Retailers Revolutionize Store Location Selection with Geospatial Intelligence
It’s a tale as old as time. A retailer picks a storefront, leases a building, and renovates a space — only to discover that the location itself is a dud. Maybe there isn’t enough foot traffic, or parking is too difficult. Or maybe shoppers in the neighborhood just aren’t interested in buying whatever products the retailer is selling. Enter geospatial intelligence.
Overcoming a bad store location is one of the biggest challenges a retailer can face, which is why more businesses are geocoding site locations and leveraging geospatial context to determine if there is a high concentration of their target demographic in an area before signing a lease.
The Science of Store Location
When it comes to physical retail, location isn’t just about being in the right city or neighborhood — it’s about being in the right microcosm, says Berkley Charlton, chief product officer at Smarty, a location data intelligence firm that offers services like rooftop geocoding and address validation to help businesses accurately locate and analyze geographic and consumer data for their sites.
“Location research is critical for site selection,” says Charlton. “Retail stores must meticulously analyze demographics, local competition, geographic data, building information, and traffic patterns.”
Leveraging services like rooftop-accurate geocoding and property data attributes can provide the data retailers need to make informed decisions about accessibility and the potential for customer footfall.
“Geocoding site locations means converting a property or location into geographical coordinates to use in various applications such as mapping software,” Charlton says. “Leveraging geospatial context refers to utilizing geographical information and analysis such as demographic information, competitor proximity, traffic patterns, and existing customer density to help businesses make more informed decisions by unifying consumer information, location data, and geographical dimensions.”
Charlton says retailers should also take into account the trade area, where customers live and how far they are likely to travel to shop there when selecting new store locations. For example, Chico’s target demographic has traditionally been financially well-off, middle aged women, so that should be considered in site selection and trade area analysis when Chico’s is looking to build a new store.
It’s not uncommon for retailers to make the mistake of using a “one size fits all” mold when selecting site locations, but good store performance modeling is about understanding when to step outside of the “one size fits all” approach.
National retailers like Dick’s and Kohl’s have built stores in a variety of shopping types, including indoor malls, strip malls, and street fronts. Using separate models for each location type gives retailers a way to account for the unique locational factors present in each situation.
Unleashing the Power of Geospatial Context
Geospatial data provides retailers with a deeper understanding of their potential markets. It goes beyond the surface and explores the relationship between consumers, competitors, and the physical environment.
Using geospatial data for site selection also sets retailers up for success down the line, when it comes time to market their stores and reach new consumers.
“The connection between geolocation research in the site selection process and future marketing opportunities is profound,” Charlton says. “A trade-area analysis is performed by geocoding customer locations, assigning them to the nearest store, and calculating the typical trade area size and demographic profile. The most successful stores can be modeled based on this information in order to replicate their success.”
Charlton says that by understanding geospatial context, stores can better identify trends and patterns in customer behavior, offering insights into potential business opportunities and strategies to optimize their marketing efforts.
“Retailers can utilize their customers’ verified addresses or billing addresses to personalize marketing efforts by offering promotions and products tailored to different geographic regions’ preferences and buying habits,” he says. “Additionally, they can analyze purchase history data to create personalized recommendations and offers, fostering a more engaged and satisfied customer base.”
