Retail Network Consultants' solution for optimizing the size and geographical distribution of a retail stores network.

1. Solution overview
Retail Stores Network
Optimal Size & Geographical Distribution

2. Retail Stores Network - Optimal Size & Geographical Distribution
Introduction
2
Is your stores network properly distributed?
• Are there any overlaps?
• In which areas is there a deficit or surplus of presence?
How many stores are required for full or partial coverage of the Country?
• In which areas? With what priority? Of what size?
• How is this documented?
What percentage of demographic and economic figures your existing network covers?
• How much will it be modified if the proposed distribution is adopted?
• How is your competition established?
What is the expected number of new clients?
• Per District, Municipality, area and store?
• What about the expected revenue?

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Our solution is built upon a
Geographical Information System.
Retail Stores Network - Optimal Size & Geographical Distribution
A very short description…of what we do
We profile your
clientele to
socioeconomic
data and reveal
geographical
correlations.
We combine all
the demographic,
financial and
market data that
exists for your
Country and
business sector.
We evaluate the
number of
potential
customers,
specifically for your
company’s
products, for every
single road of your
Country.
We pinpoint the
ideal store
locations, draw
their responsibility
areas and estimate
their size.
If you already possess a
customer segmentation
analysis, it will be incorporated.
Complete justification per store
is provided

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Retail Stores Network - Optimal Size & Geographical Distribution
A very short description…of what you get
Population 26%
Competition 23%
Consumer Behavior Index 19%
Market share 17%
Income 15%
100%
Correlation of the existing Network
with the available parameters
Reports
❑Multiple reports supported, geographical or not
❑Built upon your needs
❑Output in many formats
Proposed
Store
Area
(km2)
Permanent
population
Potential
clients
Potential
revenue*
(€)
Competition Closest store
(m)
Size index
( 0.3 to 1)
…
1 0,33 4.500 2.300 43.000 2 2.600 0,73
2 0,64 3.900 3.500 58.000 4 1.250 0,54 …
3 0,57 5.100 2.750 39.000 3 840 0,86 …
… … … … … … … …
(*) Assumes a revenue analysis of the existing network

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Retail Stores Network - Optimal Size & Geographical Distribution
and a bit more…
District Municipality Settlement Population Competition Existing
stores
Proposed
stores
Deviation
… … … 52,026 10 3 5 2
… … … 100,410 8 2 4 2
… … … 23,925 2 1 3 2
… … … 85,903 16 5 6 1
… … … 123,414 15 6 5 -1
… … … 39,122 7 7 5 -2
… … … 214,506 18 12 10 -2
… … … 108,641 7 7 4 -3
Reports requested from a Serbian retailer

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Retail Stores Network - Optimal Size & Geographical Distribution
GIS installation
If you possess a GIS infrastructure, everything will be installed in it

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Adopted to any
country
Utilize existing data
User infrastructure is not
required
Analytical customized
reports
Online access
24/7,
(available soon)
Features
Solution adopted
to customer needs
User expertise
desirable but not
required
Retail Stores Network - Optimal Size & Geographical Distribution
Solution Features

8. 8
Retail Stores Network - Optimal Size & Geographical Distribution
Let’s get more analytic – Methodology
Gathers, combines and analyzes in an
automated way all the available data
and depicts them on maps.
Defines an Area Dynamics Index at
the very lowest geographical level
(i.e. road level).
Scans the entire map and locates the
areas with high Index density (hot
spots).
Selects the areas that satisfy certain
criteria for store presence and draws
their responsibility areas.
The Area Dynamics Index corresponds to the Potential
Customers, i.e. those that not only may visit a certain area
but are also likely to enter your stores and acquire your
products.
Some of these areas will
eventually be selected as the
proposed ones for store
existence.
The areas are selected based on certain criteria such as:
• A lower limit of customers/turnover that justify the
presence of a store.
• An upper limit of customers that the store can serve.
• A maximum driving or walking time or covered area.
In 4 steps, the GIS built-in methodology accomplishes the following:
All the available data/maps, user or partners provided,
in any form, will be evaluated and utilized.
(demographic, competition, behavioral, clientele, market
shares, financial, e.t.c.)
1
2
3
4

9. 9
Demographic
(census, public transport,
enterprises locations, e.t.c.)
Behavioral
(socioeconomic and
loyalty data)
Financial
(deposits, incomes)
Market
(competition, chain stores,
e.t.c.)
Area
Dynamics
Index
The Area Dynamics Index is calculated for each
and every road of your Country.
It can be built on any sort of data:
Retail Stores Network - Optimal Size & Geographical Distribution
Area Dynamics Index
It is actually a figure of the “value” of every road,
specifically for your company.
The Index definition is not unique and must be
customized to your requirements (your feedback at
this point is of uttermost importance).
If you already have a network of stores, the
algorithms will examine its correlation with the
available data and propose the Index structure.
Population 26%
Competition 23%
Consumer Behavior Index 19%
Market share 17%
Income 15%
100%
Correlation of the existing Network
with the available data
These gravities correspond to the existing network
and may or may not be the optimal ones.

