Comparing Spending and Demand

By June 27, 2017 September 18th, 2018 One Comment

At IdealSpot we speak a lot about how important understanding local demand is for your business. But how does demand compare to the data you typically use in site selection models like income or spending?

Let’s approach this question via a comparison of spending and demand. Spending data estimates which consumers are spending money on the kinds of products you sell. Spending data is aggregated by the Bureau of Labor Statistics and distributed yearly via the BLS Consumer Expenditure Survey. Spending data is great for seeing the current state of the market but it does not quite demonstrate demand because consumers can only spend money where there are existing establishments (online sales excluded). It cannot tell you where the people who want to spend money on your product or service live, work, and play.

Demand, on the other hand, does capture this information. IdealSpot collects this information through social media platforms and search engines to get to the exact location where demand is being expressed even though there may not be establishments serving the desired product where demand is being expressed. If there are not enough providers to meet the demand, then the difference between spending and demand is profit for anyone able to capitalize on the open opportunity.

The below screenshots demonstrate this difference. Several zipcodes in Chicago have spending for glasses and optometrists but relatively low demand. However, some of the areas with low spending have high demand. What’s going on there?


Spending for glasses and optometrists in Chicago by zipcode.

Demand for glasses and optometrists in Chicago by zipcode.

According to our above theory, the areas with low spending and high demand should have few glasses shops and optometrists. Is that true? Let’s check the business counts in two cases:

  1. Northwest of downtown there is both high spending and high demand.
  2. Southwest of downtown there is low spending and high demand.

Compare the counts of glasses vendors and optometrists per zipcode to spending and demand above.

In case 1, there are indeed many glasses shops and optometrists.

In case 2, there are not many glasses shops or optometrists despite the larger demand.

Why the difference? We’d have to dig in more to be certain, but it seems that while the region in case 2 is more populous, case 1 is more affluent. Glasses are often considered fashion accessories so providers may be choosing to target wealthier individuals in their location decisions. However, case 2 would certainly be a viable option for many lower-end eyewear brands or optometrists looking for a wider pool of patients.

Demand is an important piece of the site selection puzzle and it can only be found at IdealSpot. Our suggestion: begin your search with demand and narrow in on your desired demographics until you find the locations that are right for you!

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Marc Smookler

About Marc Smookler

Marc Smookler has founded 6 companies—2 of which have been acquired and 3 of which are market leaders in their respective spaces—the leading brick-and-mortar retail analytics company (, a leading online retailer (, and a cutting-edge marketing services platform ( Marc’s companies have generated over $300M in lifetime revenues and sold over 150,000 products worldwide.

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