Looking for retail expansion that really works? Smart software may be one tool out of many to find the perfect store location for your brand.
Reading the press, there isn’t a day without various brands and retailers unveiling and opening new stores in diverse locations all over the world.
According to the 7th edition of CBRE’s annual report “How active are retailers globally?”, retail expansion is continuing by brands to expand their physical store networks, despite several challenges. Nearly all of the 150 international brands being interviewed, believe that physical stores remain the destination of choice for consumers. Also, nearly half of the interviewees intended to open 6 to 20 stores in 2016.
Challenges in the Location Search
Expansion ideas are all well and good, but then the real job starts – choosing the right location for your stores. Before the first customer can walk into your newly opened store, several questions have to be clarified. How do I determine which area is suitable and to which regions, cities, districts my brand should expand? High Street or Shopping Centre? Which adjacencies do I prefer? How many POS should I open?
Given the fact that there are several examples of well-known retailers that had to leave ‘wrong’ locations in a costly way, let’s take a closer look at the process of finding the best location (in theory). In times of continuous online sales growth, it has become even more crucial to pick the right location at once.
Locations have long term effects due to their fixed nature – they cannot be changed in the short-term. As the location of your stores may also become the difference between steady profits or a steady loss in revenue – the trial and error method is to be excluded. Due to the large number of factors to be considered, location decisions are very complex. But how can we solve this challenge in an easy way?
Smart Helper – Geomarketing Software
Having supported several brands and retailers in expansion projects myself, I’ve always found it very helpful to work with sophisticated geomarketing software to obtain precise analysis. There is a diversity of innovative databases available on the market combining and visualising socio demographic and economic data with relevant customers, competitors, sectors etc, on a map. One of those is the online platform uGeo®, developed by UrbiStat. This software is based on google maps and available in 4 languages, including English and German, for 25 European countries (further countries are under development). Its web application support is easy to use and it’s available 24/7 on either PC, smartphones or tablets.
So let’s take a closer look at its services, as according to the brands’ and retailers’ needs, different key functions are available to suit their requirements.
Create Thematic Maps to Visualise the Potential
The Administrative Area Analysis allows you to create individual thematic maps, data ranking and graphs on different administrative levels including socio-demographic and economic information as well as company specific data. It also allows you to manually define areas of interest. The example below shows the municipality of Milan.
Visualise Competitors to Secure Your Market
With the Sector and Brand Analysis, you can query the database to compose specific requests for brands of interest, as well as by category (e.g. shopping centre, retail parks, factory outlets or High Streets). A possible question on the analysis could be: Visualise all shopping centres with a certain GLA, in a defined territory with selected competitive brands or retailers present.
The example shows the OVS and H&M stores around Milan.
Examine Catchment Areas for Comprehensive Location Scouting
The Catchment Area Analysis allows you to analyse the population nearby to a location of interest, with the related socio-demographic, occupational and economical criteria such as household types, gender, age, employment, consumptions, income, tourism. The example below shows the catchment area of Prague.
Set Up Scenarios for Predicting Outcomes
With the help of Competition & Performance Analysis, uGeo® allows you to study the overlap between two or more catchment areas and compare them, by studying the population distribution in each area.
Several prediction models allow retailers and brands to determine scenarios for new store openings (own or competitors), to estimate the revenue of a new sale point. Below is an example of turnover estimates for a new Point of Sale, via the prediction model.
Of course, software alone cannot create a strong network of successful stores for retailers and brands. But in research it is one very useful tool out of many, which allows optimising your individual expansion process and location-planning in an effective way.
Interested in knowing more? Contact Isabell for further information about expansion and how to find the right locations for your stores.
About the Author
Isabell Guidastri has worked most her professional life with brands on their local and global brand distribution strategies, including many well-known global powerhouses in branding and retail. Traditional wholesale in Germany, retail in Brazil or franchise in Turkey were just some of her virtual project travels in the last 24 months. Furthermore she supported brands in their expansion and location finding process for new markets. You can reach her best by email or see more from her here.