Case Studies

Market Analysis
A supermarket retailer needs to know what sales volume he can expect if he opens in a new shopping center. Then, what impact will this store have on his sister units and his competitors? Furthermore, what will be the impact of a new Wal-Mart Supercenter if it opens and which of the weaker competitors will most likely close?

Due Diligence and Market Intelligence
A regional supermarket chain wants to divest several under-performing units. The potential buyer who directly competes needs to know what kind of sales volume and market share can be expected if they consolidate the stores. Furthermore, will there be FTC implications? Other questions need to be answered such as: Why are those stores under-performing? What are their sales volumes?

Investor Due Diligence
An investor or money manager wants to make a multi-million-dollar investment in a publicly held supermarket wholesaler. However, he has heard rumors that their largest wholesale customer is having financial problems. DJL personally visits all the stores operated by this customer. Stock levels are found to be low, employee morale is down, and regular maintenance of equipment is being postponed. The size and sales of each store are obtained and it is determined that, at their current sales per square foot, they are not profitable. It is also discovered that Wal-Mart Supercenter is opening stores in several of their markets. Direct-store-delivery vendors are interviewed and the consensus is the company is about 120 days outstanding in monies owed to vendors. Some vendors have this company on C.O.D. The wholesaler is also holding a $25 million note from this customer which may go into default. Instead of buying stock in this company, the client shorts their stock.

Geo-Demographics
A retailer has been given a demographics profile from a developer. The data is broken down into one-, three-, and five-mile rings. The dilemma is that the proposed site sits along the Mississippi River and there is no bridge for 10 miles in either direction. What lies across the river is meaningless. The retailer needs to know exactly what his trade area population is—not the areas he has no chance to draw from.

Urban Renewal
There is a vacant shopping center located in a blighted area of a large city. There is no supermarket within a three-mile radius. The local community, municipal government, and landlord would like to see a supermarket opened. A market study is performed. Despite low expectations, a local independent is able to obtain government funding and open the store.

The owner of a downtown shopping center in a small rural community has a vacant supermarket space and is struggling to keep the shopping center occupied. There is only one other conventional supermarket located on the outskirts of town near a Wal-Mart Supercenter. There is no room for a significant amount of square footage in this trade area. The existing supermarket has only a mediocre performance. Our study shows that by relocating this store closer to the population base, sales per square foot can be increased. Another alternative shows that if a strong operator opens downtown, the weaker store on the outskirts of town would most likely be forced to close. With financial incentives from the local government, a downtown supermarket is opened. The supermarket on the outskirts of town is subdivided and released to a non-supermarket tenant.

Litigation Support
A retailer opens a new supermarket and it fails to meet expectations by nearly 50%. The trade area and its competitors are re-evaluated. It is determined that the original market study’s population base included persons housed in a large prison facility. The per capita expenditure was not reduced for students housed in dormitories at a large university. The sales volume of the competitor across the street was overestimated. The retailer’s attorney uses this information in court.

Wal-Mart is trying to buy a regional supermarket chain. There is concern that if the merger goes through, Wal-mart will also convert its existing stores to Supercenters. Then several small independents will be forced to close and Wal-Mart will have a monopolistic market share. These facts are presented to the FTC for review.

The owner of an independently owned supermarket is getting divorced. The owner’s spouse is making financial claim against the present value of the supermarket. DJL Research prepares a present market simulation and future sales projections that includes the negative financial impact of new competitive market entries which will reduce the future value of the supermarket. The court allows our client to retain more of their personal wealth in order to compensate for this difference. Future alimony payments are also reduced.

Loyalty Card Data
A retailer would like to know where his top 100 customers live so that he may personally call on each one and present a gift. He would also like to know what area 85% of his volume is derived from and what his market share is. Advertising costs are reduced since the retailer knows exactly what area to target.

Economic Impact
A small city of 30,000 people will be getting a new Wal-Mart Supercenter. The city council would like to know what the impact will be on the existing supermarkets before a building permit is issued. The net increase or decrease in supermarket sales is determined.

Troubled Store Analysis
A retailer opens a store and sales are 40% below projection. All of the research is double checked and no errors found. This market is 25% Hispanic and 50% African American with most of the residents having low incomes. After revisiting the market it is discovered that the retailer does not accept WIC vouchers and Food Stamps. Hispanic food offering are limited. Competitors catering to low-income minorities were not affected by the opening of his store. The retailer is presented with a list of recommendations to improve sales.

Banking and Finance
There is a large regional bank specializing in making loans to independent retailers for the purpose of building or acquiring supermarkets. Although the bank’s client had a market analysis performed by its wholesaler, the bank required a second opinion market study before approving the loan. The second opinion study is done and it is found that the retailer’s wholesaler has indeed done its due diligence.

A regional bank would like to expand its in-store banking operations into some new metro areas. DJL Research provides the bank with a list of the highest volume supermarkets which do not currently have an in-store bank. Then the future retail sales are projected for these stores to determine the long-term viability of their locations. The bank then approaches these stores for in-store bank development.

“Most analysts will evaluate the competition using either a microscope or telescope. I use a proctoscope.”

— David J. Livingston