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Retail Stores Network - Optimal Size & Geographical Distribution
Area Dynamics Index – A step by step approach: Population
• Our algorithms will disaggregate the population at the road level. This is a key
notion to our approach, “go at the lowest possible level”.
We begin with the latest
census data.
• The next step is to re-distribute the population. We do this by gathering:
• Public transport data (subway & bus stations, routes info, etc.).
• Market and local activity data (chain stores, banks, public services, schools,
hospitals, pharmacies, etc).
However, the residents of an area
may work or conduct their every day
tasks elsewhere.
•Make no mistake, your “expertise” is crucial in how this is accomplished. If you
are a Super Market firm, you may give more gravity in school locations, if you
are a Bank, public services might be more relevant. We build this together!
At the end, a “new”, practical
population is built.
Let us give you an example of how an Area Dynamics Index is built:
Our first parameter in defining the Area Dynamics Index , the population, is ready.
But how many are your potential customers? And how they differ from area to area?

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Retail Stores Network - Optimal Size & Geographical Distribution
Area Dynamics Index – A step by step approach: Behavioral parameter
Different business segments and products target different customers. A behavioral parameter with a
geographical dimension adds significant value.
Our goal is to differentiate the population
from area to area.
The behavioural parameter will reveal areas
that although have less population, they have
a bigger value for your company.
This behavioral parameter will be incorporated
into the Area Dynamics Index.
1. There are tools in the market that can segment your clientele and generalize the results to the
entire Country.
2. If not the case, we will incorporate any customer segmentation you possess or at least, combine
your customers purchases with residential areas and their demographic characteristics and
generalize the findings to the entire Country.

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Retail Stores Network - Optimal Size & Geographical Distribution
Area Dynamics Index – A step by step approach: Everything else matters
• Population
• Behavioral
We have two parameters so far:
• Incomes
• Market share per Municipalities or Counties
• Competition
We add any other major data category, we
consider of importance. For example:
• The algorithms will propose the optimal gravity for every parameter by analyzing the
existing network.
• The final choice however is yours, since it also depends upon your strategy. Several
scenarios in that sense should and must be tried out.
All of the above are statistically processed,
weighted and combined.
Population
Customer
behaviour
Competition
Other
parameters
Area
Dynamics
Index
At the end of this procedure, every road
has its own “value”, specific to your
company.

13. Retail Stores Network - Optimal Size & Geographical Distribution
Proposed store areas
Having calculated the Area Dynamics Index for every road, the algorithms will scan the entire map and
draw the areas with high index density that meet certain criteria.
These criteria determine the selection or not of an area
and consequently the number of proposed stores. The
most significant are:
• Minimum ADI per area: Under this limit, a store
presence is not justified
• Maximum ADI per area: Above this limit, a single
store is not adequate
• Maximum covered area: A single store cannot cover
a bigger than the specified area
To a great extent, the criteria represent your company’s strategy, as for example this is formulated from the following
questions:
• Which is the minimum number of clients/turnover that, in your opinion, justify a store presence?
• Are there more than one store types? Do they address different customer types? Do you allow overlapping?
Answers to such questions may lead us either to criteria differentiation per store type or to definition of new criteria.
Your contribution to this is decisive!!!

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•Understand user needs
•Project definition – milestones
Analysis
•Data gathering - evaluation - process
•Depiction on maps
Preparation
•Area Dynamics Index definition
•Criteria definition – Parameters set-up
Model definition
•Preliminary resultsPreliminary results
•Scenarios - Model validation
•Final results
Model validation
and final results
•Standard and custom made reportsReporting
Retail Stores Network - Optimal Size & Geographical Distribution
A typical project plan

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Retail Stores Network - Optimal Size & Geographical Distribution
Summary
The methodology has been developed exclusively for the problem of optimal size and
geographical distribution.
It is fully parameterized and customizable to your needs.
The results are specific to your network, your products, your clientele.
Existing data and infrastructure are utilized.
Multiple customizable reports, geographical or not.

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Retail Network Consultants
Who are we and what we do…
Retail Network Consultants is a company founded by professionals with years of first hand experience in Retail Network
Management. Over the years we have developed state of the art methodologies and complementary software
components in the following areas.
Our vision is to provide practical, robust and reliable solutions, customized to your needs, your network, your
infrastructure, and above all, your culture!
Contact us for a thorough discussion!
www.rn-consultants.eu info@rn-consultants.eu
Target Setting &
Performance Measurement
Optimal Network Size &
Geographical Distribution
• How many stores does your Network truly requires?
In which locations?
• Which store should you open or close first?
• Where do your potential customers reside? And
how many are they?
• What is the expected revenue?
• How does your Network stand against your
competitors?
• And how are all of the above documented?
• Performance Measurement methodologies
• Advanced Target Allocation Models
• Sales reports
• Database design and development
• Variable compensation schemes
Have a first look here or go directly to our extensive
presentation that is accompanied by a complete set of
free introductory tools to see what this is all about!