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You are walking down the shopping street in your neighborhood and you are faced with a sign:
“New store coming soon”.
The property is already undergoing renovations and it is possible to peek at what it may be.
In addition to the curiosity about the type of store that will open there, there is a question:
With what criteria did they decide on this place among so many others?
Throughout this article you will see the various ways to decide where to open a point.
One aspect will remain the same, the purpose of assigning sales potential to a property, determining the Value of a commercial point.
In other words, how companies and professionals decide where and why to open a new store.
Alert! 🚨 🚨 🚨
There is no cake recipe and there is a lot of discussion between the various possible methods.
Go for the one that makes you more comfortable with your decision.
Retail Expansion Phases
Scatcher 🦸🏻 ♂️
In a pre-digital era, it was very common for companies to seek professionals specialized in finding points.
Trained by the experience, the famous college of life, many started out as realtors and switched sides.
Good to talk to, they are able to drink dozens of coffees with local merchants, other brokers, taxi drivers, newsstand owners, and bystanders.
Its primary analysis method is field research.
It is during visits to the points that you can exercise your “Look who sees business”, its unique ability to translate disjointed information into opportunity.
Aspects that attract the attention of this “look”:
Renovations to homes and commercial buildings, Reform is a sign of money in the region.
Stretched sidewalks, coffee shops, snack bars, pharmacies side by side, and other signs of people flowing.
Retail profile in the region, whether they are national networks, local networks, or single operations.
After all, the larger the networks, the more professional the decisions to open points are.
These and other elements form the feeling that that is a good commercial point.
Market Smart 👩🏽 💻
If the spotters prefer field visits, the smart marketeers prefer the computer screen.
It should be noted that this technique is Before computers and it was already practiced with maps, pins, and tables.
Its adoption increased a lot with digitization.
Specialists in geographic information systems and Business intelligence, are capable of Translate the signs of wealth into data .
They observe Information on average household income, total income in the region, number of owned or rented homes.
After making these counts, they compare the volumes with the performance of existing stores in search of standards, their success factors.
Knowing the minimum and ideal quantities of households or income for the success of a store, they start looking for these characteristics in the places they study.
As in the case of the new convenience store chain OXXO, which spent time operating in a test region until it understood what its success factors were.
“Campinas, with 1.2 million inhabitants, was chosen as a starting point because it presents characteristics of urbanization and consumption habits that are important for the local market segment.”
“The city has more vertical and more horizontal areas, noble and popular, with large surrounding condominiums and university neighborhoods.” - David Pestana, expansion director of Grupo Nós In an interview with Jornal Metrópoles.
Data Scientists 👩🏾 🚀
Data Scientists understand that numbers are their only source of wealth.
While the Slotters are those who only believe in seeing and the Market Intelligents want to bridge the gap between the standards of life out there and data.
No field visits, or visual analysis on a map, the business here is to integrate data from various sources, transform them to comparable standards and apply statistical techniques to arrive at models that represent reality.
Essentially all of the models are wrong, but some are useful.
George Box
Still, this is an area that has received a lot of attention.
Many believe in the promise that a super integration of internal data such as CRM, ERP, web traffic, with external data, such as social networks and market data, will be able to anticipate events and point out paths to success.
The recent wave of Retail Techs Surf in the expectation that it will be possible to create an artificial intelligence that explains the value of a commercial point.
The Loft team posts a lot of cool stuff and shared their household profile map, worth knowing.
The Winds of Change
There is another evolution taking place in the expansion of retail, this time even more structural.
Slotters, Market Intelligents, and Data Scientists have always had something in common, they all work directly for a retail network, either as employees or consultants.
Until now, expansion was centralized, an internal process of the companies.
The big change is that with the diffusion of new technologies, faster, simpler and more accessible, it is now possible to open up expansion intelligence to other partners.
It can now be decentralized.
This means that companies can recruit talent outside their inner circle of employees and suppliers, making it possible to propose challenges and gather answers, as in the concept of open innovation.
How to make open expansion happen in your company.
A retail chain tells the market the types of points at which it wishes to open new units and the market sets out in search of these characteristics, presenting only the appropriate points back to the company.
Imagine the power of this new process. 🤔
Networks that want to expand and work with the internal process need to hire more employees, systems, or more consulting hours.
The more points they seek to open, the more expensive the process is.
Networks that adopt the open process will be able to receive hundreds of quality points without spending much more for it.
Being able to focus on effectively capturing those points.
For Each Expansion Manager or Analyst doing studies within the company, there are another 200 outside who could be involved, many with specific knowledge about certain regions.
It's not about what tool to use, but about what strategy you're going to adopt.
Many companies will still prefer to keep decision intelligence fully internalized, just as some companies were wary of cloud computing in the beginning.
Others may use hybrid models, opening up a more generic part of gathering information while keeping the decision process closed.
Those that fully adhere to the open expansion will have the advantage of generating a much larger volume of information at a lower cost.
Advantages of Open expansion:
Involve partners from the start
Those who provide the property can also study the point.
Reduces development time
More people analyzing each point better.
Studies with a local perspective
Those who carry out the study know the region up close.
Reduces costs in several steps
Fewer field visits, fewer consulting hours, or long internal schedules.
Generate well-founded proposals
All studies follow the model in the standard established by the company.
Increases the likelihood of approval
Only points that exceed the minimum parameters will be sent for deepening.
Saving Expansion and Market Intelligence Managers and Analysts from dealing with preliminary analyses, directing their talent to the most promising opportunities.
Success Story
Understand how a Language network achieved a 12% increase in enrollment using a similar approach.
A large and well-regarded language network assessed that some units were operating below their market potential.
To reach this conclusion, the language network already knew what its success factors were.
After all, she had opened these units taking these factors into account, even though, somehow, they weren't translating into results.
This made it clear that some units had a clear space to grow, but they didn't know how or where.
Faced with this scenario, the network dedicated many hours of its Market Intelligence teams to identify the paths through which these units could reach the expected potential.
As stated in the case:
Partnerships were established with neighboring educational institutions and companies, in addition to outreach and promotions at other establishments, such as bank branches and restaurants.
“The results could be seen in the commitment that each franchisee had to reverse the situation in which they found themselves.”
Considerations
This project was conducted by the Market Intelligence team and delivered as a service to the franchisees.
Despite its recognized success, being one of the most celebrated cases in Geomarketing, it is not recurring.
Market Intelligence teams have many demands related to studying points for new units, and there is not always time to dedicate themselves to initiatives to increase sales, even with such significant results.
Until now, Geomarketing has always had high costs and is justifiable in large expansion projects.
In addition, the most complex tools require specialized professionals.
Novelties such as Mapfry allow on-site analysis activities to be carried out directly by the franchisee, under the guidance of the Market Intelligence teams.
A powerful change that is still in its infancy.
Returning to the main topics
Past and present, centralized Geomarketing
- Brokers offer points for the network.
- Franchisees request feasibility studies for their regions.
- The analysis is restricted to internal teams, so a study queue is formed.
- The studies organized in order of priority for the franchisor, such as target region, hot opportunity, internal goals.
- Study requests for existing stores are deprioritized for the benefit of expansion studies.
Future, Decentralized Geomarketing
- The intelligence area provides analysis guides for franchisees and brokers, defining which aspects should be evaluated and how to prepare a presentation in the standard format.
- The intelligence area receives the studies and evaluates them first.
- If there is interest in any of them, start to deepen the feasibility analyses.
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