Having a prime location is an essential and long-lasting advantage for any retailer, as it cannot be duplicated due to its fixed nature. Location intelligence greatly helps retailers determine the best places to physically locate their stores and distribution centres based on market potential. This enables them to maximise their investment and leverage the most from their locations by locating where they draw most of their customers.

Location intelligence can help retailers in many ways and below are some of the benefits:

  • Understand more about its existing customers
  • Capture new customers by entering new markets
  • Analyse potential cannibalisation between stores to better optimise their store network
  • Optimise your store network and distribution centres for better efficiency
  • Create more targeted marketing across various locations

Through the insights gathered from location analytics, a retailer can optimise their store space in line with the total population in the trade area, purchasing power, the number of households, among other parameters and all are location dependent.

Below are some insights and analyses one can derive from using location intelligence to understand a trade area better, using OK Supermarket in Budiriro as an example.

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Distance matters to a retailer as it affects the range of goods. The range of a good is the maximum distance a potential customer is willing to travel to a retailer. And distance isn’t just a matter of the location of the store in isolation but in the context of competitor location, mobility of customers, accessibility and store format, among other factors.

Population density within specified distances from a store is another critical parameter to a retailer as it determines the relative thresholds needed to support a retailer’s business. For example, theoretically speaking, if the development is more spread out, the average customer spend has to be high due to the smaller number of people in the trade area. Conversely, if the development pattern is more compact, the average customer spend can be lower due to the large number of people in the trade area.

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These are just some of the analysis one can do with location intelligence though more complex analyses can be done depending on the nature of the project and the business problem that needs to be solved.

With location intelligence, retailers can significantly reduce their execution risk by enabling a more data-driven approach in the execution of their retail operational strategy.