Fast, data-driven cannibalization study offers unlimited scenario testing

If you’re part of a large, multi-unit brand’s real estate team, you understand the importance of sales impact studies, which can provide valuable data for many situations. You know you have a trade area with high revenue potential and demand, and you’re primed for growth, but you need to understand how a new location will impact existing sales.

Or maybe one of your stores is overperforming to the point that its long drive-thru lines are making customers turn away, and you want to determine the best location for a new store without cannibalizing the existing one. Whatever the circumstance, your goal is to maximize your footprint in a trade area while mitigating your own or your franchisees’ risk.

There are many situations where a sales impact study is critical. Yet sales impact can be challenging to measure, mainly because human behavior is complex. From the question of why customers prefer one site over another during the morning to why they’ll drive further on the weekend, these variables can be hard to wrap your head around. You definitely don’t want this lack of understanding, though, to lead to your own sites cannibalizing business from each other. How, then, do you quickly, efficiently, and easily build out the best market planning strategy? How do you determine the sweet spots where it makes sense to open new locations?

What is sales cannibalization, and what does an accurate, multi-unit business sales impact study look like?

Cannibalization, or sales impact, refers to when a company opens a new store or site that causes a reduction in sales or market share at one of its existing locations.

A well-conducted sales impact study, also called an encroachment study, reveals precisely what you may expect if you open an additional store in a particular trade area. It measures where your customers live and work, where they stop before coming to your existing store, and where they go after leaving it. SiteZeus’ Sales Impact model is trained on six million trips made to hundreds of locations since 2017. It shows you how customers’ behavior differs in the mornings, evenings, and weekends.

With an accurate sales impact study, you can be confident about where to open a new location to reduce sales cannibalization—because you understand both your customers’ behaviors and how they act in a particular trade area. You know which customers are likely to leave an existing store and start patronizing a new one.

See How Checkers & Rally’s is leveraging SiteZeus’ Sales Impact solution

Large multi-unit brands that adopt and execute this type of data-driven sales impact study can ensure they capture maximum market share, and they often blow away the competition. Some of the leading brick-and-mortar brands effectively leveraging this type of technology include Checkers & Rally’s, Taco Bell, VantEdge, Jack’s Family Restaurants, Aroma Joes, Penn Station, and Krystals.

We’ve carefully developed a breakthrough technique to predict sales impact that yields extreme accuracy in real-time,” said Hannibal Baldwin, SiteZeus CEO and Co-Founder. “More and more brick-and-mortar businesses are realizing its value in competing for the best real estate and ultimately in their pursuit of market optimization and dominance.”

SiteZeus’ A.I-powered Sales Impact uses mobile data and geofencing technology to provide real-estate teams with more accurate market planning

Working with data from UberMedia, the leader in mobile location data, our Sales Impact analysis shows you how opening a new location at Site B will affect your existing sales at Site A and what percentage of sales will transfer from the current store as a total percentage of revenue potential.

As for infill growth potential, Sales Impact helps you proactively analyze how much a market can grow with only minimal, acceptable levels of cannibalization.

Sales Impact goes light-years beyond the traditional, manual methods of measuring cannibalization. Those outdated methodologies include measuring and analyzing distances, drive times, and, more recently, conducting time-consuming pin studies. Traditional methodologies like pin studies rely heavily upon surveys that measure where a customer came from, where they ultimately went, and their home address to measure potential sales cannibalization.

SiteZeus’ new A.I. methodology, on the other hand, pushes that limitation by measuring a bigger number of very specific variables for every trip captured. The Sales Impact model leverages actual customers’ trip information gleaned from mobile data over the past 365 days and geofencing technology to calculate sales impact. Analyzing so many variables provides unprecedented amounts of data—often thousands or tens of thousands of trips—that allows the user to study consumer behavior in a specific trade area with an unparalleled granularity.

Skip the line: Get a custom sales impact demo

The result? A sales impact study that is 93% accurate. Variables such as time-of-day and day-of-week allow Sales Impact to predict human psychology and behavior through trip pattern analysis. Brands understand why a user might visit a site close to their worksite on weekdays but shop at a different location on the weekend. Real estate teams leveraging SiteZeus can analyze why and how their customers behave differently throughout the day and week.

It’s a considerable improvement over solutions that only use descriptive analytics for market planning because results are based on much more detailed and nuanced data. Sales Impact provides data and intelligence that lets you be confident in answering the questions: How many stores can you open in a market without eating into your other sites’ sales, and where should you locate them?

