From Certainty to Precision: Choosing the Right Location Strategy Method for Retail Success

When it comes to making data-driven location decisions, there’s no one-size-fits-all solution. Different scenarios call for different levels of detail and sophistication. At h3hex, we offer two powerful approaches to help retailers make smarter, more confident decisions: the 'certainty funnel' method and complex machine-learning sales forecast models. Both deliver exceptional value, but understanding when and for whom each method works best is key to unlocking their full potential.

The Certainty Funnel: Prioritising What Matters Most

Retailers face a constant challenge: narrowing down a long list of potential sites to identify the most promising ones. That’s where the 'certainty funnel' comes in—a methodical approach that prioritises the factors most likely to impact revenue and profit.

How It Works

The funnel uses six key dimensions—footfall dynamics, consumer demographics, spend dynamics, location composition, brand affinity, and occupancy costs—cumulatively. Starting with the highest-impact factor, each stage filters out less suitable options, focusing resources only on the sites most likely to deliver.

The Benefits:

1. Efficiency: Retailers save time and money by quickly eliminating poor-fit locations without overanalysing every detail.

2. Actionable Insights: The process highlights critical factors driving store success, helping to refine site-selection strategies.

3. Customisation: The funnel adapts to a retailer’s unique priorities—whether it’s maximising footfall, serving specific customer segments, or controlling costs.

Example: Mid-Sized Fashion Retailer

A growing fashion brand with limited resources uses the certainty funnel to assess 50 potential sites. By starting with footfall dynamics and consumer demographics, they reduce the list to 10 high-potential options. Adding spend dynamics and brand affinity narrows it further to three sites, where more detailed assessments are conducted.

Result: The retailer launches two new stores that deliver a 20% revenue uplift within six months, all while spending 40% less on site analysis.

Complex Machine-Learning Sales Forecast Models: Precision Redefined

For retailers with high stakes and more data to work with, machine-learning sales forecast models offer unmatched accuracy. These models analyse a vast array of data points—both internal (sales history, product mix) and external (competition, weather patterns, mobility trends)—to predict revenue performance at a site-specific level.

The Benefits

1. Granular Insights: Machine learning provides precise revenue predictions, helping retailers make decisions with confidence.

2. Scenario Planning: Models can simulate how changes in factors like competition or footfall might impact performance.

3. Optimisation: By comparing hundreds of variables, machine learning identifies sites that align perfectly with a retailer’s growth strategy.

Example: National Grocery Chain

A national grocer uses a machine-learning model to evaluate locations for a new format targeting urban professionals. The model predicts revenue for each site, factoring in variables like daytime footfall, nearby competitors, and local spending habits.

Result: The chain opens five stores with an average revenue 18% above target, outperforming its traditional site-selection process by 25%.

When to Use Each Approach for Location Strategy Projects

• Certainty Funnel: Ideal for retailers looking to scale efficiently or when resources are limited. It’s particularly effective for early-stage site assessment, narrowing options before committing to detailed analysis.

• Machine-Learning Models: Best suited for high-stakes decisions, complex markets, or established retailers with extensive data to leverage. These models offer the precision needed for long-term strategic investments.

Why Not Both?

The beauty of these approaches lies in their complementarity. The certainty funnel is perfect for creating a shortlist, while machine-learning models can fine-tune the final decision. Together, they balance speed, cost-effectiveness, and precision, ensuring every location strategy decision is rooted in data-driven confidence.

At h3hex, we understand that every retailer’s journey is unique. Whether you need a streamlined process or cutting-edge forecasting, we have the expertise to guide you to the right solution. Let’s make your next decision your best one.