Big Data Makes Big Impact on Retailer Location
eCommerce and the rise of the Internet have altered the landscape of many industries, and the retail industry is no exception. Today, through online retailers like Amazon, you can get everything from perishable groceries to large-scale furniture delivered to your doorstep with the click of a button.
However, when eyes are away from a computer screen, it is a fact that brick-and-mortar stores are still a huge part of society’s shopping habits.
Virtual stores hold the advantage of not having to pay for physical space while being able to use big data to maximize customer satisfaction and revenue streams. Freedom from the commitment of a lease or rental agreement not only frees up money for profits and consumer relations but also gives virtual stores the advantage of flexibility with future decisions.
But virtual stores aren't the only ones using big data. Now retailers can turn to big data to help level the playing field where the perceived disadvantage of rental space is concerned.
In an interview with Forbes, Mark Cohen, a marketing professor at Columbia University’s business school, pointed out that retailers still operating in physical stores have to make choices that are often more difficult to change, such as where to build a new store or what stores should expand, close, or be renovated. Because of these costly decisions that online retailers avoid, it becomes critical that retailers understand everything about location.
“Retailers not only need to know where their potential customers are; they need to know where they will be over the ten- to twenty-five-year lifetime of the investment they make in physical space,” Cohen told Forbes.
Because of the need to not only make every dollar count today but also have every dollar count tomorrow, many companies are turning to big data to get a better understanding of the possible demographics, market risks, growth potential, and other analytical parameters of a store’s location.
Starbucks, Petco, Wendy’s, and other big-name chains are already attempting to lessen the perceived disadvantage of rental space by incorporating the use of big data.
Dennis Hill, the vice president of real estate for Wendy’s, explained how pivotal the use of big data can be in the future success of companies like theirs whose sales are dominated by in-store transactions.
“Demographic data and location analytics are critical components when making investment decisions to build new restaurants," Hill told ArcNews. "Everything we need—including mapping, analytics, and modeling—can be done on one platform that is scalable across our organization.”
By using big data when making location decisions, physical retailers may be able to not only lessen the perceived disadvantages of having brick-and-mortar stores but also increase the impact of the advantages held over their online counterparts.
