The presence of nearby establishments of the same brand can have negative effects on the results of the store. In addition, the existence of other sales channels, such as e-commerce, can also reduce sales figures. Analyse all these effects to avoid losing losses due to omnichannel cannibalization.
General Description of this use case
Companies must be particularly careful when considering a strategy to expand their establishments or when opening new sales channels in order to avoid the undesirable effects of cannibalization. Therefore, the main challenge that they face, is to know how to correctly place the physical points of sale and define their product catalogues, so that they do not compete with each other.
In these cases, when we talk about cannibalization, we are traditionally referring to a fairly common phenomenon whereby the sales of one establishment drop due to the influence of another nearby with the same brand. Therefore, the same business is competing against itself.
Today, the concept of cannibalization must be extended to the dominant omnichannel scenario. Not only is it possible for physical stores to cannibalize each other, but there are also chances that, for instance, an online store will subtract customers from a local store, or just the opposite.
Similarly, it is essential that the location and offer of each establishment does not conflict with other sales channels, such as e-commerce, preventing the physical store from losing revenue to the digital store or vice versa.
Tell us the particularities and needs your project needs to be able to implement a plan specially designed for you.
What solutions do you need?
With the appropriate geospatial data and location intelligence tools, we will have the keys to an efficient omni-channel strategy.
This geolocated information includes information on consumer behaviour in each establishment, pedestrian and road traffic in each area to be studied, demographic variables, proximity to places of interest (workplaces, public transport, shopping centres, etc.) and many other types of information.
In this way, managers will know with certainty how many establishments to locate in the same market and where, the characteristics and products to offer in each of them and, in general, make decisions that increase the return on investment, avoiding cannibalisation and achieving the much-desired halo effect between the different channels.
OMNICHANNEL RETAIL NETWORK OPTIMIZATION
The retail sector is clearly marked by the influence of different sales channels, such as physical and online stores. Therefore, it is essential to know the geospatial data that explain the dynamics of these channels, as well as the cause-effect relationships between them. With Locatium, you will be able to choose the best locations for new stores, predict results in new locations, mitigate the influence of competitors considering cannibalization, and optimize the right online-Vs-offline mix in each location.
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many industries this use case applies to?
Cannibalisation is a problem that is very present in the vast majority of business scenarios. At Locatium, we want to help you identify the main industries where we can lend a hand to prevent it from occurring.
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If we have caught your interest or if you have any questions, we will be happy to help you without any obligation so that you are really clear about how Locatium can contribute to the success of your project with our datasets and advanced solutions.