Strategic Retail Location
2—Retail Site Selection Models
CLEO leaves behind simplistic circular
concepts, and instead applies two potent families of models that
exploit the analytical power
of modern GIS and operations research. One is the spatial
interaction models (or gravity models) that predict shopping
behaviour. CLEO predicts the likely customer
expenditure at one or more existing or planned locations, belonging to
the client store chain or
competing chains. A number of retail forecasting systems do this.
|CLEO allocates demand
planned stores to estimate
centres are stores. Lines show allocation
and volume of dominant flow from
Now's when CLEO distinguishes itself and takes you
critical steps further. First, at the heart of
its engine are a pair of location
allocation models, designed to
rationalize and to optimize your network of stores relative to
Say there are 12 sites available, and you wish to
of them. Which four would
work best with your existing configuration, and hem in the competition
to your advantage? Which
existing outlets should be closed to make way for the new locations?
Recall the encircling strategy in the
illustration on the previous
evaluates hundreds or thousands of
permutations and selects the optimal set of
4, 5, 6 or whatever number of locations you like, to serve the market
Maybe you're not sure where in the city to search
sites. How do you know the available sites are in promising locations?
Turn on Scout mode, and CLEO scans the territory and recommends the
neighbourhoods in which to look. For one, two or ten sites.
Next, the models are tied into a decision support
evaluates scenarios and looks at the balance of competing objectives.
measures appear in tables and charts, and maps show who shops where,
how neighbouring stores compete for business, and which markets remain
or at risk from new competing offerings. Extensive tabular reports show
details and catchments for each store, and give you numeric measures of
cannibalization, systemwide and for each store.
Bottom line: before you make a decision on the
matter of store location, you have all the pertinent information at
your disposal. You know the theoretical optimum, and if you choose not
to go with it, you know how far off you are.
Despite its technical sophistication, CLEO
accommodates the important
contributions of local experts in the location decision. It is designed
decision maker rather than the technician. Its intricacies are
yet it offers exceptional control over model choices and parameters,
who prefer to dig deep.