This article demonstrates how optimization and simulation techniques can be adopted in retail store sales prediction and micro-competition analysis. Based on GIS platform, we develop a more elaborate analysis framework than traditional gravity model. Simulation technique provides the means of directly evaluating the impact of these factors. Besides the sales prediction of new stores, this framework can also provide an explicit estimate of the impact of new stores on existing competing stores, which is of more value for new site evaluation work of business development people. Real case has proved the effectiveness of the framework.
In our framework, we deal with the stores in the same way and ignore their differences. However, multiple factors, including visibility, store size, service level, environment, etc. can influence customers’ behavior greatly. Therefore, how to build a quantitative model to evaluate the stores’ influence on the customers will be an interesting work.
In current framework, we perform the sales prediction on given candidate sites of new stores. In real case, how to select those candidate sites is also a complex analysis work. Therefore, another interesting extension of the framework would be incorporating sales prediction into automated site location.