Find out where to open a profitable new outlet
Proper planning of the network of points of distribution and customer service points is not an easy task. The decision to open a new outlet is a big risk. The more effort required to launch a new outlet, the greater the risk. The wrong location means not only sunken start-up costs, but also the need to maintain an unprofitable outlet later on.
Making the right decision requires taking into account a number of factors ranging from the demographic and income potential of the area to the activity of competitors and forecasts of the economic and labour market situation. The more areas to consider, the more complex the decision-making process.
At the same time, omitting important variables may result in a sub-optimal decision.
Advanced data analysis comes to help. Predictive models take into account hundreds of variables and identify key factors for the success of a location. This makes it possible to predict the future performance of the new outlet and the entire network. The impact of the newly opened outlet on the functioning of the existing ones must also be taken into account. The result of advanced optimisation algorithms that take
into account also the effect of cannibalisation, there is a recommendation for an optimal shape of the network. Thanks to the optimisation, we know where and in what order to open new outlets, and which outlets to close. It is also possible to predict with great accuracy how long it will take for newly opened outlets to reach profitability and when the investment will pay off. The results are visualised on maps so managers can easily understand the new network structure and make the best decisions.
Benefits:
- Understanding the factors that affect the profitability of individual outlets and the entire network
- Possibility of forecasting “performance” of a new outlet
- Better estimation of the time needed to get break-even point
- The possibility of objectively comparing many alternative locations under consideration
- Greater conviction that the decision on the new location was right
Clients: Leading marketer from retail industry, FMCG company
