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Retailers use advanced location intelligence to pinpoint store sites
A Commercial Observer demonstration of Bain & Company’s Vantage mapped potential Los Angeles locations that could generate annual revenue of about $1.8 million to $1.9 million and 25 percent cash-on-cash returns.
Commercial Observer describes how location intelligence in commercial real estate has advanced to the point where retailers can model store performance with site level precision, using analytics that translate large sets of demographic and psychographic data into maps highlighting where a new outlet is likely to succeed.
In a hypothetical example used during a product demonstration, a U.S. restaurant chain with more than 3,500 locations studies additional sites in a part of Los Angeles and sets strict requirements, including at least 20 percent cash-on-cash returns, at least $1.5 million in annual revenue, and a maximum cannibalization factor of 10 percent for existing nearby stores.
The piece says the platform can incorporate competitive intelligence, complementary local businesses, local crime patterns, and the retailer’s own operating history, then generate neighborhood level results that can be tied to specific streets and even addresses.
Commercial Observer adds that when the demonstration dashboard was clicked on a selected mapped area, potential new stores for the franchise were projected to produce annual revenue of between $1.8 million and $1.9 million, cash-on-cash returns of 25 percent, and the highest potential cannibalization of a previously existing franchise location of 2.3 percent.