STI: PopViews (Fall 2006)

April 2006 Release?

The April 2006 release of STI: PopStats holds a noteworthy distinction - it is this year's first release of 2006 U.S. population estimates in the demographic industry. While other data providers may announce their 2006 estimates in April, no other provider has ever delivered its product until several months into the New Year. However, PopStats' estimates for each New Year are always sent to our customers promptly on the first week in April. We are proud of this important distinction between our population estimating product and others.

We are also proud that our products continue to grow based on our users' real-world data needs. Frequently our clients call us with specific population counting problems and we'll create solutions. We then share the new data with all of our clients in new product releases. Our product-expansion philosophy is that if one retailer can benefit from new population data, then many of our users will also benefit. In this way, we know that PopStats is continuing to help retail researchers solve the real-world problems they confront in their quest to identify fast-growing markets and make informed location decisions.

Because of our approach to product innovation and expansion, PopStats has rapidly expanded from its original 200 variables in October 2001 to over 800 variables in the April 2006 release - 180 of which are new in this release. They include:

• Household income by householder age
• Workforce populations
• Employment by industry
• Employment by occupation
• Workers per household

PopStats previously contained both householder income data and household age data: The new version combines the two, so that market researchers can easily identify income levels by householders' age. Our new workforce population data tells retailers how many consumers in a trade area are employed and how many are unemployed. Also, researchers can now efficiently search for employment categories by industries, employment by occupations, and workers per household.

Much of PopStats' new data, along with new variables under development, centers on what we are calling "econometrics." Many retailers are not yet tapping into the power of the economics impacting their markets. But as we move further from the 2000 Census, the numbers are becoming weaker. As a result, we are looking for new ways to counter this problem and enrich the value of population estimates. We believe that econometrics will play a powerful role in keeping population counts accurate through 2010 and beyond.

PopStats' First User Conference is a Major Success!

On March 23rd and 24th, 2006, we held our first PopStats Users Conference. This event was specifically created to help PopStats users gain greater insight into our quarterly population-estimating tool and other industry-leading products. We're happy to report that we delivered on our mission. Attendees told us the event was a valuable forum for information dissemination and idea exchange. They said they appreciated the informative presentations, peer-to-peer networking, and product development brainstorming. Here are a few highlights from the event:

A Discussion on STI: PopStats' Methodology. "How was PopStats created?" This is the most frequent question asked by PopStats users. For the first time ever, Robert Welch described the unique methodology used to create PopStats' unique quarterly population estimates. Before we created PopStats we were creating software and data products. But invariably every market researcher who arrived at our doorstep had one request: `Where can I get accurate population counts?' We searched the demographic world high and low on our customers' behalf and nothing solved this fundamental problem. So we analyzed the problem of estimating populations and created PopStats.

PopStats' estimates are calculated on six computers working together in a pseudo-parallel processing manner. We have created a self-correcting artificial intelligence modeling system that learns from itself. The methodology is comprised of four models including:

1. The ZIP+4 Model. This model is based on over 28 million ZIP+4s, representing over 116 million households. This model is the primary determinate in understanding population growth and decline. Vital to the process is that STI maintains its own street files that feed into PopStats, because we do not want spurious third-party data entering into the calculation.
2. Postal Delivery Model. This model is based on postal delivery statistics provided by the postmasters in each market across the country. This model's primary purpose is to understand trends in existing populated areas.
3. Spread Model. This model, which is based on macro-level postal counts, performs double-duty: It both calculates populations in rural areas where ZIP+4's are limited, and serves as a checks-and-balance for the previous two models.
4. Census Model. This is the grand master of all the models, which we call the "black box." It pulls together the other three models using an extreme set of heuristics (for example, if-then questions). It is the final decision-maker in the estimate.

The PopStats methodology also includes automated processes for overcoming any and all anomalies present in the data, including ZIP+4 inaccuracies, data smoothing issues, conversions (lofts), and overrides.

Insights from Kroger's Market Research. Dale Caldwell and Karie Hemming from Kroger's GIS department presented an insightful session describing one of its applications of PopStats to make informed trade area decisions on which stores to remodel. While previously decisions were made for non-demographic reasons, now the chain grocer applies demographic research to make its remodeling decisions. "The answers are not always obvious, and at $3 million per renovation, it would be an expensive mistake to make," stated Dale.

