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Retail Site Selection: How to Find the Right Retail Location

by Eric van Rees on Feb 9, 2021

For retailers, deciding where to locate a new store is one of the most critical decisions a business can make. To be successful, a new store needs the best possible access to potential customers, which may be a combination of existing known shoppers and wider target demographics.

Travel time analysis can make the site selection process easier. For example, you can use travel time data to better understand site catchment areas, identify blackspots where current or potential customers aren’t being served and manage the overall coverage of a chain of stores.

In this post, we’ll show you how to use travel time data to conduct a retail site selection analysis and identify the right retail store location. To do this, we’ll be using ArcGIS Pro and the TravelTime add-in, which allows you to easily create and visualise site catchment areas based on travel times and different modes of transport. We’ll compare five potential locations for opening a new store location based on a combination of target demographics and the size of catchment areas based on travel time.

You’ll learn:

  • How to use travel time data to evaluate which location has the most potential for opening a new store
  • How to analyse the accessibility of different locations by different transport modes
  • How to plan a future retail store in relation to future transport links using TravelTime
  • How to create travel time catchment areas for public transport and driving
  • How to visualise these catchment areas in Tableau

How to use travel time data for retail site selection analysis

If you’re looking to expand your retail portfolio into a new territory, you need to look at target demographics for each catchment area and establish which of the potential locations in the would be the right choice.

The tutorial below is a UK-based example, but the same process can be applied in any location supported by the TravelTime API.

To simulate this process in ArcGIS Pro, select five potential locations in the UK, using an online UK postal code generator. Next, load a .csv file containing these locations into Pro and geocode these to point locations on a map:

Potential retail locations

Travel time analysis will show you how accessible each of these locations are by different transport modes. Start by creating catchment areas for the different locations, which you can do quickly using the TravelTime add-in. Open the Time Map Simple tool and choose a maximum of 30 minutes driving, and run the tool to create the following catchment areas:

Travel time catchment areas

Now that you have created the different catchment areas, you need some more data about the target demographics inside them so that you can compare the different locations and decide which location(s) are most probable for realising a maximum profitability.

You can overlay the catchment areas with a dataset of regional income variations to get an idea of the potential customers for our locations.

Next, use the intersect tool to visualise only the income distributions within each catchment area which makes a visual comparison between the different catchment areas easier. This is the entire layer of the income map, where darker colours represent a higher income:

Income distribution map

Applying the Intersect tool shows the following catchment areas for the five potential store locations with income data. The numbers correspond with individual catchment areas posted below:

Catchment areas for potential retail locations

Here are close-ups of the different catchment areas for potential store locations:

Catchment area for potential store location #1Catchment area for potential store location #1

Catchment area for potential store location #2Catchment area for potential store location #2

Catchment area for potential store location #3Catchment area for potential store location #3

Catchment area for potential store location #4Catchment area for potential store location #4

Catchment area for potential store location #5Catchment area for potential store location #5

Based on this data, we can conclude the following:

  • The catchment area for potential store location #5 contains no high-income values, lacking dark-red colours. For a potential store location that serves only high-income customers, this location would be a bad choice. However, for a discount store this would be a good location.

  • The catchment area for potential store location #3 lacks mostly low-income values. For a discount store, this would be a bad location. However, for a store serving high-income customers, this would make a good location.

  • The catchment area for potential store location #2 is smaller than the other catchment areas, which means opening a store here would serve not as many people as the other catchment areas. This would make it a bad fit for opening a new store compared to the rest of the potential store locations and corresponding catchment areas.

  • Only the store locations in catchment areas #1 and #3 are located directly inside a higher-income region, which might be important if you want your store to be located near potential customers with a higher income. However, if you want to serve customers of all income levels, you’d want your catchment area to be as large as possible - in which case, a potential store location in catchment area #3, #4 or #5 would be best.

  • Based on the info above, if you consider the nearness of high-income residents a must, catchment areas for potential store locations #1 and #3 would be the best locations for opening a new store location. If these locations were existing locations and you had to pick one to close, you’d choose the catchment area for the potential store location #5, as it serves no higher-income customers within a 30-minute driving radius.

Analysing accessibility by different transport modes

The driving time catchment areas are just one example of the multiple transport modes that you can analyse with the TravelTime add-in.

For example, looking at the third store location, below is an overlay of the 30-minute driving time catchment area (in yellow, corresponding with the same area pictured earlier in this article) and a 60-minute public transport catchment area (in red). Note that the store location becomes reachable from Manchester within the specified time limit:

30-minute driving time catchment area

Finally, here’s a 45-minute cycling isochrone map in blue added to the other isochrones created earlier in this tutorial:

45-minute cycling catchment area

Planning a retail store in relation to future transport links

When planning where to have your next store location, you may also want to take future transport links into account.

TravelTime supports a number of 'future networks' for public transport in the UK. These include Crossrail and the Northern Line Extension, both of which are accessible through the ArcGIS add-in. To access either of these networks, open up the TravelTime plugin settings marked red in the image below:

TravelTime ArcGIS add-in

To access the London Crossrail, change the URL in the “customize endpoint” field to the one listed below:

TravelTime London Crossrail endpoint

To see the effect of switching to the Crossrail extension, below is an illustration of the Quick Time Map tool, showing isochrones for 15 (red), 30 (orange) and 45 (yellow) minutes of travelling near the metro station at Heathrow Terminal 4 (the green point feature below).

