Retailing 8th Edition by Patrick Dunne,Robert Lusch, James Carver

Exercise 14

The retail store you are planning has an estimated circular trade radius of 4 miles. Within this 4-mile radius there is an average of 1,145 households per square mile. In a normal year, you expect that 47 percent of these households would visit your store (referred to as penetration) an average of 4.3 times (referred to as frequency). Based on those figures, what would you expect to be the traffic (i.e., number of visitors to your store per year) (Hint: Traffic can be viewed as the square miles of the trade area multiplied by the household density multiplied by penetration, which is in turn multiplied by frequency.)
Once you answer this question, do some sensitivity analysis , which is an assessment of how sensitive store traffic is to changes in your assumptions about penetration and frequency. What happens if penetration drops to 45 percent or rises to 50 percent What happens if frequency drops to 4.0 times annually or rises to 4.5 times annually In this analysis, change only one thing at a time and hold all other assumptions constant.