Rationalising and evolving your store network
In an ever-changing marketplace, a business needs to evolve to stay competitive. We’ve written many blogs and case studies about picking the most fruitful location for a new venture using location and demographic data, but what if you have an existing network that you need to review?
In some ways you have an advantage: you probably have existing transaction data, and perhaps customer details, to help you to assess individual site performance. This is something that a new business would be very envious of to help assess an area’s merit. On the other hand, it can be difficult to approach such an exercise objectively; after all you may have to make hard decisions about which stores need to change or even close. This is all the more reason to consider every possible factor in your review.
A national mobile network provider came to us needing to undertake such a review in order to keep their business competitive. They wanted to use our TimeTravel data as part of a retail store segmentation model, which they could use to prioritise the opening and closing of shops.
Where are your (best) customers?
TimeTravel is well suited to helping you to establish a realistic store catchment for any number of locations. Your can use its real-time and real-distance travel data to look at how far a customer would need to travel to reach your store and how long it would take. Using your existing customer database, you can then see how many existing customers fall within a realistic store catchment. At this stage you could apply additional geodemographic profiling and customer value data to work out which stores are likely to produce the most income and service the highest number, or the most high-value customers.
Once you have catchments and customer groupings mapped you can look to see which stores share a customer base or risk cannibalising each other’s customers. This can provide you with a definitive shortlist of locations that are in need of closer scrutiny.
How near and how numerous are your competitors?
Even with the most basic information about your competitors – such as the postcodes of their branches – you can use TimeTravel data to then assess in what areas they have strong coverage, and where any potential blind spots in their network are located. If looking at new and uncharted sites, you can always use competitor store density to establish realistic catchments for your own future stores. Applying geodemographic modelling around a competitor’s new store could give you insight into what their key target demographic is and inform your own strategy. Of course, this assumes that your competitor is doing it right in the first place – a dangerous assumption.
How efficient is your distribution network?
TimeTravel accounts for types of road travelled upon, time of day of journey and, importantly, vehicle type, so it is invaluable in assessing the efficiency of your distribution network. This also supports an important current trend in retail – the move towards integrated online and offline sales. Most retailers are looking to supplement physical outlets with an online presence, and need to establish either new distribution hubs, or modify their store network to act as both store and warehouse. With TimeTravel’s realistic journey data, you can assess a store’s viability in this new model, choose the best sites for distribution hubs and establish cost bandings for the delivery service to accompany your new online model.
Enriching your data
As people's jobs may be at stake you need to be absolutely certain of the decisions you make and refer to the widest possible range of supplementary data. We’ve already mentioned demographic data but there is a whole range of local data that might inform your branch review. For example, you could offset predicted income against local council tax bandings and average commercial rents in the area of each store to get an idea of overheads and eventual likely profit.
Time well spent
Given the long-term commitment and expense that a fixed location brings to your organisation, investing the time and resource to ensure that your network is as robust as possible is absolutely justified. A well-planned and efficient sales network will allow your business to thrive, even in an uncertain economy.
Whether you are looking to open your first store, or review a nationwide network,
we have the tools and expertise to help.
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