The physics of a good store location

The physics of a good store location

Summary: A French physicist has applied methods used to study atomic interactions for another task: "help business owners find the best places to locate their stores." Pablo Jensen has used his method for the city of Lyon and is now developing software with the local Chamber of Commerce to help future business owners. Read more...

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TOPICS: Networking
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In "Atomic Physics Predicts Successful Store Location, LiveScience reports that a French physicist has applied methods used to study atomic interactions for another task: "help business owners find the best places to locate their stores." Pablo Jensen has used his method for the city of Lyon and is now developing software with the local Chamber of Commerce to help future business owners. But read more...

Here are short excerpts from the LiveScience article.

Researcher Pablo Jensen, a computational physicist at the Ecole Normale Supérieure of Lyon, France, studied the locations of businesses in that city. His goal was to determine which varieties of stores seem to draw or drive away other types of stores, much as how different kinds of atoms can attract or repel each other due to their electric and magnetic properties.
To see how well one kind of business, such as furniture stores, attracted or repelled other types of stores, such as delis or hairdressers, Jensen looked at each kind of store and then examined what other sorts of businesses were or were not found within a 300-foot radius, which he judged as a typical distance a customer accepts to walk to visit different stores. He then plugged those numbers into calculations that are normally used to study atomic interactions.

As writes Pablo Jensen, "walking in any big city reveals the extreme diversity of retail store location patterns." Below is a map of Lyon showing the location of all retail stores, with separate icons for shoe stores, furniture dealers and drugstores. (Credit: Pablo Jensen)

Map of Lyon showing the location of all retail stores

Below is another map showing in red the best locations to open a bakery in Lyon (Credit: Pablo Jensen). Here is a link to a larger version of this map.

Best locations to open a bakery in Lyon

For more information about this project, the research work has been published by the Physical Review E journal under the title "Network-based predictions of retail store commercial categories and optimal locations" (Volume 74, Number 3, Article 035101, September 2006). Here is a link to the abstract, where Jensen explains his method.

I study the spatial organization of retail commercial activities. These are organized in a network comprising "antilinks," i.e., links of negative weight. From pure location data, network analysis leads to a community structure that closely follows the commercial classification of the U.S. Department of Labor. The interaction network allows one to build a "quality" index of optimal location niches for stores, which has been empirically tested.

You also can read a preview of the full paper (PDF format, 5 pages, 677 KB), from which the top image has been extracted.

A question remains: would this method be valid in New York or Shanghai? According to Jensen, further research is necessary.

Sources: Charles Q. Choi, Special to LiveScience, September 27, 2006; and various websites

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Topic: Networking

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  • Deja Vu

    Sounds a bit reminiscent of something I was aware of in the UK in the 80s. A friend of mine was working on a system to predict the profitability of potential locations for a particular store chain.

    The technique was to feed a wide selection of data (including profitability) regarding each existing store into a neural network. Then similar data for prospective locations were fed into the net, which estimated some number for revenue for the new store before the property was built.

    As I recall, the parameters in this instance were not limited to other businesses, but included many others: proximity to major highways, schools, residential areas, and railroads; local tax rates; etc. It may seem odd that your department store's success is linked to its distance from a city park, but those were the sort of correlations found. The approach was basically, "taking everything into account, let's do what works for our best locations."

    This, of course, is only useful if you've already got the dozens of stores necessary to reveal meaningful correlations. Jensen's technique seems to be more generally useful for entrepeneurs. I could see a consultancy based around it, location scouting for new business owners.
    dave.leigh@...