As a tough economic climate forces retailers to batten down the hatches, wait out the storm or jump ship entirely, the greatest chances for survival will likely come to those who most effectively choose when and where to expand—and what stores to close. Senior editor Katherine Field talked with Rick Erwin of U.K.-based information-services provider Experian, which has its U.S. headquarters in Costa Mesa, Calif. Erwin discussed how technology and up-to-the-minute data have changed the look, and effectiveness, of site selection.
With retailers closing stores and many chains in a stalled expansion mode, how important is pinpointed site selection today?
It’s more important than ever before. As we see retailers limiting their expansion activities or, as you pointed out, sometimes making the difficult decision to close locations, retailers absolutely need to identify the best-performing sites or the future potential of an existing site before they make a closure or expansion decision. So retailers now are trying to optimize their location networks.
What exactly do you mean by “optimizing location networks?”
Having the right retail locations in the right places, meaning that you must improve on the best-performing stores and minimize the effect of the under-performing stores.
How do you do that?
Understanding the population around site locations is important to help drive those decisions, but since the population is continually developing and changing, it’s absolutely critical to have current and fresh information to make good decisions about how to optimize the location network.
It’s common for retailers to make location-optimization decisions based on census data or census household projections. However, that information is not current and therefore may be flawed when used in isolation. For example, if you were to look at a graph of the Dallas/Fort Worth area depicting the 2007 census household projections, you would see an area just north of Fort Worth that appears to be relatively unpopulated in terms of the number of households. But current information would show that same area to actually be a very densely populated part of the Dallas/Fort Worth metroplex, which has experienced a huge influx of new households in the past three or four years.