Expansion Plan: Retail Sales Potential

Expansion is a critical process for many organizations as they evaluate which markets to invest or divest in, where to open or close outlets, and which new or additional locations to prioritize.

The challenge: A coherent expansion algorithm

Retail trade

EXPANSION | ANALYTICS | MAPS

We optimize expansion strategies with fully data-driven methodologies. One of our clients, an international food distribution company, was able to reduce the risks of its expansion investment plan by relying on solutions generated by foot traffic analysis, location intelligence, point of interest and competitor analysis.

The company, dedicated to the marketing and distribution of food products, needed to identify the most suitable areas for the opening and management of new points of sale in Spain.

Methodology and source of data

Abacus Consulting developed a probability model that collects geographic, socio-demographic, preferences and interests of potential customers of the retailer’s stores, and mobility data, such as presence and traffic.

The methodology used for the development of this expansion solution consisted of the collection, debugging, standardization, validation and analysis of all information from secondary sources and third parties. An expansion solution was developed with the following characteristics:

Packaged solution for asset management and expansion.
Applicable to points of sale, market conquest, commercial strategy.
Product/service mix strategy, pricing, commercial route.
Modelos predictivos y prescriptivos ya desarrollados e implementados en principales empresas.
Advanced reporting.

Data extraction for descriptive analysis

Some data sources:

Stores and POIS

Abacus Consulting has variables such as location, surface area, opening date and other descriptive characteristics.

Business detail

They will add an additional layer of information about each supermarket such as opening hours, rating, reviews…

Mobile SDK

Devices that have been inside each store to obtain the occupancy rate.

Mobile telephony

The devices that have been inside each Mercadona, allowing to know the origin of the customers.

Geoindicators

Variables to describe social and demographic areas of influence of each store.

Data quality

Turnover of existing stores and potential new outlets

The site selection evaluation model was enriched with turnover information from the company’s existing stores, which was used to compare areas with similar commercial characteristics to those of the new locations. The sales that could be achieved by comparing the new locations with their mirror stores were estimated with a model reliability of over 90%.

The keys to expansion strategy

What are the characteristics of people who visit similar outlets?
What were the mobility patterns of consumers moving through the potential expansion areas?
How can I reduce the opening time of my new points of sale?
Where can I find areas with high growth potential for my company?
Where to find the best locations within a specific area?
How can I convince my partners and franchisees of the potential of a location?
How can I avoid sales cannibalization among my existing outlets?
How to guarantee the profitability of the investment in new openings?