The Role Of Demographics In Site Selection
Today’s sophisticated mapping services can help retailers find optimum locations.
Interview by Randall Shearin

Shopping Center Business recently interviewed Daniel W. Morris, president of DemoReports, a specialized demographics company that allows retail site selection executives to analyze locations instantaneously, whether they are behind a desk 500 miles away, or standing in front of the location. Demographics have come a long way since the days of pinpoints on maps. Today, sophisticated systems find data in milliseconds.

SCB: Are demographics playing a bigger role in site selection during this economic time?

Morris: It seems everything has slowed down, including the demographics business. I had the opportunity to have dinner with two major national chain retailers during the Las Vegas ICSC Recon last spring. A major topic of conversation was how the bank meltdown has affected commercial lending. Even these big companies with multiple locations nationwide, who had great credit, were having trouble getting loans to fund their expansion plans. Shopping center owners have more vacancy and have been forced to reduce rents in order to keep tenants. This has reduced their cash flow, and has made them hesitant to upgrade or purchase a new demographics system. Right now is the time they need to market their properties effectively. New demographics with current estimates and projections can help bring tenants. We understand the economy is going through a recession, which is why we are trying to show our customers cost effective solutions for their demographic needs.

SCB: What aspects are retailers most interested in when viewing a demographic report? Developer/owners?

Morris: I have run demographic reports for countless national chains, developers, and owners. The two variables retailers, developers and owners want to see most are total population and average household income. Before an investment is made, they all want to know that there is enough population and what the income levels are in order to support a shopping center or store. These demographic levels indicate to developers and owners what type of shopping center can be built and what tenants they can expect to attract. It also tells retailers how many of their customers are in the area. National chain retailers adhere to strict site criteria, which includes demographics. They know how much population has to be in an area and what the income levels must be in order to have a successful location. Income levels don’t always have to be high, however. Keep in mind national chains like Dollar General, Aldi, and Big Lots thrive in middle to lower income areas. Different demographic variables are important to different retailers. For example, if you are a retailer that sells children’s clothing, you would most likely be looking at the age breakdowns to find the number of children. If you are an urban clothier, racial information may play a role in targeting your customer. If you are a restaurateur, daytime population is a good indicator of what lunchtime business would be. It is also important to select the proper radii when looking at demographics. Most retailers will choose a 1-, 2- ,3-, and 5-mile radius for their reports unless they are in a rural area. In rural areas they might select a 3-, 5- , 7- and 10-mile radius. Big box retailers and developers will often analyze a 20-mile radius or more. Some mom-and-pop retailers will make the mistake of thinking they can draw from 20 miles. If you are not a destination type use or a big box retailer, this is probably not the case.

SCB: How quickly do clients want information? How easy is it for companies like yours to provide it?

Morris: Clients want information as quickly as possible. Coming from a commercial real estate brokerage and marketing background, I understand this as well as anybody. While working for Arnold J. Eisenberg, Inc., the Retail Brokers Network member in Cleveland, I remember retailers that would call at 5:30 p.m. to tell us they would be flying in the next morning to see every possible site location we had. There were a few long nights putting marketing and demographics packages together, but this is what it took to be prepared and to make deals. Because I knew this was the demand from the user, our service has a turnaround time that is normally 5 to10 minutes for single reports from the time the order is placed until the report is received in the customer’s e-mail box. Our GIS specialists run reports quickly and efficiently and understand important decisions are partially based upon our data. We know real estate deals can be made or lost depending on how quickly our reports are sent out. To my knowledge, nothing is really instant. Instant pudding still takes time to prepare. The same goes for demographic reports. We have a new software, though, that is really meant for those clients that really demand speed.

SCB: Explain this, because it ties in with GPS so you can be anywhere and get demographics, correct?

Morris: With SiteStar, a GPS receiver plugs into your laptop or tablet PC’s USB port and tracks your location. With GPS enabled, you can drive to any site location, press your spacebar and have a demographic report on-site without knowing shopping center addresses or having to connect to the internet. You no longer have to make phone calls back and forth to your office or wait for demographic information to come back to you. It really speeds up the decision making process and makes site tours a breeze. This is extremely important for retailers in competitive market areas. The last thing a retailer wants is to lose a deal to a competitor because they had to wait for demographic information. Now real estate brokers can take their laptop and always be prepared for their clients whenever they decide to come in. No more stressful late nights.

SCB: With the U.S. currently in a recession, how far out do you recommend retailers and developers project demographics?

Morris: Projections are typically made 5 years into the future and are based on current trends in birth rates, death rates, and migration rates. Because these trends can change so quickly, it is very important to keep a GIS system up to date with current estimates and projections. For example, when Hurricane Katrina struck Louisiana, we had to make adjustments. If you didn’t get updated estimates and projections the following year reflecting the population changes, your reports would be inaccurate. The economy can change demographics too, which is why staying up to date with the latest estimates and projections is so important. The demographics industry isn’t quite sure what to do about the 2010 Census. The Census Bureau has released a press release stating that the 2010 Census will have only 10 questions and will be the shortest since 1790. That doesn’t give demographic companies and data suppliers much to work with. This will force us to use different less informative datasets like the American Community Survey. Another possibility is to continue estimating and projecting on the numbers we already have. In any case, I would recommend retailers and developers get the good datasets while they still can.

SCB: How has GIS helped retailers identify sites? What other areas can demographics/site location play a helping role?

Morris: GIS has helped retailers identify sites that meet their specific demographic criteria. GIS can shade a map by nearly any demographic variable a retailer wants to analyze. The retailer can then visually see on the map where the pockets of customers are. Geocoding with a GIS system can also be used to plot the retailers’ existing locations along with their competition on the map. Once potential areas are identified, the search for real estate in those areas begins. When potential site locations are available in the targeted areas, demographic reports are usually compared along with various other requirements.

SCB: Your company is designed to help retailers and developers who don’t need demographics regularly (i.e., a research department), but need various reports from time to time. How did you foresee the need for this when you started your company? How did you tailor your services to this need?

Morris: The business started out as a service. I knew there were still a lot of retailers and owners with a limited number of properties or just didn’t want to spend their day learning how to run a GIS system. I remember the days when you could call and order a Pop-Facts report from Equifax. Equifax got out of the demographics business some time ago, but many still wanted that type of service. I put the service online and it did good enough to help fund the development of our software. Now, we help everyone that needs demographics regularly and not regularly. It comes down to what is cost-effective and convenient for them. Our service is great for those retailers and developers that don’t have a research department or want to spend their time on the computer.

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