The Effect of Transient Residential Populations on Business

Large cities are known most often for two things, crime and transient populations. Transient populations are the core infrastructure of many of the United States largest and most populous cities. While most transients are characterized as homeless citizens roaming the streets, many large cities have a secondary form of transiency. This form is related to the turn over of residents in any given area. This turnover has a significant effect on business performance and business planning. Let us take a look at the effect of a transient residential population on business.

To begin we must place parameters on the definition of transient residential populations. Many of the largest cities draw residential population increases of more than 10,000 people per month. While these numbers seem staggering, these same cities post decreases in residential populations of 5,000 or more. This set of hypothetical numbers provides a positive residential increase of 5,000 residents per month, but the fact remains, these 5,000 residents are new residents and, as stated in the model, there has been a net loss of 5,000 established residents. Here in lies the definition of transient residential population. A transient residential population is a population that maintains a large percentage of resident turnover.

Businesses who are established in cities with transient residential populations are constantly fighting to regain the same group of consumers they are losing over and over again. With each new consumer, a business must establish brand recall, trust and an effective supply to the resident. These establishments, for a certain amount of time, are considered liabilities to the business. With transient residential populations, these liabilities are rarely converted to profits because the consumer base is constantly revolving.

Brand recall is established over a period of time. Residents receive mailings from businesses, pass by billboards with business logos and read local magazine articles containing ads from these same businesses. Over time, residents recall the name and product of the business by sight due to the repetition of the brand advertising. This brand recall, creates a long term consumer base. When transient residential populations are common in a given city, businesses do not have the attention span of the consumer for a long enough period of time to establish the much needed brand recall.

Without the establishment of brand recall, businesses will have a hard time maintaining the level of trust needed to keep consumers returning. Consumers, by nature, purchase products and services from businesses they are certain they can trust. Unfortunately, this rule goes for businesses that may not offer as great a product as another business. Trust means more to the consumer than quality. For large cities with transient residential populations, trust is rarely if ever gained by small, private businesses. Residents do not remain in one area for a long enough time to establish a personal relationship and therefore tend to go shy away from the new to you businesses in the area.

When residents shy away from a business, an effective supply and demand relationship between the consumer and the business can not be established. It is this relationship that moves consumers from being labeled as liabilities to profitable ventures. For instance, if a resident establishes a business trust with Tom and Joe’s Pest Control, and the resident remains in the same area for 10 years, Tom and Joe will not have to pay new money to re advertise to this established consumer. The initial cost to gain the business has been re payed many fold and now the supply and demand relationship between the resident and the business is a profitable one for Tom and Joe. In larger cities with transient residential populations, there is enough turn over among the residential population to keep a business in the red due to constant advertising. A profitable supply and demand relationship can never be established when a residential population is forever changing.

The end effect of a transient residential population on business is failure. Brand recall can not be established without proper time, trust can not be gained and profitability gives way to advertising costs. It is for this reason that in many of the largest United States cities, you find the same nationally branded restaurants, department stores, grocery stores, coffee shops, clothing shops and even hair salons. These businesses have national recall and therefore maintain the trust of the transient resident no matter where they decide to live next. Small businesses are the ones who most greatly feel the effect of transient residential populations and are nearly always doomed to fail from the start.