Research Question
According to the researchers, the retail distribution industry faces a hard time as the prevailing environment witnesses constantly increasing competition. In this landscape, the pursuit for a suitable location strategy can possibly become a distinguishing and competitive feature. While theoretically the growing level of significance is put on geography due to its critical part in comprehending a business success, this is not the practical case. Therefore, the article outlines a specific process designed to specifically identify new locations of business.
The research had two key objectives. The first one was to utilize statistical data along with spatial elements for the identification of competition and demand. Because of combining the spatial and statistical elements in the identification procedure, the two concepts were denoted as geo-competition and geo-demand. The second goal of the research was to identify new locations for business establishments through joint geo-competition and geo-demand analysis. To accomplish this, the researchers analyzed the commercial distribution industry of goods that are regularly bought in the Murcia City of Spain.
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Methodology
The research used three different methods that are supported by GIS. The first one was geo-demand analysis, which was carried out to detect the consumers of a good and service in a digital map. Also, competition was identified on a digital map since it is among the key aspects to put into consideration while defining a new store’s location. Lastly, the researchers defined the possible areas for new stores based on the two previous methods performed.
The research was performed in Murcia City, and the commercial distribution industry of regularly bought commodities was analyzed. The population of the city was identified 443,203 residents per each of the 386 census tracts. The researchers also determined the city to have 23 different chains with a total of 100 supermarkets.
The geo-demand analysis was conducted in two steps: by calculating the total housing units in each city block; and estimating the ordinary sum of individuals in every city block. Conversely, the geo-competition analysis was performed by determining the competition, finding rivals on a digital map, and establishing their commercial zones. Also, the researchers performed kernel density estimation.
Findings
A major objective of geo-marketing is to identify the likely locality of the potential business customers. From the geo-demand analysis and after estimating the sum of inhabitants in each household in every census tract, a population density map of the research area was produced. The map showed that the high peaks coincided with a population concentration, thus the higher the number of persons in a particular point, the higher the peak.
Further, the researchers state that competition is among the major factors to consider while determining a new store’s site. Thus, they needed to perform a comprehensive analysis to identify geo-competition in Murcia City, visually and quantitatively. Regions with a greater retail space were then identified. These regions are the ones having a trade region of certain establishment. Likewise, the zones with a low commercial offer or retail space were also determined. The map depicted a higher saturation at the city center since this is the region that has many trade zones of various stores that are overlapping.
Weakness
The study aimed at developing a process that helps in defining the locality approach for retailers. As a result, the researchers used GIS tools as a method to exploit spatial and alphanumeric databases from the geo-marketing perspective. However, the limitation of the study is that is the digital maps produced from the geo-competition and geo-demand analysis only show the density of how the demand for a good and service is spread across the city. The GIS tools cannot tell the exact number of businesses competition in the city of Murcia, but just the competition accumulation and demand saturation.
Reference
Roig-Tierno, N., Baviera-Puig, A., & Buitrago-Vera, J. (2013). Business opportunities analysis using GIS: the retail distribution sector. Global Business Perspectives , 1 (3), 226-238.
