In a speech titled, The Digital Earth: Understanding our planet in the 21st century, Vice President Al Gore made this statement: “The hardest part of taking advantage of this flood of geo-spatial information will be making sense of it – by turning raw data into understandable information.” What Al Gore recognized back in 1998, was that while GIS was becoming more and more rich in terms of information, how businesses distill value from it was still unclear.
Leveraging GIS has been especially critical for the retail and banking industries who often need to display their network distribution including their competitors, monitor their trade area, assessment their branch performance, and choose new door locations strategically. With over 10 years experience helping retailers and banks leverage GIS for business use, here are our top 5 ways to use GIS in retail and banking.
1 – Macro Market Overview and Network Distribution
Entering a new market, professional channel managers sometimes go through dozens of market profile pages. With GIS’s help, channel managers have a quicker way to find hot new territories. In addition, understanding competitors’ locations with GIS can also help in finding new areas for expansion.
2 – Site Selection for New Branches/Facilities
Finding a new retail site is not always difficult work; where there’s a shopping area, open a door. However, finding a site that’s likely to be profitable can take more than simple local intelligence. GIS is a powerful spatial statistical and location management tool, which means it’s brilliant at dealing with comprehensive data such as interaction between demographic census and household purchasing behavior. GIS has already proven it’s ability to help in site decision making as well, especially in the US, with brands like Starbucks, Blockbuster, Sears using census data, and GIS applications to help them understand what characteristic of people buy their products and services and how to better approach these consumers.
Some retailers need to deliver localized advertising, and banks need to establish credit card applications in kiosks. Using GIS with rich points of interest, campaigns can be assessed as to whether or not they meet certain geographic and demographic criteria and can be scored according to the corresponding potential. Take bank appraisals as example, after suffering a flooding disaster, GIS application software is able to mark that disaster area on map instantly, so that when a customer from that area applies for property appraisal, front desk dealers are able to deliver quick responses and drop the property values through their systems in a matter of just a few seconds.
4 – Performance Management and Evaluation
Evaluating a branch simply by checking its revenue is not the most effective solution, because finance point of view might miss some impacts that could not showing on the number. Each branch should have its unique KPI. For example, if a site is in the right location but surrounding are many competitors and close to other branches, this site’s revenue will not reach expected target. GIS could help by applying a model to estimate market share, capture the amount of households, and the impact of competitors and cannibalization.
By analyzing the location patterns of acquisition candidates, foreign banks can determine the best geographic coverage in relation to its branch networks. Foreign banks in most countries are suffering from some sort of license issues; therefore, it may be ideal that some local bank branches are distributed through similar optimization blue prints. GIS can help decide which candidates are the best buy and simulate grown up assessments after mergers.
Location decisions are said to be the most fundamental decisions in retail and banking because they are directly connected to their ability to deliver the right products to the right customers at the right time. GIS helps retailers and banks make these strategic business plans, understand customers, analyze competitors, and evaluate current market potential.