• 7 Useful Tips for Reading a Demographic Report

    7 Useful Tips for Reading a Demographic Report

    What are demographics?

    According to Wikipedia: “Demographics are the statistical characteristics of a population. These types of data are used widely in sociology (and especially in the subfield of demography), public policy, and marketing. Commonly examined demographics include gender, race, age, disabilities, mobility, home ownership, employment status, and even location. Demographic trends describe the changes in demographics in a population over time (for example, the average age of a population may increase or decrease over time). Both distributions and trends of values within a demographic variable are of interest.”

    How should you approach reading a demographic report?

    1. Get the right demographic report.

    If you are looking at retail space you need to determine what type of shopping center the space is it located in? Are you looking at a mall, freestanding retail, a strip center, neighborhood center, community center, lifestyle center or power center?

    Understanding what type of center you are looking at will help you determine the associated trade area for that particular location. Having access to a report with 1, 3, and 5 mile demographics may be useful if you are looking at a strip center, but if your space is in a Power Center the trade area can go out as far as 10 Miles. According to the International Council of Shopping Centers (ICSC the trade areas for each center are as follows:

    Strip Center – <1 Mile

    Neighborhood Center – 3 Miles

    Community Center – 3-6 Miles

    Lifestyle Center – 8-12 Miles

    Power Center – 5-10 Miles

    Theme/Festival Center – 25-75 Miles

    Outlet Center – 25-75 Miles

    Regional Mall – 5-15 Miles

    Super Regional Mall – 5-25 Mile

    For your records you can download the full report here ICSC Shopping Center Definitions

    2. Read the right demographic numbers.


    Now that we know what the trade areas for each shopping center type are, the next step is to examine the numbers that make up your marketplace.  A typical demographic report shows you the total demographic numbers of the concentric circles around your subject property.

    From Wikipedia -“Concentric objects share the same center, axis or origin with one inside the other. Circles, tubes, cylindrical shafts, disks, and spheres may be concentric to one another. Concentric objects generally have different radii, as concentric objects with the same radius are equal. One of the most familiar examples of concentric circles are the evenly spaced circles of a target used in target archery or firearms, and accordingly any concentric design may be called a “target” or a “bullseye” (after the center).”

    While knowing the data associated with each radius circle is helpful, what you should really pay attention to is each radius ring (i.e. the difference between the total 3 mile radius and the total 1 mile radius) as it will give a better picture of who surrounds your business location and how far away they are from you.  To get your “radius ring” take the information from your demographic report and put it into excel then subtract the 3 Mile radius from the 1 Mile radius and the 5 Mile Radius from the 3 Mile Radius. This process will leave you with a 1 Mile radius and 3 Mile and 5 Mile rings. Thus giving you a better picture of the potential customers who are out there and how far they are away from your business location.

    3. Weight your radius rings appropriately.


    Ask yourself this, where do you really get your customers from? Now that we have taken the extra step and are looking at our radius rings, we now need to give each potential customer base the property weighting as to where we think our customers will come from.  As a starting point we’ll once again look at the ICSC definitions for each shopping center and their trade areas. According to ICSC each primary trade area is the area where 60-80% of the center’s sales originate (ICSC Shopping Center Definitions).  So what you have to decide now is how do you weight each trade area? For a strip center does 70% of your business come from a 1 mile radius while the additional 30% comes from the outlying 3 mile ring? Or is it more of an 80/20 split? Once you know this information you’ll start the process of narrowing down who actually makes up your potential customer base.


    Strip Center – <1 Mile

    Neighborhood Center – 3 Miles

    Community Center – 3-6 Miles

    Lifestyle Center – 8-12 Miles

    Power Center – 5-10 Miles

    Theme/Festival Center – 25-75 Miles

    Outlet Center – 25-75 Miles

    Regional Mall – 5-15 Miles

    Super Regional Mall – 5-25 Miles


    4. Age is not just a number.


    It is critical to understand the dominant age cohort surrounding your address and weight your product mix, promotions, advertising, and overall marketing strategy to their desires and ability to consume your service and/or product. At the same time there may be a minority (smaller in relative size) age cohort that no other business/service is addressing in your market area that is wide open for you.


    Having a clear understanding of “who” lives around your business locations will give you great insight into the spending mentality and patterns of your customer base. For the most part, businesses within the last fifty years have heard about and focused on the baby boomers and their impact on our economy and our culture. Not undeservedly so, as the baby boomers have had more impact in the United States than any generation in the history of our country. However, the echo boomers (18-34 year olds) who numerically are just as large as the baby boomers, and their impact on the economy, are being largely ignored.


    The baby boomers reached their peak spending and earning power within the past decade. Their late forties is when they achieved their highest salaries, and they spent the most money as their children matured and as their families grew to their max…McMansions were affordable because of low interest rates and the ability to buy them. Today baby boomers are looking toward retirement-looking to downsize, looking to save- and in many cases they are looking to economically help their echo boomer children, survive these difficult economic times. When have you seen so many “children” living at home?


    Read more about echo boomers and baby boomers here.


    5. You can’t spend money if you don’t have a job.


    What is the job situation around your business and why types of jobs do your potential customers have? The current unemployment rate as reported by the BLS (Bureau of Labor Statistics) is 9.1% for the U.S.

    6. On a scale of 1-100, how economically stable is the area around your business?


    How do you prepare for the future? If your customer base is economically stable today, it means that they have already survived the “great recession” and are poised to be stable for the foreseeable future. The 3L Score takes the most important economic information (employment, household growth, housing performance, income, population, etc…) and uses that information to rank the current economic stability of the neighborhoods surrounding any retail location on a scale of 1-100 utilizing a proprietary algorithm developed by our team.

    The algorithm includes and incorporates the following three major factors of possible change:


    1) Household income;

    2) Household employment make-up; and

    3) Local housing conditions that may cause significant migration due to price changes, sales rates, and probabilities of mortgage defaults in the future in your specific geography.

    7. Are your customers willing to spend money today?


    Imagine your own neighborhood and the local geographies your friends live in. What you experience and what you see and hear about those around you impacts how you think of the future and influence your retail spending decisions today.


    Perhaps, many of the homes in your neighborhood are “underwater,” and those that are selling are often sold at a loss. There are noticeably more “For Sale” signs standing in yards waiting for a viable offer. You now see vacant homes­ in your neighborhood, and maybe more in the neighborhoods around you. Compared to last year, maybe more of your neighbors have either lost their job or have had their wages and hours cut. Your closest friend, like you, is bringing more work home on her computer at night, but not getting paid more. She calls it “job insurance.” She’s worried because hardworking capable friends can’t find work, and they are looking. You hear numerous similar anecdotal stories at local school sports events, cocktail parties, church and other places.


    Wouldn’t an environment like that affect your willingness to part with your cash? Would this type of environment cause you to “splurge” less and save more when possible? Would it cause you to grace the doors of discount/value stores with a new mentality and check menu prices more closely when eating out? If you haven’t experienced this, good for you, but your customers might be going through it right now.


    We hope that these 7 Useful Tips for Reading a Demographic Report were indeed useful and we welcome your feedback. Download our sample report 3L Score Sample Report or visit our website at and register for a free trial.

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