Geomarketing models in supermarket location strategies

• Main Authors: Amparo Baviera-Puig, Juan Buitrago-Vera, Carmen Escriba-Perez
• Format: Article
• Language: English
• Published: Vilnius Gediminas Technical University 2016-12-01
• Series: Journal of Business Economics and Management
• Subjects: geomarketing; retail location theory; geographic information systems (GIS); multiplicative competitive interaction model (MCI); business planning; trade area
• Online Access: https://journals.vgtu.lt/index.php/JBEM/article/view/2303

Choosing where to open a new outlet is a critical decision for retail firms. Building on the multiplicative competitive interaction model from retail location theory, this paper develops a geomarketing model that can be used to devise supermarket location strategies. First, attributes that explain a supermarket’s pull on consumers were determined. These attributes included objective (taken from databases and empirical observation) and subjective (based on managerial judgements) variables relating to the supermarket and its trade area. Then, geographic information system tools were used to analyse real data at a highly detailed level (road section). From a geomarketing viewpoint, the model shows that sociodemographic characteristics of the supermarket’s trade area affect firms’ location strategies. The paper also discusses improvements for calibrating and validating this model. Adding the spatial organization of supermarkets to the model yields a different consumer behaviour pattern. This geomarketing model can help managers to design supermarket location strategies according to shop features, competitors and environment, whilst estimating supermarket sales.