Retail void analysis is a useful and powerful market research tool used daily by retail real estate professionals. Retail is a highly competitive sector of commercial real estate. There are new stores opening every day, but sadly not all of these will succeed over the long term.
Essentially, a void analysis helps retail property stakeholders to make better choices regarding the location or type of retail outlet by analyzing the gaps (or voids) in the market. It helps to mitigate the risk of potential failure by reducing the chances of market saturation.
Often outsourced to a specialized consultant, a void analysis would take days of manually gathering demographic and brand data which could also be flawed by subjectivity or human error.
Thanks to today’s advancements in Geographic Information System (GIS) technology, large amounts of complex data can be compared and analyzed all at once. The result is a much quicker, and more accurate void analysis than ever before.
What is Retail Void Analysis?
A retail void analysis shows you which retail brands are missing in a specific area, and which retailers would be well-positioned for success in that particular space.
Used by investors, property owners, and retail brokers, void analysis provides valuable insights by assessing the population demographics in a defined location.
Demographic components usually include aspects like average age, median household income, median home value, education, race, ethnicity, and more.
Retail brands are given a score based on their likelihood of being a good fit in a particular location considering the population demographics.
Void analysis underpins important real estate decisions as it considers all the population data variables involved, and forecasts performance of a particular retailer based on potential demand by people in the area.
Why is Void Analysis an Essential Tool?
The retail market is highly competitive, and location can make or break a retail outlet.
Without a void analysis, overlapping retail brands competing for the same customers can be set up for failure or conversely, brands can be placed in low-demand locations.
Unfortunately, if you don’t do the research, you are liable for making decisions that could have long-term detrimental effects.
Positioned correctly, retail businesses can thrive and beat their competitors by standing out in their location and attracting the relevant customers. Conducting a void analysis is essential to making these informed decisions.
Use Cases for Retail Void Analysis
Property owners and real estate brokers might use a void analysis for several different scenarios, such as:
- Deciding what type of retail store to open in a specific location
- Choosing an ideal location for a specific type of store or retail brand
- Assessing the viability of a retail business idea (brand, type, and location)
- Forecasting which retail brands would be well-positioned in various locations
- Finding the ideal tenants to fill up empty space in a new or existing shopping mall, which will ensure success for both parties
- Analyzing competitors in a specific location to figure out what types of stores/brands are missing
- For large franchises, a void analysis can aid in a growth strategy by identifying which locations are best suited for future outlets
- Analyzing the performance of an already existing store in its current location
How to Do a Retail Void Analysis
There are a variety of GIS analytics tools to choose from, each offering a set of categories and filters to assist you in collecting and analyzing your data results.
Most analytics tools provide a match or risk score for each retail brand as part of the results data. This is an indication of whether the retailer is a good match or a high risk (not a good match) for the selected location.
If a retailer has a good match score for a location, it has a much higher likelihood of success in the specified space, saving time, effort, and expenses all round.
After conducting a void analysis, you’ll have a manageable list of possible retail brands or locations too choose from or compare your own business to.
Armed with this list, you can kickstart strategic conversations with the relevant property stakeholders.
Example 1 – Conducting a Void Analysis for Retail Success
A tenant in a shopping mall decides to move out, leaving the mall owner with an empty space. The mall owner approaches a retail broker for assistance in finding the best tenant for his empty space.
The broker runs a void analysis and determines that there are two large high schools near the mall. There are also very few existing stationery stores in the area. In fact, there seems to be a gap in the market for stores that target teens.
The broker finds a stationery franchise tenant and fills the space in the mall. The store becomes very popular, and a second store that targets teens (this time clothing) is opened in another vacant space in the same mall.
What Happens if You Don’t Do a Void Analysis?
Without a void analysis, successful retail opportunities can be easily missed.
Example 2 – Without a Void Analysis
The same mall owner from above has a good relationship with the owner of a pizzeria franchise and has seen that this franchise is very popular in other locations in the state.
The mall owner leases the empty space to the pizzeria owner without consulting a broker.
The problem is that the people in the area don’t eat pizza much – in fact they tend to prefer juice bars. Furthermore, there is already a similar kind of pizzeria not too far from the mall.
The pizzeria brand opens in the mall anyway, but several months later is struggling to make a turnover with its tiny client base. Eventually it closes and the mall owner is left with an empty space again.
A void analysis at the start of the tenant search would have avoided this unfortunate (and costly) situation.
The bottom line
A property owner who uses a void analysis will start their search with the right data. They will speak with relevant potential tenants who have a high match score to the local demographics, which will ensure a good fit for the retail space.
Having in-depth data shifts tenant placement from a lengthy and costly exercise to a quick assessment that is more likely to yield success for both parties.
Final Thoughts on Retail Void Analysis
A retail void analysis provides reliable research that informs the decision-making process in the highly competitive retail market. In some cases, a void analysis can be the difference between failure and success.
It’s certainly an invaluable tool for assisting discussions between retail property owners, potential investors, and of course tenants.
Over the years, void analysis has become infinitely more accessible with the use of GIS analytics tools which make an in-house void analysis simple, cost-effective, and efficient.
Conduct a Void Analysis using AlphaMap
If you’re using AlphaMap’s void analysis tool, you can follow these easy steps:
- Select your property location on the map
- Scroll down the list on the left-hand side of the screen
- Click ‘Void Analysis’
- Define your radius
- Utilize the filters to refine your search based on brands and demographic components
- View and analyze the results