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Location Intelligence – driving optimal retail store locations

Location, location, location" is the old adage of real estate fundamentals but never before has it been so important to retailers in today's ultra-competitive markets. Tim Ogilvie, head of Strategic Consulting for JLL in Victoria highlights the surprising reality that only 60% of new businesses in retail keep their doors open within 12 months of launching and where they do continue to trade, in many cases retailers can experience extended periods of underperformance. Many of these occurrences can be attributed to sub-optimal store locations.

It's no secret then that securing the right retail location can make or break a retailer's performance. Identifying the optimal space has traditionally been more of an intuitive decision.  However, as Ogilvie points out, rapidly changing market conditions including tighter retail vacancies, increasing global competition and more sophisticated consumers, are seeing leading retailers transform their approach to utilise advanced locational decision making tools to support business growth and stronger performance.  

GIS – not a new tool, but an increasingly vital one

While using geospatial information systems (GIS) tools to help identify new store positions is not new to the industry, Locational Intelligence – defined as the process of deriving meaningful insight from geospatial data relations to solve a particular problem – is fast becoming the key to securing new sites.  This is being supported by the ever increasing level of detailed map based information now available and the user friendly interfaces to display it. 

'Know your target market?' Profile it and map it. 

Know your competitors? Map them. 

Know your preferred market drivers to be co-located with? – Map them. 

But Ogilvie notes true Locational Intelligence goes well beyond just simple mapping – it is a powerful decision making and presentational tool that merges a range of information sources to present a multi-dimensional platform for smart locational decisions.  JLL's Locational Intelligence platform takes many of the industry's traditional data and information sources and combines them into a single set of visuals, enabling retailers to have answers to their most critical questions:

The results include streamlined decision making, higher market penetration, first mover advantage, maximum competitive edge, minimal store over-lap and efficient use of resources which ultimately drive stronger sales turnover performance, Ogilvie says.

Filtering through the world of Big Data

For inner city and CBD locations, which are data rich, the opportunities become even more pronounced with key variables such as amenity, pedestrian flows, spending patterns and workforce and resident densities being able to be readily profiled.  This is particularly important for larger and emerging brands where the Locational Intelligence platform is being applied in multi-store or national roll-outs where stores are opening in quick succession.  Ogilvie says JLL is partnering with such groups to implement Location Intelligence based strategies which enable retailers to rapidly secure market share and establish a strong brand presence.  As such, Locational Intelligence is more critical than ever to ensure the right decisions are being made quickly- the best store locations being identified and secured to build the strongest market share as quickly as possible.  

Utilising this technology for a recent multi-store roll-out strategy enabled JLL to support the retailer with securing the best possible spaces across Sydney CBD.  This included visually demonstrating how the recommended store locations would function as a ‘network’ to optimise their overall performance and how the locations would benefit from the pipeline of future development and new spaces yet to become available.  

This enables retailers to readily make fully informed decisions rapidly and move forward with confidence.  Once the optimal locations have been determined, Ogilvie and JLL’s Retail Advisory team are able to act quickly on the next stage of implementation to secure the spaces via lease or purchase.  As part of an end-to-end ‘Entry Strategy’ service for interstate and offshore groups this may extend to introducing skilled local fit-out designers, architects, and other project partners such as licensee and capital partners, securing approvals and project managing their capital works and fit out programs.  

With a resurgence of CBD retailing, increasing competition and tight vacancy rates, this new location based entry strategy model is addressing the challenges of identifying and securing the right space in the optimal business locations, particularly in metropolitan locations such as Brisbane, Sydney and Melbourne.  The seamless integration of locational data, real estate knowledge and project management skills is helping retailers outperform the market by identifying and securing positions that are optimized to their business model and helping the portfolio to perform to its maximum potential.

JLL is pioneering the development and application of Location Intelligence techniques in a broad range of real estate decisions, from store locations and network roll out to valuation analytics and selection of school sites, harnessing the growing reservoir of public and private geospatial data and employing sophisticated mapping and graphic techniques to create powerful visual analytical tools.  “Location, Location, Location” will still be the catch cry, but these new techniques and tools will take much of the guesswork out of the identifying the right location and those who take advantage of it can expect their businesses to thrive long beyond the first twelve months.

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