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Location Planning for Retail Businesses
Retailers are faced with huge challenges. The Hamburg Institute of International Economics (HWWI) concluded in a study: “The most important factor for ensuring the success of a retail distribution channel is (...) selecting the ‘right’, in other words future-proof, location.”
Future-proof means that the location will be profitable in the long run. Simply choosing a prime location is therefore not necessarily the best solution. They are expensive and the rent prices continue to rise. Furthermore, stores in prime locations are not necessarily optimal for reaching the intended target group. Today’s conditions require retailers to pay close consideration to the location factor and to analyze locations objectively.
Geomarketing provides the necessary tools for a future-proof location strategy and WIGeoGIS offers all the necessary building blocks from a single source: the geocoder JoinAddress for the localization of business, customer and competitor addresses, WIGeoLocation for comprehensive location reports in just 3 steps and desktop software for complex analyses including supplementary market data.
What WIGeoGIS Offers
- Help choosing the best GIS system for you
- Implementation of mapping solution for location analysis
- Individual training and methods training
- Help selecting the relevant market data
Geomarketing Helps You
- Analyze the profitability of a location
- Restructure branch networks, refurbish and relocate branches
- Determine catchment areas for specific target groups
- Prepare location-related sales forecasts and category management
- Conduct competitive analyses and manage your company effectively
Dänisches Bettenlager(JYSK) is using geomarketing solutions.
In order to grow, customers must be won away from the competition. This is only possible through a perfect location selection.
Intersport: Location analyses for retail
The world’s largest dealer network has relied on WIGeoGIS’s geomarketing software in Germany for several years already.
Expansion planning at dm-drogerie markt
Location decisions are among the most important and long-term tasks in the development of a commercial enterprise.
Coop uses geomarketing solutions for effective planning of expansion
coop eG is Germany’s largest consumer cooperative in the food retail market.
Analyzing the Profitability of Locations Based on a Score
Geomarketing analyses allow you to forecast the profitability of specific locations. This applies for both potential new locations as well as existing ones. An individual score can be calculated for each location, allowing it to be easily compared with other locations. When analyzing a location, the following questions for example play a role:
- What is the turnover potential?
- Is the potential being fully exploited?
- How successful is the location now or how successful is it expected to be?
The scoring analysis is particularly suitable for analyzing a location. It takes place in the following six steps:
- Definition of location factors
- Calculation of catchment areas
- Statistics per catchment area (number of residents, households, age and purchasing power structure etc.)
- Weighting and scoring
- Determining the individual score for each location
Based on the determined classification, a retail business can make an objective decision for or against a possible new location. It is important for the profitability analysis that there are a sufficient number of existing locations. At least 100 locations are recommended. Furthermore, the reported store sales must be for the same time period. Today, location analyses and evaluations are more important for retailers than ever.
Target Groups and Category Management
Location-based Target Group Analysis
“The fight for the customer and their money is getting tougher. This can be safely assumed based on the imminent population decline alone, with only slightly higher or perhaps even stagnant disposable incomes.” That is why it is increasingly important for retailers to reach defined potential target groups. Geomarketing allows retailers to accurately locate their target groups.
There are two approaches for retailers when conducting target group analyses. First: the target group is known and easily identified by socio-demographic indicators. The goal here is to find areas where the target group is very strongly represented. This approach is particularly relevant for the opening of new locations. Second: The target group is not comprehensively localized.
The retail business wants to expand the target group for example, or shift their focus. To do so, the environment of the locations concerned are analyzed in detail based on figures from socio-demographics, lifestyle, footfall generators, market environment and market research results. This makes it possible to draw conclusions about the existing potential. The retail businesses can thus adjust their product range accordingly. Modern geomarketing software makes it possible to conduct environment and target group analyses at very detailed levels such as road sections or raster cells.
Category management in accordance with the target group and environment
An environment-optimized category management ensures the success and sustainability of a location. The spatial analysis of the location environment makes it possible to adjust the product range to the dominant target group in the area. Marketing activities can be tailored to the specific environment. The catchment area of the location is analyzed based on socio-demographic figures.
Such analyses not only make it clear why certain articles are not moving, but they also provide information about which products or packaging sizes will sell well based on the location environment. Data on the ethnicity of people living in the catchment area also provides further valuable information for your product planning and personnel management.
Management and Competition
Competitive Analysis and Management with Geomarketing for Brick-and-Mortar Retailers
For retailers, there are two areas where competitive analysis is absolutely essential. First is location planning: For expansions or restructuring efforts it is important to know where the competition is located and how successful their locations are. This knowledge influences the positioning and planning of your own locations. The second area is the direct comparison with the competition in terms of management. Here, retailers can compare the performance of their locations with those of the competition, for example based on the following criteria:
- Development of your total turnover compared to store stock and market penetration
- Sales for product categories and products
- Number of customers
This helps you to determine the strengths and weaknesses of the individual locations and make the appropriate action plans. Geomarketing software thus helps you monitor and manage your retail business with predefined analyses and reporting functions. The system displays the relevant indicators on maps. Based on the results of the analysis, the maps can be color coded like a traffic light for example, thus serving as an early warning system. At a glance, it is clear where action is needed, allowing you to react more quickly.
Ask our expert
“We have years of experience working with retail businesses. Our references speak for themselves. Take advantage of our know-how. I will be happy to answer all your questions.”
Key Account Manager
+49 89 321998 41
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