*This project was originally delivered by Gamma, now part of KatRisk.
Overview
KatRisk* helped a franchise supermarket and convenience store operator assess the likely impact of opening a new store on nearby existing locations. Using location intelligence and customer data, KatRisk analysed potential revenue cannibalisation, estimated the likely performance of the proposed store, and identified where the operator should focus future marketing activity.
The Challenge
The client needed to understand the commercial impact of opening a new store within an existing franchise network. In particular, they wanted to know how the new location might affect the sales of nearby franchisees, whether compensation might be required, and how much revenue the new store could realistically generate.
They also wanted a clearer view of where future growth would come from in the surrounding area, so they could support the new opening with targeted marketing and make more informed decisions about network expansion.
The Solution
KatRisk used location intelligence tools and customer loyalty data to assess the likely impact of the proposed store opening.
The client provided shopper loyalty data from existing stores, including customer addresses and spending information. These addresses were cleaned and geocoded, allowing KatRisk to map trading areas and analyse customer penetration patterns across the local market.
Using this analysis, KatRisk modelled the likely trading area of the proposed new store and estimated how much revenue would transfer from nearby existing stores. This provided the client with a robust evidence base for understanding cannibalisation risk, evaluating the commercial potential of the new location, and identifying the areas where new customer acquisition efforts should be focused.
The Results
The analysis gave the client a clear view of the likely level of cannibalisation associated with opening the new store and helped quantify the potential impact on existing franchisees.
It also provided a more realistic estimate of the new store’s likely performance and gave the operator a stronger basis for deciding whether compensation would be required. In addition, the work identified where the business should target new customers in the area, giving the client a practical mandate for future marketing activity.
