Alice Wood had worked in a women’s clothing store for several years and was considering opening a store of her own. Her investigations produced considerable secondary information, but she was not sure how to go about estimating the potential market, or the market share she could count on, for new women’s clothing store in Prince George, B.C. Prince George was a city of 86,100 surrounded by a large trading area. She found it had 17 clothing stores and five department stores that retailed women’s clothing. During the previous few years, Alice had been saving her money and learning all she could so that her Petite Shop ladies’ wear store would be a success.
In anticipation of starting her own store, Alice had enrolled in a small business management course at a local college. The instructor stressed the importance of market research and mentioned several sources of secondary information that could assist in determining market potential for a new business. Alice had obtained the reports she felt were relevant to her idea from the Provincial Department of Small Business, Statistics Canada, and the city of Prince George (Figures 1 and 2).
Now that Alice had this information, she was not sure how to proceed. She did not want to retail all kinds of ladies’ clothing but planned to cater to the “petite” woman who wore dress sizes 3 to 9. Alice wore petite sizes and felt she understood the difficulties women of her size had when shopping for clothing. Drawing on her retail experience, she estimated that about 60 percent of all clothing sales were in women’s clothing and 20 percent of all women fit in the size 3 to 9 category. She arrived at her decision to select a store directed at the petite woman after she visited all of the 17 clothing stores in Prince George and the clothing departments of the city’s five department stores. She estimated that only about 10 percent of clothing stores’ stock was sized 3 to 9, and the five department stores devoted only about 6,500 square feet (in total) of selling space to this size range. She believed a small shop of about 1,000 square feet could provide a much better selection to this market than those outlets provided.
Figure 1 Selected Data for the City of Prince George
Number of families
Per capita income
Per family expenditure on women’s clothing
Source: Statistics Canada
Figure 2 Estimated Retail Space for Selected Retail Establishments (in square feet)
Men’s clothing stores
Women’s clothing stores
Source: Statistics Canada
1. Calculate the following. Remember that Alice is making an estimate, and that she will do better if she errs on the conservative side.
a. Total market size for women’s clothing
b. Total potential market size for petite-sized women’s clothing
2. Calculate the market potential for Petite Shop
a. Market share as a percent (%) (based on square footage – round to one decimal place)
b. Market share in dollar ($) volume
3. Indicate one positive factor and one negative factor which might cause Alice to alter her proposed sales figure.
a. Positive factor
b. Negative factor