Moving Closer To Your Market

gracer

New member
Hello everyone! :)

I noticed that one famous wholesaler and retailer grocery chain in my country has this technique of opening up branches in areas where target consumers don't need to travel far to get to them. I find this as a very big advantage for them because they are the ones who are reaching out to their customers, as though saying "Hey! I just moved in close to you so come check me out!".

Smaller retail businesses and regular consumers are their regular customers. I am one of their regular customers because they're very accessible to me. I could just drive to them for 5 minutes or less. Retailers near the area also have the option of directly going there and purchasing supplies or taking advantage of their free delivery for a set minimum purchase.

What do you think of this kind of strategy? Is moving closer to your target market an advantage or the opposite?
 

TopLink

Forum Founder
Staff member
Re: Moving Closer To Your Market

I think it depends very much on the market segment and country.

In many Western countries these days. many retailers have gone to the 'bog box' format, where all the major retailers are in a 'park, on the outskirts of town. Obviously this means the consumers need a car to go shopping.

The 'corner' store almost seems to have died out. In Bangkok (where i live part of the year) it's kind of a mix of the two. Lots of small local stores, but also big box formats. They call this 'modern' trade as opposed to traditional trade.

In general terms being closer to your customer is an advantage, for sales. But the supply chain is more expensive per unit. So where lower prices are important for consumers, big box formats win due to the lower supply chain costs. (basically replenishment is in bulk)
 

CarlosTL

New member
Re: Moving Closer To Your Market

It is a strategic orientation made at very high-up level, and depends on many things.

Even some bank opted to implement this strategy in some countries as a way of getting more clients by opening up new smaller branches.

Personally, I think that there may be some valid cases for this strategy, but generally speaking it is a bad move. You tend to skyrocket your sales operating costs without much return. It is like swimming upstream when it comes the current trends in the industry. Everybody is trying to save costs, by getting bigger and sharing operation costs.

Even in Economics, you regularly hear that this or that country can't be efficient at adopting this industry because 'your cities aren't big enough'.
 

explorerx7

New member
Re: Moving Closer To Your Market

I have seen where many of the wholesalers of food and household supplies have been opening outlets in the urban areas which have brought the suppplies to a location near to many of the potential customers. Nowadays, most of the populated clusters have adequate shopping opportunities in close proximity, therefore, there is no need for them to travel any considerable distance to purchase supplies. The good thing about this situation is that the wholesalers have some good evaluation of where to locate the outlets because for the most part they do very lucrative business.
 

gracer

New member
Re: Moving Closer To Your Market

I think it depends very much on the market segment and country.

In many Western countries these days. many retailers have gone to the 'bog box' format, where all the major retailers are in a 'park, on the outskirts of town. Obviously this means the consumers need a car to go shopping.

The 'corner' store almost seems to have died out. In Bangkok (where i live part of the year) it's kind of a mix of the two. Lots of small local stores, but also big box formats. They call this 'modern' trade as opposed to traditional trade.

In general terms being closer to your customer is an advantage, for sales. But the supply chain is more expensive per unit. So where lower prices are important for consumers, big box formats win due to the lower supply chain costs. (basically replenishment is in bulk)
This "big box" method is indeed a new concept for me. :) I don't know if it can also be considered as a big box method, but there are events here which are being organized by our local Department of Trade where big suppliers and retailers are invited to take part in big product sales which are either done in big parking lots or parks. This is on an occasional basis though so small retailers only get to take advantage of big discounts in bulk supplies several times in a year.
 

Vampa

New member
Re: Moving Closer To Your Market

In small towns like the one I live in moving closer to your target market will most likely get your more sales because as there's little competition, and the price difference aren't that huge (assuming the retailers get most of the stuff from the same suppliers) most people will buy whatever they need from the nearest store. It's different in cities though. It doesn't really matter where you live because if you seek a great deal and will save money no matter how far you drive, you'll buy what you need only from the places where you'll get the best deals.
 

David_TR

New member
Re: Moving Closer To Your Market

I think this is a good strategy depending on the market and what you do. Back in school I remember having to do a report about the concept of "food deserts", which were areas where it was very hard for people to get food, primarily in inner city/urban areas. In your specific example regarding grocery stores, I think it makes sense that any sort of food retail (both commercial and consumer-level) would do great in trying to reach out to areas where their potential customers don't have any sort of access to their products, especially in areas of low competition where there might not be any other functional grocery stores.
 

ad.mike2016

New member
Re: Moving Closer To Your Market

Moving closer to your target customer is generally advantageous. With warehousing you could always offer discounts for customers who will come and pick up their orders as long as they have the correct type of transportation and PPE. Or instead of pickup you could offer discount local area shipping or same day delivery if you are in the position to do so. If you are near a residential area and depending on the type of merchandise you sell you could also open up a "warehouse retail outlet", might as well let the money come to you. You could also provide some options sort of like a Co-Op where multiple small businesses get together and pull their resources to allow them the ability to get a large discount.
 

