STI: PopStats 2016 Research Conference Report
Read highlights from the 2016 STI: PopStats Research Conference sessions. This report provides an overview of the event's 13 information-packed sessions delivered by PopStats users, partners, and team members.
From introducing innovative new data sources to the traditional deep dive into STI: PopStats and STI: LandScape methodologies, the 11th annual STI: PopStats Research Conference covered a wide swath of research territory. Over 110 attendees from major U.S. retailers, restaurants, and real estate firms gained new insights on innovations in mobile data, site selection modeling, customer opinion surveys, store cannibalization, trade area research, real estate scoring, developing market strategies, municipality growth strategies, and the top U.S. growth markets in 2015. Leading-edge insights revealed this year helped the PopStats Conference maintain its tradition of being one of the best places to learn about the impact of data on a wide range of business decisions - from where to open new stores, to testing new store concepts, to optimizing cannibalization. What's more, the conference, held in Austin's new downtown Marriott, provided attendees with easy access to the vibrant (and booming) downtown scene in one of America's consistently fastest-growing markets.
Feedback from Conference Attendees!
Every year, the feedback from PopStats Conference attendees helps us understand how we performed. We're proud to say that we receive a lot of great feedback this year, including many high scores. Here are a few highlights from our attendees:
Highlights from attendee comments about sessions:
How would you rate this conference compared to other conferences of this type?
What was the single best idea you gained that will help you in your job?
What was the single most important factor/issue that influenced your decision to attend this conference?
What new topics did you hear about this week that you plan to investigate further?
This Conference Report provides an overview of the 2016 Research Conference, including synopses of all the sessions. This Report provides a review for this year's attendees, as well as an overview for those who could not attend the event.
TABLE OF CONTENTS
Mon. April 4, 2016
SESSION 1 - Predicting Store Performance without Sales Data, Chris Hathaway, AggData
Tue. April 5, 2016
SESSION 1 - Top Growth Markets for 2015, Robert Welch, STI
Wed. April 6, 2016
Monday, April 4, 2016
SESSION 1 - Predicting Store Performance without Sales Data
Presenter - Chris Hathaway, Founder & CEO, AggData
"Data hungry." That's how Chris defined some of his customers. Once they start using data, they want more. He strives to give it to him - even data not normally in his data product offering, which is comprised of data he aggregates online. He builds custom databases of free online data based on his clients' needs. A good example is store sales estimate data. However, it's not exactly something that companies just post online. So he came up with a way to make educated predictions of store performance in a chain relative to other stores by analyzing the companies' store openings and closings history. For example, if 85 percent of the stores open where household incomes are above $30,000, he assumed other stores will also perform well in those income levels. He started with two assumptions:
After overcoming several issues, such as store numbers missing, changing data, inconsistencies, and holes in the data, using machine data aggregators and a Bayesian model, he collected enough data to test his hypothesis with the help of college students. He discovered wide and interesting trends based on demographic and income changes in locations - and proved his methodology worked.
SESSION 2 - Real Estate Scoring with "The Delhaize Situs Model,"
Presenter - Christian Ormond, Director of Site Location, Delhaize Group
Christian started his talk with his favorite quote from Randall's found Robert Onstead: "You pay for a good site one day. You pay for a bad site everyday." But what is a good site? While working for Delhaize Group, a Belgian international food corporations that include Food Lion, Christian made it his mission to not only find out, but also to educate others in the company about what specific kinds of real estate is required to choose sites for conventional supermarkets. "We were dealing with people who want to open stores, but who never dealt with real estate before. We had to help them understand how to find good sites before making $20 million investments." To get started, the site research department first broke down all the components involved when rating site locations. "We put everything important into models so we could replicate our intuition mathematically," he said. Key to the process was developing a common-language real estate scoring model, called Situs, to rate existing and new locations as A, B, C, or D. This step determined the real estate quality for new locations and properly allocated capital to existing stores. They determine A, B, C, and D store grades by assessing:
To ensure accuracy, Delhaize processed its 1,200 locations, comprised of several different chains, through the model. The company uses this model for all of its site decisions - including capital efficiency for remodels, evaluation of relocations, lease renewals, and new store forecasting.
SESSION 3 - Trade Areas from a QSR Perspective - What's Old and New, What's Been Tried and True
Presenter - Mike Sawyer, Director of Market Planning, CKE Restaurants
The magic formula for trade area analysis at CKE (Carl's Jr. and Hardee's) is this: Sales = Reach x Visitor Frequency x Average Check. Mike shared this with attendees at the start of his talk on how the QSR views trade areas in market research. "It's powerful in helping us consistently define trade areas. It's a quantitative component that drives our sales, particularly, because we know that sixty percent of customers consistently come from two-mile trade areas," Mike said, before launching into a review of trade area analysis.
