On a recent trip to Dallas, Texas, I took note of the very broad diversity of businesses located there and started thinking about the fact that Dallas is well known as a test market for new businesses – particularly chain stores or new concept enterprises. In fact, Dallas is among the top five cities in the U.S. used as a business incubator. Understanding why this is so provides a useful glimpse into the marketing mindset.
For starters, Dallas affords the opportunity to measure against a very broad and diverse demographic and competitive atmosphere. John Shern, Home Depot’s director of real estate, once noted that “What we learn in Dallas, we will employ in other cities like a Phoenix or Atlanta.”
Wal-Mart Stores Inc. of Bentonville, Ark., often comes to Dallas to test its concepts, as does Target Inc., which is based in the Minneapolis area. For local retail and restaurant firms such as 7-Eleven Inc., the Michaels Stores Inc. arts-and-crafts chain and Carlson Restaurants Worldwide Inc. – the owner of TGI Friday’s, the area is ideal for experimentation.
The diverse criterion Dallas meets is difficult to match in other markets. It is difficult to find the same mix of competitors and robust number of potential customers elsewhere. For companies trying to be segmented, those segments; suburban, urban and rural, are often well represented in Dallas. A study of these makes it is easier to design approaches to attracting given types of customers.
San Francisco-based consultant Stephen Roulac notes that Texas’ spot in the middle of the country also is an advantage as Retailers testing markets tend to stay away from the East and West Coasts because the lifestyles there aren’t generally representative of the nation’s majority.
Local companies choose Dallas because they can test ideas in their own back yard. Again, the diverse cultural base provides a useful glimpse into the markets they need to focus on not only in taste and style, but also in average sales thresholds per person in a given visit and overall pricing strategies. It also allows businesses to test the appeal of much more subtle marketing strategies such as colors, traffic flow and the likes, applied to a diverse base of customers.
Dallas, because of its broad atmosphere – culturally, geographically and economically, serves as one of the five major test markets in the United States. Chances are that many of the products, services store layouts, ambiance and more, of stores you visit, have been tested out in this diverse community before being rolled out to larger audiences.