Getting Physical with Geographic Information Systems

Are you adding brick-and-mortar to your click and catalog channels? Are you contemplating the location of your next retail storefront? If so, you’re embarking on a vital component of growing your business: site selection. Many retailers choose store locations based on geographic data such as traffic counts. And many organizations leverage their customer data for marketing decisions. Few, however, ensure that their marketing analytics have been fully integrated into their location analysis and site selection—even though the technology exists to do just that.

Let’s back up a few decades for a moment. For many years and in many circles, site analysis was a black art. It was commonplace for a team of top decision- makers to hop on a bus and take a guided tour through the streets under consideration. During that tour, critical decisions were made: Where to place new franchises, which existing sites to further invest in, and which to close. It was hardly a well-honed, systematic approach to crucial decisions.

These simplistic methods thrived even though information has existed since the early 1960s on how to systematize site analysis. During that time, the best way to gain a competitive edge in site analysis was to contract with an organization to provide a suite of geographic software services. Early software was custom-developed for individual retailers and included advantages such as quick and user-friendly operation, paired with the ability to derive application-oriented relationships among retail sites, street networks, and demographics. Why, then, was the seat-of-the-pants approach so pervasive? In a word: cost. In recent years, however, as site analysis has become affordable, the technology has become more feasible for all multichannel merchants to consider. With the emergence of geographic information systems (GIS), cheaper processing power, and more-elaborate Census and third-party data packages, even the humbler retail chains can automate site analysis decisions.

GIS makes complex, time-consuming analyses manageable by allowing analysts to marry unrelated data that have a shared geographic component. For instance, distance data and traffic pattern data can be married with information regarding competitors’ locations and best-customer/demographic data. Often the use of GIS significantly reduces the amount of time needed to collect and input data, allowing for more in-depth and thorough analyses. With canned programs such as MapInfo or ArcView, and data from any number of providers and your own customer database, effective answers on siting new franchises can be but a few dozen well-planned keystrokes away.

Larry Daniel is president/CEO of Conclusive Strategies, an Austin TX-based database marketing services firm. To read more on using data for site selection, visit http://multichannelmerchant.com/news/marketing_location_location_location_3/index.html

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