The Chick-fil-A Rule: Embracing Corporate Market Research for Success

Entrepreneurs and “small-time” real estate investors face one disadvantage that large corporations do not: we cannot conduct as much market research. That doesn’t mean, however, that we shouldn’t respect their work to gain insight into where to invest best.

Indeed, it’s clear that large corporations take this approach. Have you noticed how CVS and Walgreens always seem to locate directly adjacent one another despite having nearly identical pharmacies? It seems odd.

My preferred explanation comes from a Tiger Droppings forum post.

“Walgreens spends significant resources and effort conducting market research and conducting real estate due diligence on potential properties.

CVS just pops in next door!

CVS For The Win”
We should probably take what an anonymous Internet commentator says with a pinch of salt; Hotelling’s Model of Spatial Competition provides more accurate explanation. As Marques Thomas notes,

Businesses selling similar products tend to locate near one another to capture maximum market share.”

“For instance, customers from either store who are dissatisfied with service, pricing or product offerings can easily walk next door and utilize CVS or Walgreens services instead.”

Although this may be true, I’m almost certain at least one of them draws upon market research conducted by their competitor when making decisions about where to locate stores.