Introduction | Buying Power | Grocery Store | Drug Store | Market Studies | Conclusion & Sources

This study determined whether a grocery store would be an appropriate new use for the Mystery District. A grocery would provide for neighborhoods nearby and should provide normal grocery items such as meats and fresh produce. The study began by determining the income density of the surrounding neighborhoods, in particular: East Central, Industry, and the Old West End. By taking the median household income and multiplying it by the number of households, the group obtained the median income for the area's entire population. This was then divided by the area of the neighborhood, thus finding the median income density. This number was approximately $90 million. Due to the low income statistics, incomes were adjusted to reflect the actual amount of money spent. According to these calculations, an overall change of 48% results in an income density of $130 million.

Figure 1.
Details how much more money is spent by lower income groups than their actual recorded incomes.

The average expenditures for the trade area were then calculated. A national value was found and then converted to an average more appropriate to the Midwest. The demand for food (from a grocery) was also calculated. This was determined by multiplying the number of households by the median household income and also by the percentage of income spent on food at home. This calculation determined that approximately $9 to $14 million are spent on food each year by the residents around the Mystery District.

Competition provided by nearby groceries was also considered in determining the appropriateness of locating a grocery store in the Mystery District. Those with overlapping trade areas (of one mile) were the LoBill on North Walnut Street, the LoBill on South Hoyt Avenue, and the Savins on East Memorial, as can be seen in Figure 2. This approximation determined that there is an overlap of approximately 60% of the Mystery District's trade area by other grocery stores. The demand for food determined in the previous step was then adjusted for this overlap. Once the affect of competition was subtracted from the previous demand, a new value of $3 to $5 million was determined. Average grocery stores have a demand of $7 million. On the other hand, if the overlaps are adjusted for the assumption that people will shop at the grocery store nearest their home, the buying power for the trade area can be increased.

Figure 2.
Shows overlapping trade areas of the Mystery District and three competing grocery stores.

Following the assumptions made above, this group determined that $64 million is the total amount of income in the trade area. However, the amount spent on food is the actual number needed, and this was found using the data in Figure 3.

Figure 3.
Shows the typical percentage of income spent on groceries for various income levels.

According to this data, the group decided to use a value of 13% to represent the percent of income spent on food. They believed that this number was fairly conservative. Using this value, the amount of money actually spent on food each day is $23,000. According to Dollars and Cents of Shopping Centers, the average grocery store makes $360 per square foot. Using this value, it is assumed that the Mystery District could support a grocery store of 20,000 square feet. The Savins on Memorial Drive is approximately 17,000 square feet and the Hoyt Street LoBill is of a similar size. Both had similar values for the income spent on food in their respective trade areas.

Students Beth Johnson, Tony Piaskowy, and Peter van Mil developed this section.