Competitive Impact on Store-Level Sales: The Interactive Effect of Population Density (Residential and Employment) and Competitor Type on Store-Level Sales

Susan Haynie, Demographic Consulting, Inc.
Rod Brown, Dechert-Hampe & Co.

Leading retailers are always looking for better predictions of store sales performance. Analysis of the retail competitive market improves understanding of sales patterns. Geo-demographic approaches can be augmented by examining additional predictive factors, such as spatial distribution of direct competition, density of residential population, and the business environment (persons employed in the area). Rather than a direct inverse relationship between number of competitors and sales, the analysis showed that the “types” of competition around a store had an influence on category sales. Further, the competitors with the most impact may not have been considered by the retailer to be a major competitive threat. Stores can be clustered based on level and type of competitive impact. Such analyses can provide the impetus for major strategic shifts, including product pricing and promotions, increased focus on specific consumer segments, changes in merchandising configurations, and adjusted assortment and inventory levels.