The client (a big retailer) is looking at ways to implement a new approach to retail network expansion (opening new stores) that is focused on top-down planning of the geography and structure of new store openings.
The Customer needs a versatile tool that will allow him to simulate possibilities for the company's expansion in order to make strategic decisions.
Develop a tool according to the Customer's requirements.
Provide calculation of expansion scenarios.
Transfer the tool to business users.
A flexible expansion model has been developed based on the Customer's methodology, which allows forecasting the main indicators of expansion results in scenario mode (in the form of dynamic reports):
- the maximum number of stores to open and their geographic location, provided that repayment conditions and priority for opening are met;
- estimated projected market share (global and intra-city), taking into consideration sales cannibalization;
- sales and profit forecasts, as well as the requirement for growth capital expenditures.
A variety of other features have also been incorporated in accordance with the Customer's wishes:
- sophisticated mechanics of revenue cannibalization accounting when establishing new stores;
- functional calculation of new store margin EBITDA in relation to turnover prediction;
- the capacity to forecast future shop income based on real data from existing stores in the city and nearby cities;
- accounting and exclusion from the model of cities where the Customer's shops are now absent;
- the function of accounting for limits on available sites for new stores;
- the function of artificially restricting the overall number of new stores by selecting the most efficient opening possibilities.
The model has been transferred to business users: discussions and consultations about the model's transfer have taken place, and instructions for using the model have been written and distributed.
The customer received a platform that helps them to make data-driven strategic expansion choices. Expansion scenarios are computed using the model in order to build a company's medium-term development plan.
Because of the tool's versatility, the Customer will be able to make the necessary adjustments to the model in the case of a change in methodology - trained users will be able to do so without the need for third-party consultants.