years we have conducted shopping center studies , what we do know for certain is that the makeup of the shopping center consumer base is different from the makeup of the trade area. For years, the term “trade area” has been used as a proxy for the actual shopper. Having the actual shopper data, though, can increase the value of the space at your shopping center exponentially.

For example, say you have a shopping center in a trade area that contains equal parts Millennials, Generation X, and Boomers, but the restaurants at your center attract an actual consumer base of 50% Millennials, 30% Generation X, and 20% Boomers.  If you are using just the trade area to sell a Millennial-happy potential tenant on your center, you are approaching the conversation without the data that could seal the deal, maximize your rent or increase the tenant contribution – vastly underserving your bottom line.

With the use of mobile data in our TruTrade™ technology, centers not only can strengthen their own hand at the bargaining table, but they also can call the bluff of their competitors. Rather than relying on educated guesses or imaginary circles on maps, centers can use research to show potential tenants how their trade area compares to that of the competition and make the case that their actual consumer base is the one that the tenant wants.


Take, for example, the above TruTrade™ map of Avalon. While the mixed-use center does draw consumers from its traditional trade area, its penetration of the market spans far beyond it, too. As shoppers from further away continue to flock to the North Atlanta shopping center, research resources like TruTrade™ can give them the tools to sell their actual customer base to potential tenants.


What competitive advantage is your center leaving on the table?

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