How Location Visualization Improves Strategic Retail Decision Making

11/11/2014
With all the emphasis on the omnichannel today, it's easy to forget that the vast majority of retail revenue is still generated in brick-and-mortar locations.  Amazon's recent decision to open stores in New York and San Francisco and pop-up kiosks in selected malls is the highest compliment the e-commerce giant can pay to physical retail. 

The retail landscape has changed, of course, and picking and sizing a location has become a challenge more complex  than ever before. Choose the wrong location or the wrong size and you can be stuck in an unprofitable lease for years.  Fortunately, new visualization technology and big data have made picking and sizing a location more science than art.

The amount of data available to retailers can be overwhelming, with retail systems supplying customer information, loyalty program data, and historical store performance.  In addition, data sets related to demographics, income levels, competitive locations, and even weather are also readily available. There's so much data that the problem becomes what to do with it.

The tried-and-true method of consuming data has been to create reports: reams and reams of reports.  About 87 percent of reports are scanned or never read.  That means that decisions are being made with only the 13 percent of the data that's easily available. Data that is difficult to understand goes unused.  The challenge is not generating data, it's presenting it in a way that makes it easy to consume and gives users ways to do "what-if" scenarios without having to run another report, get IT involved, or wait days for the data to be reconfigured.

The easiest way to consume and understand data is through visualization.  Here's a simple example of the power of visualization. Oklahoma covers approximately 69,960 square miles. The area of the state of Texas is about 268,820 square miles. So this tells you that Texas is bigger than Oklahoma, but the fastest way to understand their relative sizes is to look at a map. Doing so gives you an immediate understanding that you can't easily get from the data alone.  Visualization turns data into knowledge and quickly produces that "ah-ha" moment of understanding.

The company with the best data can gain an advantage over a competitor. Analyzing the performance of a location and the relationship between its performance and the competition starts by mapping current locations, adding data on sales performance, length of time at the location, staffing information or anything else that is important to the analysis. The next step is layering on demographic information, drive times, traffic patterns, population density, income levels, and buying habits.  This provides a complete picture of the location's environment and potential.  All these feeds are available from the government or commercial suppliers. The variety and amount of data you can add is limitless.

Incorporating competitor locations for a snapshot of the selling environment results in a comprehensive view of all store locations and all the factors contributing to its performance. Users can profile the characteristics of a high performing location to set benchmarks.  Visualization provides the capability to compare how a location that's within a 20-minute drive of one or more competitors performs versus a location that's a 30-minute drive. Seeing what is happening and why is much more efficient and effective than reading reports.  Data visualization makes it easy to analyze the impact of opening, closing or moving a location.

Traditionally visualization software was expensive and required special skills to load and display data.  Fortunately, a new generation of visualization software has been designed to be simple enough for a business analyst to use.  This new technology offers data drill-down, so that clicking on any mapped element reveals even more detailed information.

In today's increasingly competitive environment retailers cannot afford to make location decisions based on gut feel or superficial analysis. Data visualization is a new tool that can help to drive smarter decisions and more predictable results.


Daniel Schubert is president of AMTdirect, a real estate managment software company. 
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