NEW YORK — Technology from customer analysis firms Buxton Co. and MapInfo Corp. is helping retailers take the guesswork out of choosing mall sites, tracking sales trends and learning about a store’s core shoppers.
The companies’ technologies analyze prospective customer buying habits, forecast store operating performance — down to volume expectations — and show how many stores a retailer should open in one market.
“The most expensive thing a retailer will do is open a nonperforming store,” said Buxton’s Rich Hollander. Excellent site selection is therefore imperative because retailers can’t get out of the store location easily once the mistake has been made.
Retailers “want to do a lot of things before they say, ‘I made a real estate mistake,'” said Hollander, who is president of Buxton’s CustomerID division. In addition to losing money while they figure out what to do with the store, retailers often waste money hiring new management because “the first thing they do is blame [the underperforming store] on the manager of the store,” he said.
Thus, a $60,000 to $100,000 investment in Buxton’s predictive technology can easily be rationalized if it saves a retailer from spending $250,000 to build a store that will only perform poorly. Buxton’s CustomerID proprietary technology lets retailers look at any location in America and “determine before the store opens what the sales volume of that location will be for the buck,” said Hollander.
Buxton’s “regression models” look back at the historical statistics of how other retail stores have performed in a specific area. That data is cross-referenced with demographic and statistical data Buxton has in its in-house databases. Buxton then analyzes the buying habits of people living in that area, both demographically and psychologically, in order to give clients a well-rounded view of how a given store could perform.
Fort Worth-based Buxton’s clients have included retailers The Container Store, Pier 1 Imports and Casual Male, as well as cities seeking to revamp their retail environments in fast-growing U.S. regions such as Buffalo, N.Y., Evans, Colo., and Jacksonville and Cape Coral, Fla.
Like Buxton, Troy, N.Y.-based MapInfo builds predictive models for clients who are researching their core customers in order to open stores in the best possible sites. Devon Wolfe, managing director of MapInfo’s modeling solutions, said one of the most common problems apparel retailers face is mall selection.
MapInfo’s screening technology called AnySite analyzes a market and “puts in hypothetical sites, and then essentially qualifies sites in the market and comes up with the number of qualified sites across the country,” said Wolfe. “Which means if I’m going to Wall Street with a projection of how many stores I’ll have, it’s better than a guess.”
MapInfo uses the government’s census data and infuses it with data from local demographers. Because census data is dated, the demographers then estimate and project the data into current metrics.
A typical MapInfo client could be a retailer who has 10 stores in the Boston market but wants to know where the best locations would be to open its next five locations. In this scenario, MapInfo’s software would allow that retailer to “strategize a market on the fly,” Wolfe explained. “An analyst in-house at the retailer can sit and run scenarios in certain markets.”
MapInfo’s clients have included Charming Shoppes, Bob’s Stores, J.C. Penney, Kohl’s, Ross Stores, Talbots and United Retail Group’s Avenue chain.
So what are some of the hottest U.S. regions where retailers should be looking to open stores? According to Wolfe, Las Vegas is the fastest growing retail market in the country.
“It’s just unbelievably, rapidly growing,” he said.
Some states — Florida, Texas, Arizona and California — are other regions seeing a “resurgence” in retail activity, Wolfe added.
“The Sunbelt states are attracting the growth companies, high-tech companies. They have the warmer weather and often a lower cost of living, and [the region] is nonunion, which attracts a lot of manufacturing jobs,” he said.