- Identified the factors that contribute to successful locations
- Created predictive modeling to evaluate potential locations
- Simplified site selection
- Improved overall performance
Our client is a specialized division of a major retailer that buys, sells and trades used books, audio books, CDs, DVDs, video games, vinyl records, accessories and more. At the time they began working with Lift361, they had eight retail stores and they wanted to understand what was making them successful in some locations, and less successful in others.
The goal of the evaluation was to determine the factors that led to a successful retail location and apply that criteria to evaluate future earning potential of a proposed new store location.
A comprehensive study was required to create a baseline set of criteria that identified the factors contributing to success. The study revealed three contributors:
- The immediate physical location of the store
- The percentage of the broader trade area population that matched the retailer’s best customer
- The direct competition in that area
Once the criteria for success were identified, a scoring system was created that could be applied to all future real estate planning efforts, showing a predictive model of the future success of a proposed new location.
WHY LOCATION MATTERS
An optimization strategy is essential before you open your next location.
The scoring model determined the following classifications in terms of annual sales:
- Best = $2.1 million
- Good = $1.8 million
- Above Average = $1.7 million
- Average = $1.6 million
- Below Average = $1.2 million
When the company identifies a potential new site location, the model can predict how well that store will perform on the front-end. By avoiding locations that are most likely to fall into the Average or Below Average categories, the company can focus its energy and dollars on sites that will generate higher revenue.