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Monday, March 05, 2018

AI Location Analysis

Since the beginning of optimization analytics, store location has been a classic application.  Every major chain uses it to consider the best location for new stores.   Now will it be superceded by including more data, more patterns and relationships, deeper considerations?  And how much better will that be than classic approaches?  And you can also ask, will location remain the most important consideration in a more brick-less retail world?

Is AI the key to finding the right location, location, location?
by Matthew Stern in Retailwire with further expert commentary.

The conventional wisdom is that being in the right location is critical to success in retail. As one Japanese convenience store pursues an expansion, it may be getting some non-human help to decide where its stores should go.

Convenience store chain Lawson is considering using artificial intelligence (AI) to determine where to place its new store locations, according to the Japan Times. The chain plans to use AI to collect marketing data, such as household distribution patterns and traffic volume, to determine a given store’s chances of success in an area. Generally, the chain makes such decisions based on information gathering and analysis of an area carried out by staff. The chain is the third largest convenience store chain in Japan with 13,000 locations; 7-Eleven is first with more than 20,000 stores.

Using AI to crunch the numbers on demographics or habits could lead to some interesting and unforeseen strategic maneuvers, depending on what data points the chain folds into the calculation. But passing on locations that the AI doesn’t recognize as being profitable may have pitfalls, potentially ruling out otherwise good locations with extenuating factors that a human would recognize but an AI would overlook. ... "  

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