The location of a retail store is one of the most important factors in the success or failure of that store. It’s also one of the hardest decisions to make, as a wealth of retail data is required to map out an effective retail location strategy.
Retailers need a deep understanding of the surrounding area before an informed decision can be made. This can be a challenge even for determining the location of a single store, as there are so many different factors to consider. The challenge is amplified exponentially for major retail brands. The ultimate decision in the location of retail stores will inevitably impact foot traffic, revenues, competitiveness, and the ability to build long-term relationships with loyal consumers.
Accessing the Right Data is Critical to a Successful Retail Location Strategy
Modern retail technology provides deep insight into the areas surrounding shopping centers, major malls, suburban developments, and other prime retail locations.
First and foremost, competitive analytics are particularly important, especially for remaining competitive on a national scale. Given the vast number of store locations that major retail brands typically have, leaving any room for guesswork is risking too much. Retailers need to be where their competitors are thriving – competitive analytics is necessary in this pursuit. The right data can allow a retailer to evaluate market expansion opportunities by comparing market share and share of space. Market saturation models can be developed from this information that reveal the most promising opportunities.
Deep demographic data is just as important as competitive data. Having access to demographic information that breaks down a given population by age, income, gender, and more allows retailers to quickly compare the population surrounding a shopping center, major mall or other potential site with what’s known about their ideal customers. This data can then be combined with psychographic profiles that detail shopping behaviors of a geographic area, or even a demographic population within a certain geographic area, for even more precise insight into surrounding markets.
In addition to these forms of data, having access to detailed information about shopping centers and major malls where store locations are being considered is a major advantage. This type of information can reveal what other brands are at a location, where there is an opportunity due to a void, site/leasing plans, renovation plans, and key contacts.
Overall, if major brands have access to competitive data, demographic and psychographic data, as well as shopping center and major mall data, there’s many different ways the merits of a particular location can be evaluated.
Latest Retail Technology is Fundamental for Assessing Potential Retail Locations
Accessing the right retail data is key, but leveraging the right technology for sourcing this data and then analyzing it is the foundation of a truly profitable retail location strategy.
For basic insight into a retail market, retailers can perform a ring radius study to segment areas surrounding a retail location, a drive-time analysis to further assess the potential market size, or even build gravity models to determine the pull of a specific retail area.
Diving deeper, new technology exists that collects mobile device data, sometimes called mobile trace data, for even more advanced insight. Essentially, this data is collected based upon a geofenced area, for instance around a major mall, anonymously aggregating consumer data from any mobile devices they may be carrying.
Once mobile device data is collected, retailers gain real observations on behavior at the potential retail location, including the most crowded areas of the major mall or shopping center, as well as the areas that are less busy, and at what time of the day this traffic peaks. Heat maps can be created for a comprehensive view of mall traffic for any segment of time and day. This anonymized data can also be used to predict likely home locations for these consumers, allowing the creation of detailed trade area polygons to understand where the traffic is being drawn from.
Retailers can then combine demographic, psychographic, and other key consumer information, with trade area information for extremely detailed insight into the market surrounding a retail location. This level of insight helps retailers understand who their customers are, where these customers are located, and who’s not a part of their potential consumer base.
The volume of information generated by mobile device data can facilitate complex data analysis such as performing cannibalization studies, implementing behavioral analyses, setting up cross-shopping studies, and creating void analyses to determine potential customers who aren’t being served by competitors.
Even beyond the selection of a brand location, this data has several benefits, allowing retailers to connect more closely with their surrounding consumer base – providing more personalized experiences and optimizing logistics and inventory processes based on consumer shopping habits in a geographic area.
With a wealth of data, the latest retail technology, and a number of different ways to analyze a given retail area, major retailers can make more informed decisions for their retail location strategy.
Retailers who make data-driven decisions on their brand locations will realize higher foot traffic, sales revenues, competitiveness, and will be best positioned to build long-term relationships with potential customers.
To learn more on this topic, continue reading about DMM Retail Boundaries to see exactly how mobile device data offers robust planning and analysis features.