If you were thinking about opening a retail location here, you can visualise the catchment areas for public transport as your mode of transportation, including the Crossrail extension stops:

Public transport catchment areas

Using travel time catchment areas to pinpoint the right store location

We’ll now provide a step-by-step walkthrough of creating catchment areas for both public transport and driving. To replicate the following steps, make sure you have the TravelTime add-in installed. After downloading the add-in, you’ll need to activate the add-in with an API key so you can start using it.

The TravelTime add-in is listed on the ribbon interface of ArcGIS Pro. Clicking the TravelTime platform menu button will display the following icons:

TravelTime ArcGIS add-in

Here, use the TravelTime platform toolbox, which offers more extensive functionality than the tools displayed above.

To visualise it, click the second icon from the left (hovering over it with the mouse will display a tooltip that reads “Show the Toolbox” and display the Catalog window by either clicking View on the ribbon interface and next Catalog Pane or on the right of the screen if you have the Catalog window docked there. You should now see the Traveltime platform toolbox:

TravelTime toolbox

STEP 1: Generate UK postal codes and geocode them inside ArcGIS Pro

To create the catchment areas for our retail locations, first create point data that serves as input for the add-in. This website will provide random UK postal codes that you can add to an empty Notepad file and save as a .csv. The file will look like this:

ADDRESS
DY10 2RN
G12 0JR
PE7 3FR
DG10 9SJ
CW2 7BX

Next, add the .csv file to the table of contents in ArcGIS Pro by clicking Map on the ribbon interface and selecting “Add Data” and next “Address and Place layer”. This way, you can geocode the .csv file directly to points on a map. Select the .csv file as the Input Table and for Input Address Locator, select the ArcGIS World Geocoding Service. This is a tool that consumes credits and will convert the postal codes to points on a map.

For “Input Address Fields”, select the option Single Field. Under “Alias Name”, select “ADDRESS”. Select “United Kingdom'' under country. Make sure to mark the “postal” field under Category. Click “Run” and notice that five points are added to the map as a result. You are now ready to create the different catchment areas, which you'll do next.

STEP 2: Generating the catchment areas based on driving time

With the TravelTime add-in, you can generate multiple catchment areas at once through the Time Map - Simple tool. Find the tool in the TravelTime platform toolbox listed in the Catalog pane. Select “Simplified” to visualise and select the tool by double-clicking it. Fill the following parameters to generate the 30-minute driving time catchment areas for all five retail locations at once:

  • Under “Locations”, select the point layer with the retail locations that were created during STEP 1.
  • Under “Travel Mode”, select “driving”.
  • Under “Time Zone”, select “UTC”.
  • Under “Departing/Arriving”, select “Arriving” (the locations are a destination, not an origin).
  • Under “Travel Time (in minutes), enter “30”.
  • Under “Result Aggregation”, select “NORMAL” so that possible overlapping catchment areas won’t be joined.
  • Leave the name for the Output Layer as it is (you can change it after it is being added to the table of contents.

The tool parameters should read as follows:

TravelTime Time Map_Simple

Finally, click “Run” to start running the tool. The catchment areas for each location are added to the map automatically. You can change the output colours manually by selecting the output in the table of contents. For catchment areas using public transport, repeat the above process, but now selecting “public transport” under Travel Mode:

TravelTime Time Map_Simple

Again, click “Run” to start running the tool and generate the catchment areas.

Visualising travel time data in Tableau

You can access and visualise the five catchment areas based on driving time in Tableau by opening Tableau Desktop and choosing the option to connect to a spatial file in the opening screen.

Navigate to the geodatabase for your ArcGIS Pro project click “open”. Next, drag the table of interest from the left to the right of the screen and open a new worksheet. Doubleclick the “geometry” column on the left of the screen and a map is created:

Travel time data visualisation in Tableau

Getting started with travel time analysis for retail site selection

In this tutorial, you’ve learned how to perform retail site selection analysis and identify the right retail store location using a combination of travel time and demographic data. We chose a number of potential UK retail store locations and created multiple isochrone maps for each, representing the catchment areas based on a maximum travel time for different modes of transport.

We did this using the TravelTime add-in for ArcGIS Pro, which allows you to generate travel time data for multiple transportation modes. In this example, the analysis showed the best potential store locations based on the size of the different catchment areas - and therefore potential customers. We then did the same kind of site selection, but for a future site using transport data from a future transport link, the London Crossrail extension.

However, these are just a few of the benefits of travel time analysis. You could also use travel time data to accurately forecast demand, footfall and store performance, as well as to avoid cannibalising current business between stores or competition for new customers with rival stores.

Finally, while we used ArcGIS in this tutorial, you can also run a similar travel time analysis in several ways, using Alteryx, QGIS or the TravelTime API.

To see how you can get started with travel time analysis for site selection, book a demo.

Topics:
Tutorials Location intelligence Site selection