This inventive GIS team created their own unique program for increasing the effectiveness and efficiency of applying demographics to this problem, which they call the Priority Index Model project (PIM). "PIM helps us keep our priorities in focus and ensures we achieve a greater bang for our buck," noted Dale, Director of Kroger's GIS department. They explained how PIM helps them create more accurate trade area boundaries and reduce their research time per store from 15 minutes to two minutes. "Achieving these efficiencies made the project feasible," said Dale.

Simply stated, Kroger's PIM program uses PopStats and the parameters of distance and density to create a spreadsheet that ranks stores according to their growth rate and incomes. The higher the demographic growth rates and incomes, the more points a store receives. "The higher scoring stores float to the top, so we know which stores will deliver the highest ROIs from remodeling investments," explained Dale. Every six months Kroger updates their PIM analysis. "Thanks to PopStats' updated population counts, we can obtain current insight on our stores' demographics and up-to-date remodeling recommendations throughout the year."

Insights from Walgreens on Market Research. In the "retail war," Walgreens said that PopStats is a key weapon in its arsenal. Walgreens is among the most aggressive growing U.S. retailers today. But behind the scenes, the drug store chain's market researchers have faced several challenges - many of which they've conquered with their progressive application of GIS. "Our aim has been to lower the risk of opening new stores and entering new markets," said Dave Miller. "Achieving this required getting more sophisticated with our market analysis. Once we had the advanced tools, we realized we needed better data - including accurate population counts. That's when we discovered PopStats. It's one of the tools that has helped elevate our confidence in our results - short of going into the markets on personal site visits and counting heads by hand."

The State of the Demographic Industry. Larry Maves could be called the "father of demographics" for his long and influential career in the industry. PopStats was honored to have him attend the User Conference to share his singular view of the industry's history and future. Larry led off his discussion with this pronouncement: "PopStats is a forward-thinking product." Larry acknowledged that the primary reason every market researcher attended this event was to learn how to get better answers from their data and more accelerate answers to questions such as: Where are our customers? Where are high-potential new markets? What are viable new retail concepts?

In the pursuit of every answer, time is of the essence. As such, every researcher needs to create fast GIS systems. The good news, said Larry, is that the tools to extract the most relevant data quickly are maturing. He cites PopStats as the best tool available for delivering demographic data that is highly accurate, timely, and useable. "Its estimates are light years beyond what we used to gather in the field," he said.

Also critical is the process that researchers use to extract relevant answers from the millions of data points available today. "We continually face the issue of filtering down to the data that's most important and getting as much insight as we can, because as we all know ninety percent of the research process involves interpreting the data," Larry said. "Then we have to get it into the hands of the users quickly, so it has relevance. Six or seven months later are not an option."

The good news is that the tools to extract the most relevant data are maturing, he noted. These tools are allowing retailers to access relevant data and extract it in ways that are meaningful to many areas of the business, including merchandising, human resources, finance, marketing, real estate, and operations.

Larry also spoke to the evolution of consumer lifestyle segmentation during his years in the industry. It's not just valuable to seek answers to the question "who." For the most profitable answers, researchers also need answers to what, where, when, why, how, and how much. He said that as segmentation systems have matured they have gained the ability to answers these critical questions. He pointed to STI: Landscape as a premium example of consumer segmentation. "It's the equivalent of hunting to understanding our customers' wants, desires, and changing needs with a rifle and scope versus a shotgun," he said.

Needless to say this will not be our last User Conference - it is the first of what will become an annual event. We hope to see you there!

A Preview of PopStats' Future Releases

STI is currently working on several new product developments for PopStats - all of which are aimed at increasing retailers' demographic research success. Among the most significant new developments in the short-term are the following:

STI: Landscape Neighborhood Segmentation Categories. Our unique neighborhood segmentation system formulates all U.S. markets into 15 overall neighborhood categories and 72 individual neighborhood segments. A future release of PopStats will include the 15 neighborhood categories, which are segmented by traditional demographic factors, including family status, affluence, age, family status, ethnicity, and degree of urbanization.

10-Year Forecasts. These quarterly updated future projections will give researchers greater accuracy in forecasting their markets.

Historical Data. This data will help researchers better understand the history of their targeted markets.

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