CKE uses trade area analytics for customer profiling and target marketing, in particular:
Two broad definitions of trade areas are important in the QSR:
Further, he shared three definitions of trade area styles:
Mike also mentioned a concept important to CKE's trade area analysis: Settlement Context. "This is important because it's not just the raw distance people travel from urban and rural areas, but also their traveling mindset. For example, if they live in a rural area, they will likely combine destinations into a single trip."
SESSION 4 - 7 Steps to Improve Site Selection
Presenter - Ross Beaton, Senior Director, Rent-A-Center
In the past, real estate decisions at Rent-A-Center were made by operations managers based on existing store performance and local knowledge. However, this approach occasionally resulted in new store development in over-penetrated markets, inadequate return on investment, and premature lease termination. So, in 2013, Rent-A-Center created a new seven-step market planning process to make better data-driven decisions on real estate. "We have a limited amount of money, so we have to carefully consider several issues," noted Ross. "From throwing a dart on map to actually getting site approval, we now sequentially execute seven models when making location decisions." The process has proven to be a success. In a blind analysis of 68 recent new store openings, stores approved by the new process delivered a 50% higher Total Revenue at Month 12 than stores that were rejected.
SESSION 5 - Economic Impact of Retail for a Municipality Public Sector vs. Private Sector
Presenter - Lacy Beasley, President and COO, Retail Strategies LLC
"How do you make data sexy to a municipality?" That's the challenge facing Retail Strategies, which was formed to help cities take a comprehensive approach to retail recruitment. The company conducts market research for municipalities and also acts as a matchmaker between locations and retail businesses. "Essentially we play matchmaker," said Lacy. "More municipalities are looking at economic development than ever before. Today, more than ever, they recognize that retail establishments and restaurants create a substantial economic impact in a municipality through attracting desired businesses, boosting tax collections, creating new jobs, and improving the overall quality of life of communities. Basically, they like the retail opportunities and the jobs that come with it."
But how do municipalities analyze retail recruitment opportunities, especially since they tend to have tunnel vision and don't know how to speak that language? In her presentation, Lacy highlighted the advantages and challenges of relying on either too much or too little data for developing long-term municipal real estate strategies. "Cities love graphics, including infographics," she shared. "The right data and graphics provide information and focus to make wins for communities." Retail Strategies research steps include:
Tuesday, April 5, 2016
SESSION 1 - Top Growth Markets for 2016
Presenter - Robert Welch, President, STI
Robert led off the second day of the conference with his annual presentation on the top growth markets across the U.S. This annual presentation highlights those market areas that have shown strong growth in the past two years. This is always a favorite session - particularly since the research also shows top market growth since he started the research 10 years ago, because companies can make year-to-year comparisons. Robert related this annual review to the previous Top Growth Market presentations and compared and contrasted those markets.
Robert uses the same methodology each year to create the report - which also makes it a valuable tool for year-to-year comparisons. The criteria used to create the list includes areas that: (1) have an initial market size of at least 60,000; (2) have a minimum per annum growth rate of 2%; (3) have a minimum growth rate of 8,500 people; and (4) experienced significant growth for at least two years. Robert uses PopStats data for the analysis.
This year, 27 markets made the Top Growth Market Report. The top 10 are:
SESSION 2 - Role of Customer Opinion in Research
Presenter - Danielle Yanskey, Managing Partner, ROIC Analytics
"Research is always about the piece you don't know," stated Danielle at the start of her presentation. "We spend a lot of time analyzing markets to try and make better business decisions," including: Who? How many? What? Where? Where else?
However, there is something that traditional data insights cannot tell you about your customers: WHY they do what they do? ROIC began wanting to understand the why, because: "Necessity is the mother of invention," said Danielle. "Understanding why became essential for us and our clients. We discovered that you can ask a whole world of questions about how customers feel about their shopping habits and they will tell you." This was proven to be true when ROIC began conducting more robust customer questionnaires via 15-minute customer surveys. They got answers to questions about store quality, variety, competition, pricing, and in-store advertising.
What they found from well-constructed customer opinion surveys involving consumers' behaviors, opinions, and preferences included insight on the entire store lifecycle - planning, opening, growth, and decline. Store insights that can be gained from customer surveys include:
SESSION 3 - Understanding Mobile Data
Presenter - Andy Moncla, COO, B.I. Spatial and Doug Shaddle, Director of Data Sales, UberMedia
Today we all use our phones more than any other device. It surpasses the time we spend on TV, radio, and print. In fact, growth is compounding at rates of 11% for all devices and 40% for mobile. Naturally, this is changing the way companies spend ad dollars. "It's important to us, because it's how we get our data," said Doug. UberMedia should know. The company tracks accurate mobile GPS data on over 270 million active devices in the U.S. (nearly 600 worldwide), extracting over 1,000 unique data points per device - including social data, interest signals, location history, and intent cues. This totals to a daily collection of 12 billion data points.
