Location Planning: How an Effective Strategy Can Boost Your ROI​

Investing time and resources in location planning has evolved from a mere business approach to a strategic imperative for retailers. The difference between a prime spot and a less-than-ideal one can have a significant impact on your return on investment (ROI)
But how do we quantify the impact of an effective location planning strategy and its ROI?

Location Planning ROI

1. Location Planning and Site Selection: The Art of Picking the Best Spots

Before diving into the topic, let’s see what location planning and site selection refer to in the retail environment.

  • Location planning refers to the strategic process of selecting the best sites for business outlets. It relies on data, ranging from foot traffic and demographics to market trends and competition.

Location planning goes beyond simply choosing a spot and opening a store. It encompasses the analysis of new openings, impacts on existing outlets and long-term evolution plans, making it an integral part of your overall business strategy. 

  • Site selection, on the other hand, focuses on the specific piece of a property within the chosen location. This process includes analyzing the suitability of the site in terms of infrastructure, zoning regulations, environmental impact, and potential for future growth. 

2. Why an Effective Location Planning Makes the Difference

- Direct Impact on Sales and Profitability

Strategic site selection directly leads to higher foot traffic, optimal demographic matching, and competitive advantages, resulting in increased sales and revenue.

- Cost efficiency and Market Adaptation

Location planning enables cost savings, faster break-even points, and adaptation to market trends through data-driven decision-making. Location planning is not a one-time decision; it’s a continuous process that adapts to changing circumstances: markets evolve, demographics shift, and competition fluctuates.

- Reduced risks for brick-and-mortar investments

Picking the right spots for your investments can be tough, and it comes with a big chance of things not working out or wasting money. But if you plan carefully and use a strong process to pick sites based on studying the market well, you can lower these risks and make good location decisions.

👉 Location planning goes beyond choosing where to establish your business; it’s a crucial aspect of prudent risk management. It’s essential to understand that it’s not just an expense but a strategic investment in the core of your business’s success and stability.

3. KPIs to Measure the ROI of an Effective Location Planning

Measuring the effectiveness of location planning is crucial to assess whether your chosen sites are contributing positively to your business’s goals. Here are some key metrics and methods to measure the effectiveness of your location planning.

Sales and Revenue Growth

One of the most direct ways to see results of your location planning strategy is by evaluating the direct impact on sales volumes and revenue. Compare the performance of the new location to the performance of similar venues.

👉 You will need to take into account the direct environment (population, footfall, competition) to determine whether the new venues are really out-performing.

Market Share Growth and Penetration Rate

Track the growth of your store’s market share in the area. Has your business gained a larger share of the local market as a result of the new site? Understanding how you stack up against the competition will provide valuable insights into the success of your chosen location. This can be a crucial KPI for retail and service-oriented businesses.

Customer Acquisition and Retention

Track changes in customer acquisition, customer demographics, and customer retention rates compared to projections. Positive feedback and improved customer satisfaction scores can be indicative of success.

Cannibalisation and impact on other venues

Monitor the impact that a new venue may have on existing stores. Does your new store “steals” customers and sales from existing ones? 

Foot Traffic and Conversion Rates

Track foot traffic to the location and conversion rates (the percentage of visitors who make a purchase). Improvements in foot traffic and conversion rates can indicate a successful location selection.

Costs Savings

Consider any cost savings achieved as a result of location planning. For instance, if the selected location reduces transportation costs or provides better access to suppliers, calculate the actual cost savings over time.

Break-Even Point

Determine how long it takes for the store to reach the break-even point. This is the point at which the store’s revenue covers all initial investment and operating costs. An effective location planning strategy should lead to a quicker break-even period.

Brand Awareness

Assess whether the new location has contributed to increased brand awareness in the local market. This can be measured through brand recognition surveys and social media engagement metrics.

👉 Remember that measuring the effectiveness of location planning is an ongoing process. Regularly review these metrics and adjust your strategy as needed to ensure that your chosen location continues to contribute positively to your business’s success.

In conclusion

Effective location planning and site selection in retail are investments that require careful consideration and ongoing analysis. Measuring the ROI of these decisions is essential to ensure that your retail operations are not only sustainable but also profitable.

In the case of large expansion projects, it is common to allocate a significant portion, typically around 10-15%, of the total expansion budget to pure location planning. It can be even more for complex projects with legacy network optimization.

The revenues at stake justify allowing more resources to secure decision-making and optimize your retail strategy for maximum ROI. Remember, in the world of retail, location is not just a place on the map—it’s a strategic asset that can drive your business’s success. 

About Symaps
Symaps offers a complete solution for site selection, location planning, and expansion strategy. Our services cater to diverse industries, including retail, luxury, restaurants, car charging stations, and more. We empower businesses with precise, data-driven insights to make informed decisions regarding their brick-and-mortar investments.


Reach out to us if you need a tool to assist you in finding the best location for your business or analysing your footprint.

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