As retail outlets have become just one element of an omni-channel world is it time for a rethink in the world of location planning? Is it all just too difficult to comprehend or does the vast array of customer data now give us the key to unlock the latest challenge in store planning?
Essentially location planners have sought to understand consumers’ spatial responses to retail locations on offer now and in the future. Over time we’ve coped with a move from a ‘one nation’ view of shoppers to an understanding of the complexities of geodemographics and the transport modes available to shoppers.
Store performance models for retailers now routinely include bespoke catchment models and a precise understanding of the spending potential for each consumer group. We even pat ourselves on the back for thinking about the impact of online on store performance and cheer when we have knowledge of the likely online uplift in a virgin area when a new store opens.
However as we look to meet the omni-challenge we need to re-assess how we analyse consumer behaviour and their spatial interactions with retail outlets. We need to appraise existing methods to give ourselves a realistic chance of understanding the omni-channel world. The challenge has intensified as online has become the top performing ‘store’ in most retailers’ portfolios.
Understand the ‘whole’ customer, know the trading potential
The opportunity for a new approach lies with our understanding of the individual customer. The customer centric focus of many retailers offers the capability to solve the omni conundrum. If we are to understand the spatial behaviour of consumers we need to drill deeply into the customer data held by retailers. We have to examine each customer and their relationship with the retailer across all digital and physical touchpoints.
At best it means we know from a single customer account which store a customer uses and where the shopper accesses online for browse and purchase and by what means both physical and mobile. And above all else we need to see the colour of their money. This all presents a massive challenge for many retailers as they seek to link up customers across all channels and connect multiple accounts for the same person and household.
A precise knowledge of individual customers, their spending and touchpoints will provide a clear picture to understand the retailer’s business from the ‘whole’ customer perspective. This approach delivers an opportunity to create individual customer models, bespoke and actionable customer segments (at CACI it’s my.acorn) together with an assessment of spend, opportunity and interaction across all touchpoints. The benefit to the business in respect of existing customers is the opportunity to target those customers whose actual spend by touchpoint is below segment expectations.
Evaluating the opportunities, valuing the prospects
Of course, increasing spend is only one part of the picture. The other challenge for any national retailer is to identify the potential from non-customers by channel. The development of a bespoke my.acorn segmentation using customer data can be used to match to the wider population. As a result prospects can be valued by channel leading to improved return on marketing spend and new store opening and rationalisation scenarios can be accurately tested.
Facing the omni challenge
Omni-channel is now leading to reviews of every business process in retailing and location planning faces the same pressures. The old ways are in need of substantial re-engineering and analysts will increasingly be examining the activities of individual customers before they embark on the development of spatial models.
On the subject of ‘omni’, a quick Google search reveals the bizarre fact that the Omni International Mall in Miami closed down in 1999 due to decreasing sales 23 years after it opened. Perhaps it’s an omen foretelling of the need to get location planning from an omni-channel perspective sorted out before it’s too late. Making the right property decision is now all about consumer, consumer, consumer. Fail to understand the omni-channel consumer and you’ll fail on location, location, location.