Doug explained how he accurately defines their own and competitors' trade areas, analyzes potential and actual cannibalization, and finally gets accurate insight on daytime population density. In particular, the company's UberRetail data tracks consumers' Path to Purchase for companies in automotive, hospitality, QSR, and retail industries to use in three ways:
Andy demonstrated how the Mobile Location Data-based trade areas, coupled with PopStats demographics, fit easily into Tableau - allowing easy dissemination and use of 100 million points of consumer and market-based insight.
SESSION 4 - Developing Market Strategies Using an Analytical Approach
Presenter - Brian Strickland, Director of Market Analytics and Systems, Signet Jewelers Ltd.
Brian presented a discussion on his self-created analytical approach to develop comprehensive market strategies focused on portfolio management, new store growth, and market entry for Signet Jewelers. He noted that these strategies are also used to drive non-real estate related initiatives, including marketing programs, store operation reviews, and financial reporting. Signet Jewelers is the largest specialty jewelry retailer in the US, UK and Canada, representing brands such as brands of Kay, Jared, and Zales.
Of the many insights Brian shared was his Nine-Box Matrix, which he created by borrowing from other disciplines and applying it to real estate strategy development. He uses the matrix to evaluate current performance in markets while looking for opportunities to build out. The seven steps are:
SESSION 5 - Cannibalization and Sales Accretion - How White Castle Measures, Uses and Pitfalls
Presenter - Jim Smith, Location Research Supervisor, White Castle
Jim provided attendees with a comprehensive overview of market research conducted in America's first fast-food hamburger chain. He discussed sales patterns for stores and groups, and how the company uses this data to assess cannibalization. He also overviewed cannibalization's close cousin accretion, which is what happens to sales of stores when you close a unit either temporary or permanent.
To identify cannibalization risks, Jim starts with the company's sales data calculation: Sales = Mix/Volume + Pricing + Discounts + Capacity. Capacity is the number of days a store is open or closed due to remodels, replacements, and new franchises. Sales without capacity are viewed as "real sales." Jim uses percent of sales by region as the baseline for charting cannibalization, since all products, pricing, and discounting are regionally based. From there, he finds the difference between the baseline in a region and the projected sales of a store, in other words, what the store should have done had if they had not put in new store nearby. "It's the one to two percent difference that can really help us understand the cannibalization of sales," noted Jim.
He minimizes noise in the data, such as false indicators, through the following steps:
Other departments use the cannibalization data, including store management, capital expenditures, compensation, and accounting. The result is smarter decisions throughout the corporation.
SESSION 6 - PopStats in Action
Presenter - Robert Welch, President, STI
"I didn't know PopStats had that data!" Robert hears this comment more often than you would probably guess. The product is so jam-packed with valuable data, that many companies overlook some of the specialty datasets and applications. Robert demonstrated a variety of research techniques and PopStats data fields that are included with every release of PopStats, but are somehow overlooked by many users.
In this year's PopStats in Action presentation, Robert shared insights on over one dozen PopStats techniques and datasets including these:
Wednesday, April 6, 2016
SESSION 1 - STI: PopStats Methodology
Presenter - Jeremy Setty, STI
For the first time ever, Robert passed the torch of delivering this annual presentation to his newest employee: Jeremy Setty. Based on the positive feedback, he did an excellent job of getting into the nitty-gritty of the STI: PopStats' methodology, including the five-year forecasts, the 10-year projections, and PopStats Expected Value Index. Regarding the methodology, Jeremy explained that the PopStats estimates are calculated on multiple computers working together in a pseudo-parallel processing manner, in a self-correcting artificial intelligence modeling system that learns from itself.
Here is a brief description of the PopStats' methodology. Four models comprise the model:
The PopStats methodology includes automated processes for overcoming any and all anomalies present in the data, including ZIP+4 inaccuracies, data smoothing issues, conversions (lofts), and overrides. If a client has a question about PopStats' estimates, Robert or a member of his team will research the issue. The client should first gather as much detail as possible, include any third-party evidence that supports his or her position, and be patient during the evaluation process. The issue will be verified, and the underlying data and soft sources will be checked. Finally, STI will report back to the client in a timely manner.
SESSION 2 - STI: LandScape Methodology
Presenter - Robert Welch, STI
Robert added an in-depth discussion of STI: LandScape's methodology this year, beginning with an overview of the four reasons that neighborhood segments consistently form across the country 80 percent of the time:
Neighborhood segmentation works because the segments change slowly. But one weakness is that while the demographics may indicate a specific consumer type, such as "married with children," the attitudes of the residents may be different that what is expected. For example, some parents may raise their children according to an attitude of ensuring they are always dressed in the latest fashions. Meanwhile, other parents' attitudes could be that "our children will just outgrow their clothing, so we're just going to purchase discount items." LandScape's ten social and lifestyle indicators add a new dimension, and a way to see these attitudinal differences, to the traditional breakdown by demographics.
STI: PopStats Research Conference
ICSC RECon 2017