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Convenience Store Location

Planning and Forecasting A


Practical research Agenda
Presented by: Ishika MBA 152022
Vikas MBA 152061
Akshay MBA 1520
Parthasarthi MBA152037
Anuj MBA152008
Dhruv MBA152018
Pushkar MBA152042

INTRODUCT
Since 1960 science of SiteION
selection and sales forecasting

of retail stores has gained enormous attention within both retail


management and retail geography.
Major focus
Conceptualization of techniques for
determining the optimal location and sales of the food
supermarket
Clear reasons why this is the case
Superstores are the major layout by which food is sold

(accounts for 74% of total grocery retail expenditure in


the UK)
Given the size of each store, there is a Clear sunk cost
related to each development and thus accuracy in location
planning is indispensable.
These stores are dependent on the regular weekly
expenditure levels of consumers.
Dialectical relationship between the academy and retailers with
considerable location decision-making expertise established at
the leading supermarket retailers in-house site research
departments
Also associated with the rise of flourishing business
opportunities for funding companies such as Map Info, The ORC
Partnership, GMAP, CACI and
Experian that provide assistance in decision-making.

INTRODUCT
History says convenience store operatives have not enjoyed
the scale and thus locationION
planning is frequently assumed on

the basis of subjective rules of thumb.


Major structural changes have occurred in the neighborhood
market with aggressive expansion by Tesco, Sainsburys and
the Co-op,
exposes small neighborhood retailers to
competition with dominant operators,
EXAMPLE Tesco is widely recognized to be at the forefront of
location research and data analysis in food retail, while
Sainsburys makes good use of its customer data and also
operates a specialized location research department
Leading retailers seek to influence their greater degree of
sophistication in location planning into this sub-market
basically
the bar
in small
store sales
1. To briefly
detailraising
the strategic
regulatory
motivations
and
location
planning
of the
UK food retailers
The
aims implications
of this paper
aremajor
fourfold:
entering this market.

2.To summarize the traditional sales forecasting techniques used


in food retailing that have been well analyzed within the
academic literature.
3.To review why these established approaches are difficult to
apply to convenience stores in neighborhood markets.
4. It concludes by exploring how neighbourhood retailers
can become more sophisticated in their store location
planning and forecasting even without sizeable budgets
for high-tech location planning solutions.

MARKET REGULATION AND THE


SEARCH FOR NEW GROWTH
VEHICLES IN UK FOOD RETAILING

ARGUMENT-The foremost motivation for the entry of the


leading food retailers into the convenience market has been
the degree of planning regulation preventing the
construction of the preferred large, and by definition, out of
town centre formats.
Primary way that this has been in evidence is via the
introduction of Planning Policy
Guidance Note 6 and its revision.
Introduction of sequential test.
Leading UK food retailers have employed some advanced
approaches to achieve vigorous levels of growth.
More innovatively- previously marginal locations for
superstore development becoming acceptable to retailers.
Internationalization strategies have seen mixed success-in
the case of Tesco, they have absorbed 5.5 billion of capital
investment, leading to 50% of its operating space being
located outside the UK by the end of 2004

Conventional superstore site


location analysis
Conventionally,
quantitative
data
determines
the
affordability of a site
Later, food retailers came out with highly data-rich methods
of store forecasting and various core-technique modelling
Gravity/spatial interaction modelling was derived by
Newtonian laws of physics based on the countervailing
influences of the attractiveness of the store and the
distance between the shoppers home
Introduction of GIS enables site analysis based on
drivetimes rather than simply straight line distance
GIS and gravity model allow retailers to fully utilize datasets
and proactively seek strategies, it also allows monitoring of
customers activities
Numerous geodemographic data supplying agencies like
CACI, Acxiom, Experian
Segmentation of customers data based on lifestyle, family

Analogue stores approach


It was based on measurement of market penetration by distance from
store, on a concentric distance and drivetime ring, it was supported by
loyalty cards, customer surveys
Associated with historical sales performance of existing stores,
employed to forecast as well as fine-tune the results of spatial models

The strategic use of loyalty card data


It helps in location decision making by understanding customer behavior
It gives larger sample size and associated statistical reliability by
customer spotting surveys
It allows understanding of gaps in stores, customers lifestyles and
sales cannibalization

Location Planning Challenges of CStores

1. Small scale issues


considerations.
.
.
.
.

become

big

Concern with small, unstandardized competition


Micro-scheme quality - footfall, car parking, visibility,
store design.
Customer perceptions
The study of drive times less significant

Concern with small,


unstandardized competition
It says that:

Stores < 3,000 sq ft, similar sized units provide strong


competition because commercial databases of such units
are less available .
Quality of c-stores varies considerably.
Independent store will not necessarily have a poor quality
product offer or store environment.
Associated services along a shopping parade can have
disproportionate effects on a stores performance.

So this places a huge importance on the site visit to


understand the nature of the development scheme
and catchment.