Why SiteZeus’ Sales Impact is better than other impact solutions

  • Brands no longer need to invest in large IT teams to run sophisticated sales impact analyses but can take advantage of these at a fraction of the cost.
  • One subscription allows for an unlimited number of sales impact analyses.
  • Companies can quickly make informed decisions because our A.I.-powered Sales Impact analysis provides results in just minutes or even seconds, whereas traditional methods take weeks or months.
  • The tool offers data granularity that includes time-of-day and day-of-week information, among many other variables that capture accurate customer behavior other methods do not access.
  • The Machine Learning model is trained on data that goes back 365 days.
  • Sales Impact lets you visualize results on an easy-to-understand map.
  • Retroactive tests prove that Sales Impact analyses match real-life results with 93% accuracy.

Death of the pin study: an older, less effective way of measuring sales cannibalization

Pin studies, which were traditionally used for market planning, are lengthy, time-consuming, and manual processes, don’t capture behavioral information or seasonality, and have the potential for bias (for instance, a surveyor can easily hear or enter incorrect information). Someone conducting a pin study surveys customers to learn where they came from, where they are going next, and perhaps where they live.

The long and expensive process only captures a strict 50/50 sampling (half foot traffic and half drive-thru traffic). It counts on customers being willing to stop and talk, which is problematic in the best of times and more so during a pandemic. And a pin survey shuts down at the close of daytime business hours, so it misses the night audience altogether.

The old-fashioned and limited way of planning a marketing build-out, which doesn’t take advantage of today’s technology, results in much less information than an extensive, A.I.-powered Sales Impact study.

Compare traditional sales impact methodologies to SiteZeus’ solution

Traditional sales impact methodologies also charge a brand for every different impact scenario. That’s not the case with Sales Impact, which provides an unlimited number of scenario testings with a single mobile license.

Before SiteZeus, pin studies required us to schedule on-site intercepts and wait for results, often weeks or even months per site. Now getting sales impact studies takes minutes.”

Jim Avery, Director of Development at Jacks Restaurant

Other drawbacks to pin studies: They may be even less accurate during the COVID-19 pandemic because people are not as willing to stop and answer questions. They also quickly become outdated when conditions change, such as with the unexpected pivot restaurants have made to delivery and carryout. Pin studies are on their way out.

Site Impact, powered by both mobile data and A.I., offers much more detailed information and provides the analysis much quicker.

Who is SiteZeus’ Sales Impact for, and what can they solve for?

SiteZeus’ Sales Impact solution is built for real estate teams across many verticals that plan to expand their unit footprint in existing markets. These include general retail, grocery stores, and restaurants, including fast casual, quick service, and full service, among other verticals.

The solution provides an unbiased, data-driven approach to help corporate and franchisees successfully open a new location near an existing site and solve franchise disputes.

Because customer behavior differs in various verticals, SiteZeus’ Sales Impact uses training sets based on learned behavior specific to each vertical. Grocery stores, for instance, which are daily drivers, are analyzed using a different data set than quick-service restaurants, which are based on convenience and value.

With this comprehensive tool, real estate teams can:

  1. Test impact scenarios. Use actual trip data to study consumer behavior, pick the best locations, and predict a proposed site’s impact on any existing location.
  2. Understand infill growth potential. Learn how many stores you can successfully open within a market while minimizing cannibalization.
  3. Create proactive fortressing strategies. Evaluate market saturation to strengthen your brand’s position, block competitor growth, and minimize cannibalization within your portfolio.
  4. Maximize revenue per market. Identify the greatest revenue opportunities in any market.

Sales Impact, powered by A .I. but supported by humans, is only one piece of a more extensive solution that lets customers take multiple dimensions of data into account. SiteZeus offers several other analyses that are part of an overall cannibalization study, including sales forecasting, white space analysis, customer segmentation, and portfolio optimization.

Ultimately, brands want to answer the question: how many stores can we open in a market, and where? Using SiteZeus, customers can consider all these dimensions of data in one platform. Models are created and deployed in days, instead of the weeks and months it commonly takes when working with traditional vendors.

We can build a predictive model quickly, so your brand can see how Sales Impact works for you. We also offer proof of concept, easy implementation, and instant access to Solution Suite, as well as Olympus Data Exchange, which lets you explore turning data on and off.

Ready to run your custom Sales Impact study? Schedule a live demo today.

Empower your team with data-driven insights for more profitable decisions.

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