Real Estate Site Selection Analytics for Retail
Site selection is one of the most impactful business decisions you will face this year or any year.
“I run a new site evaluation report from OpenDoorData every time I make a go/no go decision on any new location under consideration. It’s a valuable tool in my analytics toolbox.”
Let’s face it: the choice of geographical location for your company’s next retail store, restaurant, or entertainment center will have long-ranging impacts on your business. Real estate leases, new construction, refurbishments, capital equipment purchases, and employee training represent long-term financial commitments that are cost prohibitive to undo.
You need to get this right, and the stakes are high. Even choosing a location 1 or 2 miles in the wrong direction can have a dramatic negative impact on that location’s future revenue results. And you’ll have the live with that choice for years.
As the in-house real estate site selection director, CEO, or governing board member, this is the kind of decision that can keep you up at night.
We Make Site Selection More Predictive
What if, instead of staying up late worrying, you had an analytics-driven time machine that lets visit the future – mathematically. What if you could get your hands on a location profitability score for each of the locations currently under consideration?
At OpenDoorData, our site selection process is like having a time machine – letting you see the future of several potential locations so you can determine which are going to be the most successful.
Our expertise leverages the insight that the neighborhood or immediately-surrounding area matters most in your retail site selection decision. Our methodology involves analyzing the key factors that have contributed to success in your historical locations in the past – and then building a mathematical model that we use predict the changes for financial success of future locations.
How it Works
The site selection process we employ at OpenDoorData isn’t a software tool or a SaaS. Rather, it’s a proprietary methodology that combines machine learning with some of the analytics best minds in the business to develop truly predictive site scores. Here’s how our process works:
We start by taking into account the revenue performance of your existing locations, separating your best-performing and worst-performing locations into two groups. We then analyze up to 100s of psycho-demographic and commercial neighborhood variables across each of the two groups, isolating the 10-20 variables that contribute most to success or failure, then discarding the rest as irrelevant.
We combine those same top 10-20 neighborhood success factors using multiple regression statistics and machine learning techniques to produce an algorithm that correlates these factors with future revenue potential with a high degree of accuracy.
The model build is a one-time process that takes 10-14 business days to complete. Once it’s built, we can apply it an unlimited number of times in the future to predict the success of new locations under consideration. Once it’s built, you can leverage your model for years into the future.
Potential Site Evaluation
You send us a list of locations (as addresses or map coordinates) under consideration. We source the requisite variables determined during the model-building process and feed them into the model to generate a location profitability score.
We build you a report that includes the location profitability score, a location map, and a summary of key area demographics.
Site evaluation takes 4-5 business days to complete, depending upon the number of locations to be analyzed.
Is this your first location?
Retail Site Selection: The 7 Success Factors Every Smart Company Needs to Consider
Data Resources We Leverage
The success of our site selection process is predicated upon the latest, reliable market data. We leverage inputs from Dunn & Bradstreet, Acxiom, ARC GIS, and nearly a dozen other data sources in sourcing information for the model-building and evaluation process. In other words: we leverage best-in-industry market data with our own best-in-class analytics methodology, a combination that is second to none.
We Leave the “Last Mile,” On-Site Considerations to You
Of course, other factors beyond the psycho-demographic composition of the trade area around your new location(s) also contribute to retail site selection success or failure, including:
Visibility from major roadways
Presence of anchor stores in the vicinity or shopping center
Local real estate market conditions and availability
We understand that you will be visiting one or more “finalist” potential locations in person to evaluate these factors. Our analysis purposefully does not take those into account. Analytics cannot replace an in-person visit to determine the above factors.
Conversely, no number of in-person visits can give you the analytics-based insights into whether the composition of the types of people who live in the surrounding area – the neighborhood – will contribute to your success or failure. Simply “driving the area” or sitting in the local coffee shop to observe local residents for hours on end will not yield a profitability score based on local characteristics. Intuition is good, intuition + data is infinitely better.
That’s our job. Our report will remove the guesswork from this essential piece of the puzzle that most of your competitors are likely skipping.