Selection of a location for a prospective Wal-Mart creates many questions for executives. A suitable site would be one that has an adequate demand for Wal-Mart offerings, sufficient transportation resources, and an available labor force. For the purposes of this study, concentration is placed on the potential business effects related to the proximity of an existing Wal-Mart store to a new store.
Wal-Mart is the largest retailer in the world and when considerations for expansion arise, choosing a location presents a problem. With Wal-Mart's success, operating many stores could lead to oversaturation. "The downside of opening stores close to each other is the potential for cannibalizing the sales of other stores in the chain" (Basker, 2007, p. 181).
Research Question and Sample Design for Collecting Data
The question becomes: "Should Wal-Mart establish a minimum mile radius between the current stores and location of the new stores?"
First, the Wal-Mart customer base must be determined and how far they would be willing to travel to shop at a store. Next, a determination must be made of those customers who select Wal-Mart because of its proximity to them. The study should be a structured as a survey because qualitative data will be obtained. These responses will be the key elements in helping to form a decision.
Population characteristics of income, wealth, culture, and health must be considered in the study design. It should be a formal study conducted on a location basis. The demographics of one location may relate to other similar areas. The method of data collection will be communication via an electronic response system and a mailer (Cooper & Schindler, 2006) to the target population. Each will be deployed randomly through the target population at potential Wal-Mart locations.
The independent variables examined in the research include the distance of the Wal-Mart from the customer, the distance between Wal-Mart stores, and the distance from competitors. A few examples of survey questions would be as follows:
1. What is the farthest you would be willing to travel to shop at a Wal-Mart store?
Choose One: 5 miles, 10 miles, 15 miles, 20 miles
2. What is the maximum distance you would drive to [insert name of competitor here]?
The dependent variables are the distances current and potential customers would be willing to travel. It will also reflect whether or not this willingness is affected by the presence of a competitor.
This is a descriptive, cross-sectional study that aims to find how much people are willing to travel to shop at Wal-Mart; the study is not time-dependent. Cooper & Schindler suggest that the ultimate test of a sample design is how well it represents the characteristics of the population it represent (2006).
A simple random sample should be taken to create an accurate reflection of the customer base. Basker indicates that this type of sampling ensures every member of the population has an equal chance of being independently selected, thus minimizing bias (2007).
Needs assessment through customer survey about new location selection for Walmart. An organizational psychology issue.