Micro-scheme quality - footfall,


car parking, visibility, store design
These are four factors that
convenience store sites viable:

are

important

in

making

Football: a field visit is done to determine the pitch and


quality of the site in terms of pedestrian footfall.
Car parking: In economic terms, the imposition of finding a
parking space can be considered a fixed cost to the shopper
that cannot be reconciled with such a low transaction
shopping mission.
Visibility: It is central to all forms of retail success as
neighbourhood stores are not always a customers predetermined shopping mission and thus clear identification is
essential.
Store design: Early stage consideration which says
customers should be given the ability to circulate
throughout the store, with space to queue at peak times.

Customer perceptions

With superstore developments, customer expects that there


will be an extensive car park, the store will be well-stocked,
and store standards will be reasonable.
But in c-store, it is not possible and retailer brands are also
weaker so customers are more easily dissuaded.

The study of drive times less


significant
When attention shifts to neighbourhood stores, the use
of drive time analysis becomes less useful.

Not the One stop shop and


understanding customer shopping
missions

Consumers shopping missions is becoming confusing


Longer drive times
Top up shopping rather than one stop shopping(20 years
back)
Competitive opportunities for neighborhood retailers
top-up, impulse, distress, treat and main shop all
have slightly different requirements
Analysts must pursue multiple approaches

Small scale data availability

Enumeration district (ED) that consisted of nearly 200


households which made practical use of the data difficult
The Census of 2001 developed Output Areas (OAs), which,
while largely similar to EDs, consisted of only c.100-125
households
For retailers seeking to forecast small neighborhood stores
there are a range of Census data that can be extremely useful
The Census is not the only data upon which forecasting and
neighborhood retail decision-making can be based other
potentially useful sources of information include:
Local workforce information (e.g. Blue Sheep)
Footfall data in town/city centers (e.g. CACI)
Population (e.g. Census data)
Population classifications (e.g. MOSAIC; Personcix and ACORN)
Where people live in relation to where they work (Census Travel
to Work Area data)
Food expenditure (e.g. Expenditure & Food Survey [EFS])
Traffic flow data (e.g. Capita Symonds; Morgan Tucker
Associates)
Datasets on the location of schools, Post Offices etc (e.g.

A Practical Framework for


neighborhood store
forecasting
The investment level in store location research is low by
analyzing the budgets of neighborhood retailers.
A broad framework is required for formalizing convenience store
location planning for a smaller retailer who is lacking in
established in-house expertise.
Given figure is about the retailer that is targeting limited
portfolios of stores and has not appraised store sites in depth.
Larger operators who have recently entered the market focus on
more efficient methods and organized data sets that are
productive for business.
Decision is to whether location planning is to be focused on site
by site assessment or on a strategic review of store expansion
where building in-house expertise is lengthy and expensive.
In case of forecasting, location analyst should be situated outside
property department in order to gain independent perspective.

The data purchase decision


Key to success in c-store site evaluation is site visit,
data must be relevant as it is key to decision making.
In order to evaluate which geodemographic data is to
be purchased, factors like budget of retailer, scale of
plans for store development should be considered.
If external data is to be acquired, retailer should be
clear how forecasting would be benefitted in excess of
census data.

Basic site evaluation techniques on site


visit
Proposed model of forecasting should be easy to
implement because more simpler the model and its
working, greater the comprehension by retail managers.
Quantitative approaches should be used less as
sophisticated models are not always possible. Also, site
visit can expose issues that cannot be expressed
quantitatively, here intuition and experience comes into
place.

More advanced site evaluation


techniques: value of regression
modelling
Statistical relationships to sales level can be explored as more
information can be collected from catchment data or EPOS
data.
This approach is useful in case of wide-ranging portfolios of
stores and the amount of work involved should not be underestimated.
Store location decision makers must make managers aware of
data requirements and must focus on right information.

Determining affordability
Determining a bid ceiling in the event of site auction must be
done with the help of forecast sales figure.
Once the store gets matured, its value estimation can be
done and return on investment can be realized with different
degrees of site cost.

Post opening accuracy


assessments
Forecasting process doesnt end with the issue of sales
estimate.
Performance is tracked through opening and reassessed after 10-15 weeks.
Follow-up research is to be done in order to estimate
accurate original sales against actual realized sales.
This is done in order to get better insight on stores
over or under performance.

CONCLUSIONS

Forecasting for c-stores sees traditional techniques of market


analysis for large scale food stores become largely redundant.
There is no single approach or technique that is likely to provide
a universal solution to forecasting for convenience stores.
Forecasting for small stores is not as data intensive as local
factors have to be increasingly considered.

Given the scarcity of appropriate micro scale data or


established competence in neighborhood forecasting, we
need to use site visits in combination with more
quantitative techniques that will provide the most effective
solutions.

We need a reconciliation between analytical capabilities of


human institutions and the complexity of the environment
in which they function.

Thank you