How to Choose the Best Retail Business Location Using GIS Analytics

If you’re considering opening a new brick-and-mortar store for your retail business, you might be wondering which business location will yield the best returns.

Should you rent space in that brand new shopping center down the road? Or should you choose a quirky location on the high street?

Ecommerce businesses might be wondering if they need a physical store at all, and if so, where and how to locate it.

There is no doubt that choosing the best location for your store could be one of the most important and influential decisions you make at the start of your venture, or as you grow and expand into new potential markets.

Geographic Information Systems (GIS) property intelligence and analytics platforms are making it easier for real estate brokers and retail owners to access the necessary location data, but there’s still a lot of data to process and analyze.

Those who can harness the data successfully will find optimal business locations that give them the edge in the highly competitive retail market.

Defining Property Intelligence and GIS Analytics

Having a holistic understanding of a property and its surrounding location is often referred to as ‘property intelligence’.

Property intelligence is important to commercial real estate professionals because it gives them access to detailed knowledge about a property’s condition, value, and risk – all critical touchpoints in any real estate deal.

GIS analytics provide a layer of geospatial property intelligence linked to a property’s location.  

Examples of Geospatial Property Intelligence
Examples of geospatial property intelligence

Today’s GIS analytics tools are highly sophisticated and act like an overlay to Google Maps where you can click on any location and gain access to detailed property records (like size, age, type, ownership, sales, and zoning), demographics, trends, foot traffic data, trade areas, and more, in one user-friendly interface.

These online platforms help real estate professionals create analytical frameworks which assist them in making key decisions like selecting an ideal location for a retail business.  

Why You Should Use GIS Analytics Instead of Common Sense

While seasoned CRE professionals rely on their experience and knowledge to make good business decisions, in competitive markets like commercial real estate, guesswork is not enough.  

Modern GIS tools process and compare a great deal of complex data very quickly, eliminating the need for time-consuming tasks like data entry, creating comparative frameworks, and making reports.

Over and above the time-saving benefit, GIS software can help real estate professionals rank opportunities and improve the probability of business success.

New retail stores are popping up every day but not all of them are succeeding, and one of the common reasons why is because they are in the wrong location.

Questions to Ask When Choosing Your Retail Business Location

Choosing an optimal retail business location is a complex problem that requires a multifaceted approach.

Successful retailers model the opportunities presented by various potential store locations and rank them against competitors.

This process always starts with defining who your customer is, understanding how many customers you need to make your store model work, and knowing how far they might be willing to travel.

These questions help you define your store size, number of branches, and ideal locations.  

The Three Questions to Ask When Choosing Your Retail Business Location
Questions to ask when choosing your retail business location


Best of all, you can use a GIS analytics tool to access this data. Here’s how.

Who is Your Customer?

Get to know the demographics and psychographics of your target customers. Where do they live? What are their income levels? What do they spend their money on?

These questions will help you understand what type of store might work best for them. You also need to understand their spending behavior according to their lifestyles and income levels.

You can find this out from psychographics which are essentially demographics combined with behavior.  

Sourcing this information doesn’t have to be guesswork. A real estate GIS analytics tool can provide you with in-depth psychographic data which segments customers according to their lifestyles.

This information helps you to locate where your ideal customers are, so that you can choose a location near them.  

A graph, from the AlphaMap tool, showing consumer spend in a 1-mile radius of the chosen site, provides useful insight into what local customers are spending their money on.
A graph, from the AlphaMap tool, showing consumer spend in a 1-mile radius of the chosen site, provides useful insight into what local customers are spending their money on.

How Many Customers Do You Need?

How can retail store owners estimate the number of customers that will actually walk through their doors in a given area? How do they know what size their store needs to be?

Again, these can be complex questions that guesswork can’t help with. A GIS tool can provide you with visitation data such as who visits retail brands like yours in similar areas, and at what times. You may wish to review analytics like:

Trade Areas

These are the primary catchment areas which define where ideal customers live and how they are likely to travel to a business location of area.

Trade areas might be defined spatially by distances, highways, and other physical barriers (like rivers or railways). Trade areas can also be measured by how long it takes to drive to a location.

One way to visualize trade areas is by measuring radius rings around a specific location.  

Trade are visualized in radius rings using AlphaMap.
Trade are visualized in radius rings using AlphaMap.

‘True trade’ data is created by tracking actual visits to certain locations using mobile phone data. True trade analytics give you an overview of where visitors to your specific location live and work. You can see how much they spend and where else they tend to shop as well.

Foot Traffic Data

Visitation data is often referred to as foot traffic data. Insights based on hourly and daily visits to your location are created by actively tracking mobile phones across the US.

AlphaMap tracks over 130 million mobile phones (from three different mobile providers), meaning greater accuracy of data measured.  

Foot traffic data trends visualized over a period of time using AlphaMap
Foot traffic data trends visualized over a period of time using AlphaMap.

How Far Will My Customers Travel?

Do you have the type of retail brand that customers will travel far for, or does distance affect whether they choose you over your competitors?

Understanding how far customers will travel involves understanding car traffic and drive time – how long it takes to get to the location from your customer’s homes or work locations, among other distance-related metrics.

Car traffic visualized in your chosen location using AlphaMap
Car traffic visualized in your chosen location using AlphaMap.

How Does Your Retail Location Rank Against Competitors?

A GIS analytics tool can give you insight into how your business location might rank against competitors. In a ranking analysis you might wish to compare the performance of your chosen location against key benchmarks like:  

  • Other locations of the same retail brand (if you’re a franchise)
  • Other locations in the same business category
  • Compare across different levels of geography (national, state, city, metro, county, state, national
  • See performance trends over time
A graph showing how the brand at the specified location ranks next to its competitors using AlphaMap
A graph showing how the brand at the specified location ranks next to its competitors using AlphaMap.

It’s also important to avoid overlapping trade areas that result in too much competition for the same customers. A detailed void analysis will help you to identify gaps in the market and which retailers would be the most suitable for which locations.  

Final Thoughts on Finding a Perfect Business Location Using GIS Analytics

The retail business has a low barrier to entry - there are many businesses competing for a piece of the same pie. Some will succeed and others won’t. Finding the right business location might be what helps one of these businesses succeed over another.  

When identifying a competitive location for a retail business it’s imperative to start with the customer. Define who and where your customer is, understand how many customers you need to make your business model work, and calculate how far they are willing to travel to find you.

Making use of a GIS analytics tool, like AlphaMap, will give you access to the in-depth geospatial property intelligence data that will help you find a competitive location.

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