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Locating a strategic advantage in retail

By Retail Technology | Tuesday April 30 2013

Location is playing an increasingly valuable role when analysing data, according to analytics strategist Graham Wallace, helping retailers like The Co-operative and Argos gain competitive advantage

The analysis of location-based data has traditionally been the domain of the major retailers, mainly in their property divisions. By analysing data on a map, retailers can reveal patterns and trends which would otherwise have remained hidden in traditional spreadsheets or tables of data.

Graham Wallace, senior strategist for geographic information system (GIS) software provider Esri UK, confirmed that creating a geographic view of business is already helping top UK retailers optimise their property portfolios, improve the performance of existing stores and create highly targeted marketing campaigns. For example, The Co-operative food retail division is using location analytics to support ambitious plans to open over 100 new stores each year, amongst other applications (see mini case study below).

New applications development

"Consumer behaviour coupled with the harsh trading climate is now forcing many retailers to re-examine how they apply their understanding of spatial data across their business," he said. "Not only can the insight gained help drive sales and cut costs, but also create new business models to meet consumer expectations."

Wallace said growing trends like click & collect, showrooming and home delivery can all benefit from spatial analysis. "If you can understand where both your store and online customers are, their buying behaviour and local demand, it helps decide where these services might be best deployed," he explained. "Capital investment decisions relating to both physical store portfolios and the logistics needed to support online and mobile shopping then become easier to prioritise." 

Argos uses Esri software to gain a better understanding of its property portfolio strategy taking into account customer demand and competitor activity. "Location analytics are also currently used to help Argos to adapt its store network, making sure it offers optimum coverage of the UK and Ireland, so customers are able to benefit from convenient collection of items they have reserved online via its website, mobile sites or iPad app," Wallace continued. The retailer is also using location analytics to help with operational efficiencies and to assist its distribution team to pinpoint key locations from which to grow the delivery operation.

Facing future challenges

One of the biggest challenges many retailers face in harnessing spatial data will be the creation a single source of geographic data across their business, he added. "This includes being able to make use of all types of geographic data, such as social and mobile data, or transforming existing information into spatial data.

"Meanwhile, recent advances in location-based app development are set to help cement personal links between brands and shoppers," Wallace said. "The complex challenge of calculating a consumer’s exact location and translating this into a meaningful ‘place’ has been overcome. This means retailers and brands will be able to focus on creating engaging apps and services for the map-savvy consumer. Personalised offers aimed at individuals in real-time, as they enter a pre-defined area for example, will rapidly become common."

As every vital question that retailers need to answer involves some kind of spatial data, the Esri strategist predicted that harnessing the potential of location is set to become a growing source of competitive advantage for all retailers. "Location-based data and location analytics are being used not only to help overcome today’s challenges but also to shape successful businesses of the future," he concluded.

Location analytics at The Co-operative

The Co-operative’s food retail division has ambitious plans to open over 100 new stores each year and location analytics from Experian, using its Micromarketer G3 GIS solution underpinned by Esri ArcGIS, are helping to ensure it opens them in the right places.

Daran Hewitt, The Co-operative national location analysis manager, stated: "We visualise and manipulate a whole range of information, from competitor sites and transport networks to demographics, natural features, Experian data and new housing developments. This catchment area analysis supports the search for the best sites for new stores and whether an acquisition opportunity is viable.

"Our existing store portfolio also benefits, as location analytics help us understand where our loyalty card Co-op Members live, shop and how far they are prepared to travel to a store. This insight is particularly valuable when assessing current stores for possible extensions or downsizes. We then use these findings to predict future store performance.

Digital mapping benefits

"In terms of delivering value across the business, being able to visualise and manipulate data in digital mapping format helps simplify complex data for colleagues. Maps are an excellent visual aid and we create them for a variety of scenarios, from maps for the board to ad-hoc requests. We recently mapped schools and Co-op farms for example, in support of The Co-Operative 'Farm to Fork' campaign. 

"Once staff across the Group witness the value of location analytics, we receive an increasing number of requests for mapping to support other departments."

Future plans include extending the analysis out into the field using mobiles and tablets. Hewitt added: "We’re also looking at using the Experian platform, underpinned by Esri ArcGIS, to examine possible cross-selling opportunities within The Co-operative Group’s outlets in the food retail, pharmacy, funerals and banking sectors."

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