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Retail Renaissance: How Predictive Analytics is Transforming Site Selection
6
See the relationship between
brick-and-mortar and ecommerce
With a healthy ecommerce business, you can tap into trade
areas and reach demographics that are nowhere near
your brick-and-mortar stores. You can even see when large
concentrations of ecommerce customers come f rom the
same communities—and how far they are f rom the nearest
competitor.
This is a key insight modern retailers use when evaluating
locations. How will adding this site affect current ecommerce
sales? If we remove this store, what percentage of sales can
we recover through ecommerce?
Cannibalizing ecommerce sales isn't the same as cannibalizing
one of your other locations, but if you truly want to see the
potential of a site, you have to consider its total impact
on your business. That said, with an omnichannel retail
mindset, you can see these as complementary aspects of
your business, rather than two pieces in competition. Your
store locations aren't just shopping centers—they're order
fulfillment centers and warehouses as well. So having one
in a location you're already doing business in regularly
enables you to provide current customers with services and
experiences they can't currently get.
The relationship between ecommerce and brick-and-mortar
isn't cut-and-dry. And there's another wrinkle: what if your
ecommerce business currently has little-to-no adoption?
Perhaps it's new or had a rocky start. If your customers
aren't used to shopping with you online, they may be more
reluctant to do so if you relocate—especially if there's a viable
competitor nearby.
Thankfully, this is another area where predictive analytics can
remove the guesswork, helping you build complex models
you can confidently base your decisions on.
