Site selection is a critical location decision, especially for retailers and restaurants. Criterias and checklists are typically developed by chains to maximize success, but despite locations checking all the boxes, many still fail. Why? What’s missing from the site selection checklist?
The Current Site Selection Checklist
The first step in choosing a retail site is to eliminate locations that don’t meet your requirements:
- Building requirements (building size, clear height, parking lot)
- Resources requirements (cost of resources, waste disposal, etc)
- Logistics (vicinity to customers, airports, etc)
- Incentives (tax cuts, grants, etc)
- Project timeline (unable to wait for a site to become available)
- Regulations (zoning, etc)
This will have narrowed down your list of potential sites. The next step is to conduct a detailed evaluation of specific properties and communities. This is known as “Trade Area Analysis”, and is often the most important factor when deciding where to open a store.
Trade Area Analysis is often comprised of:
- Demographics - While having large numbers of people in the area is a good thing, it means very little if they’re not the sorts of people who would frequent your business. This data ages quickly and is only updated every ten years.
- Psychographics - These try to explain how people are like using demographics. Unfortunately, there is often a bias as someone is trying to interpret the data, and results can be unreliable unless individuals participate in psychographic surveys.
- Traffic data - Where people are and when. You know where they are but nothing else. Assumptions are often made about people’s current activities.
However, this analysis does not communicate the whole picture of how a community behaves, and certainly cannot quantify it. We constantly talk to confused retailers who, even though they had checked all those boxes, their store still ended up shutting down.
The Missing Criteria
Geosocial data is location-based social media data. It is content produced on social platforms tied to a location - either a coordinate or a place - and is capable of quantifying social behavior across locations to reveal the “personalities” of places.
This data can be used the same way demographics are used for site selection. The common behaviors and personalities that drive success or cause failure can be identified by comparing historical store performance to the social media activity in the trade area.
Examples of behaviors and personalities found in social media can be accessed at https://spatial.ai/taxonomy.
Geosocial data has already been proven to improve site selection processes. Read our case study here: Payless Site Selection Case Study
Geosocial data is quickly becoming the new standard for location intelligence. It’s not enough to rely on demographics for such a critical decision.
Two sites having similar demographics doesn’t mean they have similar communities and customers. Failing to identify the social differences between these locations is a mistake that can cost millions.
Now let’s go rewrite that checklist!
Need help identifying the right social media behaviors to look for when making real estate decisions?