Lucrative store locations pinpointed by new model

location based services

The old mantra about the three most important factors for a shop's success - location, location and location - has been borne out by a new mathematical model. It could help retailers pinpoint lucrative sites for their stores.

Physicist Pablo Jensen from the Ecole Normale Supérieure in Lyon, France, analysed location records for more than 8500 retail outlets in the city. He found that the shops formed clusters, with shops such as butchers and delicatessens in one group, for example, and laundromats and bookstores in another. Stores of the same group seemed to attract each other, while stores from different groups repelled each other.

Jensen then adapted a theory of magnetism to calculate a number, Q, for shops, based on the proximity of attractive and repellent businesses in the area. Q denotes the suitability of a site for a particular type of shop: the higher the number, the better the site.

To test its predictive powers, Jensen calculated Q for all the bakeries in Lyon in 2003 and 2005. During that period 19 bakeries shut down, and Jensen found their average Q was significantly lower than the average for all bakeries. "Bakeries that closed were generally in bad locations," says Jensen (Physical Review E, vol 74, p 035101). The Lyon Chamber of Commerce is using the model to