Corzhens

Member
Re: Moving Closer To Your Market

There is a saying - if the mountain will not come to Mohammed then Mohammed will come to the mountain. Yeah, that's a good strategy that is being practiced particularly by stores selling consumer items like food. Take the strategy of McDonald's here, they are putting up small kiosks in street corners that sell only their cold items like sundaes and shakes. Right by the gate of our village, there is a small McDonald's kiosk that is being patronized by the people in our village. The kiosk attendant said that they are targeting big villages for their kiosk. The nearest McDonald's outlet is less than a kilometer away so it is obvious that the fast food chain is the one going to their consumers.
 

gracer

New member
Re: Moving Closer To Your Market

As a regular customer and a retailer myself, I really appreciate this strategy a lot since it is hard to get to the center of the town especially during the stormy season. Having the grocery store chain put up near our area made it possible for residents living near it to easily access basic necessities without having to travel an extra distance to the central business district. We don't experience traffic and we also save a lot on gas and fare this way. So this kind of move is not only beneficial for the grocery store chain, but also for customers who appreciate this move.
 

Norm

New member
Re: Moving Closer To Your Market

I think it's a great strategy as it does seem to work not only for groceries but for most any business in general including restaurant chains as I have noticed. A lot of convenience stores here have set up multiple branches along a relatively short road in my residential area probably for that very reason and they all seem to be thriving for the most part I think because each area has enough people in them to keep the business going even when they have branches or even competitors just a few blocks away.
 

Corzhens

Member
Re: Moving Closer To Your Market

I sometimes wonder how the fast food chains operate with their supply chain regarding the distance. Most fastfood chains including the franchise have a centralized supply chain system that almost all the supplies and materials come from the head office. I still have to make a research on this for the actual figures but I am guessing that their warehouse is located in each province or perhaps in each region so the distance for delivery is not too far otherwise the delivery will be costly.
 

James-M

New member
Re: Moving Closer To Your Market

I sometimes wonder how the fast food chains operate with their supply chain regarding the distance. Most fastfood chains including the franchise have a centralized supply chain system that almost all the supplies and materials come from the head office. I still have to make a research on this for the actual figures but I am guessing that their warehouse is located in each province or perhaps in each region so the distance for delivery is not too far otherwise the delivery will be costly.
I have the same opinion
 

David_TR

New member
Re: Moving Closer To Your Market

I sometimes wonder how the fast food chains operate with their supply chain regarding the distance. Most fastfood chains including the franchise have a centralized supply chain system that almost all the supplies and materials come from the head office. I still have to make a research on this for the actual figures but I am guessing that their warehouse is located in each province or perhaps in each region so the distance for delivery is not too far otherwise the delivery will be costly.
It depends on where the restaurants are located, I imagine. Areas like the United States where restaurants are going to be more spread apart tend to have different distribution centers; in fact, some restaurant chains like Burger King actually have the restaurant owner find their own suppliers from a list to make sure the ingredients remain consistent. Countries like Japan where most of a chain's locations are going to be more centrally located may be able to pull from one warehouse, but it may depend on locations.
 

joshposh

New member
Re: Moving Closer To Your Market

Are talking about SM savers or Pure Gold Junior?

Not everyone can make it to the SM Malls and pick up their daily groceries. But I think it is a move on the big companies to start taking business away from the mom and pops stores (sarisari store) that have catered to the smaller communities.

Every big shopping center here has people offering rentals for employees. But they are now reaching out to the subdivisions to be closer to the consumer.
 

Corzhens

Member
Re: Moving Closer To Your Market

Are talking about SM savers or Pure Gold Junior?

Not everyone can make it to the SM Malls and pick up their daily groceries. But I think it is a move on the big companies to start taking business away from the mom and pops stores (sarisari store) that have catered to the smaller communities.

Every big shopping center here has people offering rentals for employees. But they are now reaching out to the subdivisions to be closer to the consumer.
You are right on that, big businesses particularly those dealing with consumer products are coming nearer to the consumers. Would you believe that there are 2 Puregold groceries in our village gate? When you enter the village, one Puregold is to the left and the other is to the right. It's strange why the one on the right was given a franchise when there is already one on the left. But it's clear that Puregold is trying to grab the business from the big malls like SM.
 

Norm

New member
Re: Moving Closer To Your Market

As a regular customer and a retailer myself, I really appreciate this strategy a lot since it is hard to get to the center of the town especially during the stormy season. Having the grocery store chain put up near our area made it possible for residents living near it to easily access basic necessities without having to travel an extra distance to the central business district. We don't experience traffic and we also save a lot on gas and fare this way. So this kind of move is not only beneficial for the grocery store chain, but also for customers who appreciate this move.
I agree completely. Back when there weren't many branches of these stores I'd have to travel farther to get my goods and nowadays I don't even feel like I need to dress up all that much anymore since the stores are so near that it seems acceptable to just go there in my home clothes as long as it is presentable and this is true for most other people I see walking around as well. It is very comfortable and convenient and combined with online stores times now really have gotten a bit easier.
 

djchain

New member
Re: Moving Closer To Your Market

Of course, proximity matters a lot. But, I would like to replace that word with "reach". Its all about reach when it comes to the market. What I mean is that you may not be able to set up shop closer to all you customers, however, you can partner with local businesses so that your particular business benefits and those local businesses benefit as well. IMHO it generally costs less in terms of leases, inventory, etc. when such partnerships are built. It does take time and effort, but at least you'll have more reach.
 
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