By Pamela Lewis Dolan/Post-Tribune staff writer
Northwest Indiana shoppers looking for a store where they can “Expect More, Pay Less” or want “Low Prices Always” don’t have far to travel to find the nearest Target or Wal-Mart store.
And those shoppers who “Expect Great Things” won’t be hard-pressed to find a Kohl’s store within a few miles.
But many region shoppers are wondering why they’re seeing double and triple in the chain-retail landscape — while other stores such as Ikea, Nieman-Marcus and Trader Joe’s haven’t managed to cross the state line.
Local and national marketing specialists say the reason can be boiled down into one word: demographics.
NWI’s market
A national retailer looks at population and income of a potential trade area, said Frederick Langrehr, the Paul H. Brandt professor of business at Valparaiso University.
“You need people and money,” Langrehr said.
Ikea, an international home furnishings company that boasts quality at low prices, has two Chicago area locations, in Schaumburg and Bolingbrook, but none in Indiana.
“Ikea would demand a much, much greater trade area than Northwest Indiana has,” Langrehr said. “There is high-end housing, but not enough of it,” he said.
Ikea agrees.
Ikea’s Chicago’s locations draw not only from a huge Chicago market, but also from Indiana, Minnesota, Michigan, Wisconsin, Missouri and Iowa.
“Northwest Indiana is part of our Chicago market,” said Joseph Roth, director of public affairs for Ikea North America.
According to Subir Bandyopadhyay, associate professor of marketing at Indiana University Northwest store locations are more and more data driven.
Retail companies rely heavily on Census data, specifically the price of homes and income in any particular market area.
They also use local county and city data to see if there is an influx in their target profile, the type of customers who historically shop at their stores and forecast how many more will be there in the next 10 years, he said.
“They look to see if there’s a building boom going on and the types of houses going in and if it matches with their target market,” Bandyopadhyay said. “They look at the growth potential and if the profile fits.
“It’s a question of critical mass,” Bandyopadhyay said. “There may be $50 million homes in an area, but it does not make any sense to put a store there for those few families.”
Bandyopadhyay pointed to the area of Dyer, Schererville and St. John.
“It’s a booming area,” he said. “Stores are coming up like mushrooms because companies got the data.”
The fact that Schererville has luxury automobile dealerships like BMW and Jaguar, but no high-end retail stores, also is based on demographics, he said.
Cars are a unit-driven market, while department stores are volume driven.
“If you sell 10 cars a year, you are a successful dealership,” Bandyopadhyay said. “If you are Neiman-Marcus, you have to sell a lot of clothes.”
While there’s a follow-the-leader phenomenon among big-box retailers, the same is true for high-end retailers, said Neil Stern, senior partner for McMillan/Doolittle, a Chicago-based retail consulting firm.
Retailers look at the logical places first, he said, like the metro markets or places well known nationally for growth. But that shouldn’t discourage local leaders from courting the big names.
All it could take is for one big name and the rest could follow, he said.
For example, a retailer might think, “If it’s good enough for Williams-Sonoma, it’s good enough for us,” Stern said.
But while locals await the arrival of the upscale names, the big boxes are popping up in droves.
Vince Galbiati, president of the Northwest Indiana Forum, a privately owned economic development corporation, admitted the formula retailers use when deciding where to locate is a mystery to him.
Galbiati said the forum doesn’t focus much on retail growth, but he said he doesn’t understand the motivation of big-box retailers placing two stores virtually next door to one another.
Jackie Long, media relations specialist for Kohl’s department store, said the company looks for high concentrations of families and children when seeking new locations. She said a region’s growth potential also factors into the equation.
Long said “when it makes sense,” the company will build a new store in an area already served by a Kohl’s.
But, “It’s a long and involved process, and I don’t have details to share,” Long said, adding that the company generally doesn’t discuss the demographics it looks for.
Target Corp., which bills itself as an upscale discounter, takes a little different approach at store location.
The retailer opened 60 stores, the highest mass opening in Target history, in one day, on Oct. 9.
According to Target spokeswoman Aimee Sands, Target looks at trade populations of 100,000 or greater.
“A rural area circle could be wider than an urban area,” Sands said. “We look at the percentage of the population that fits our profile of a Target shopper,” she said.
That profile is a female, age 46, with a median household income of $55,000 a year. Of that group, 38 percent have children.
“Our process is very individualized,” Sands said. “It depends on each city and what we feel it can support.”
The next big thing?
As interest grows among developers eyeing Crown Point’s Interstate 65 corridor, city officials have said they will wait as long as it takes to get something not found just around the corner.
Earlier this year, the city greeted Lauth Property Group with excitement over its proposed shopping center at I-65 and U.S. 231. But later, when city officials learned that Wal-Mart could anchor the shopping center, the City Council proposed two zoning ordinance changes that would prevent big-box retailers from locating in the city. But the ordinance changes would provide for variances or special use designation for big-box tenants considered more desirable.
A public hearing on both ordinances is scheduled for Monday at the Plan Commission meeting.
Stern, the retail consultant, offers one warning to those holding out hope for certain high-end shopping options: If municipalities hold out too long for a certain retailer to notice them, “It may not ever happen,” Stern said.
Stern said the retailers have spent a lot of time perfecting the formulas they use to determine locations and know what factors, including traffic patterns, need to exist to bring in the shoppers.
And if big box is what Crown Point is attracting, city officials should be more receptive to the idea, Stern said.
Because retailers can take a chunk of the tax burden off residential property owners, most any retail is better for the taxpayers than none at all, said Stern, with the caveat that Wal-Mart has a set of other issues communities sometimes find undesirable.
“I think a lot of communities have an elevated sense of what their community’s about and what should be there.”