It is quite common for our clients and prospects to ask if one of the derivatives of the models we develop will be a simple “check list” of essential screening criteria. “Will you be able to tell me how many consumers are needed within a certain income range, in a certain age category” or “Which cotenant guarantees that we will have a successful store?” are examples of this ask.
Unfortunately, as much as we all would like it to be that simple, identifying drivers of performance is neither straightforward nor clear-cut. While our analyses absolutely identify which demographic, psychographic, and socio-economic factors are most positively (and negatively) correlated with performance, factors such as where “in-profile” consumers are positioned within a location’s trade area strongly influence sales potential. Generally speaking, the viability of a location is significantly greater when in-profile customers are concentrated proximate to the store versus sparsely distributed at the periphery of the trade area. Layer in the positioning of competition vis a vis in-profile consumers, accessibility (or lack thereof), and the impact that favorable/unfavorable site characteristics can have on performance, and it becomes apparent that a simple check list is an inadequate means of assessing a location’s potential.
Fortunately for our clients, the models developed by Intalytics simultaneously account for the interplay and spatial distribution of these (and many more) factors. Specifically, the unique composition of each trade area’s demography, psychographics, competition, and importantly the distribution of these variables is appropriately reflected in our model estimates.
Using this information to accurately screen prospective site opportunities, develop optimal deployment strategies, and accurately predict sales performance is in and of itself a tremendously valuable asset. However, if the intelligence gleaned from the development of our predictive models is limited to assessing real estate-related issues exclusively, it is an under-leveraged asset.
In a forthcoming series of blogs, Intalytics will describe how the analytical “heavy lifting” associated with the development of our models can be leveraged to improve our clients’ marketing practices, assess omnichannel relationships, and optimize merchandising strategies to align with the specific characteristics found within each location’s trade area.