How Geographic Information Systems Work for Retailers   9 comments

How  Geographic Information Systems Work? GIS tools offer a way for analysts to work with enormous amounts of data in a very logical and structured way. These decision tools are designed to work with spatial data, which is data that pertains to latitude and longitude as well as elevations and road networks. The tools are typically used to present information back to the business as thematic maps, as compared to reports or spreadsheets. These spatial data sets vary in size but are typically very large, and include information from many varied sources. GIS tools provide a way of visualizing the data you are working with.

There are many different types of mapping tools, from those found on Internet sites to more advanced types like Google Maps and MapQuest, which can give road networks. The top GIS toolsets used globally are MapInfo and ESRI Arc GIS. General Electric, for one, has selected the tools from ESRI, which include ArcInfo and Arc GIS, among others. ESRI is one of the most advanced GIS solutions available on a global basis. There are ranges of complexity within each product, from simple mapping to topographical layered dissections and everything in between. GIS is an advanced tool, which requires special training, especially in how to present the best map to the business. When using these tools, it is very easy to overcomplicate the maps with too much information.

GIS Layers of Information: Building a Map, Layer by Layer: There is a set process to building a map in a GIS tool, which involves developing layers. Each layer has similar information, such as zip codes, road networks, boundary files, parks, rivers, and lakes. For example, layer 1 may have an outline of a state, layer 2 might be the zip codes in that state, layer 3 might be the roads, and finally layer 4 might be an overlay of the national parks. You may have experienced this while looking for a hotel online: The sites display maps and points that represent hotels and restaurants, as well as roads. As the layers are placed one on top of the other, the picture takes shape, with each layer representing a different level of data.

Retail and Location: For GIS tools to function, the locations and addresses are converted into latitudes and longitudes that represent precise points on a map. Using latitudes and longitudes, it is possible to calculate exact distances between two points on a map. With some advanced software, the actual drive time can also be defined. Before retailers can use many of the functions in GIS tools, they have to convert store addresses into mapping coordinates. This process is called geocoding, or batch geocoding if you are converting a large set of data. This simply means the GIS software converts addresses into geographic codes that can be read by the software. I provide a few examples of how GIS tools have been used as well as the types of data that is bought into GIS tools.

Many retailers do not have the resources to develop all the data points required to produce detailed maps, data such as road networks, competitive locations, rivers, and bridges. These points make a map more of a strategic tool, rather than just a nice graphic.

Retailers typically buy competitive location data from companies that sell retail location data. A retailer could buy data showing the locations of all of its competitor’s stores, including store size and the number of employees. With this information, the retailer could produce a map of all of its stores in relation to the competitor’s locations. This would be considered one layer.

Next, the retailer would buy population data, which is available in many forms from various sources. Most third-party sources for population data will group the data to some aggregate level such as block group, zip code, postal code, or carrier route before selling it. Population by postal code would be another layer.

Among the most sought after are household income levels and competitor sales. Sales estimates for retailers in mass merchandise, supercenter, and grocery stores are critical in estimating share of wallet and market share at the mapping location. Depending on the classification of trade (SIC code), other sources of data are available, such as National Purchase Diary for apparel retailers. Each of these would be a subsequent layer.

A varied level of road network data (including major roads like freeways and urban neighborhood roads) is available, depending on your country or region. Again, more layers.

Each of these data sources would be considered a separate layer that would be presented on a map produced by a GIS tool. As you can see, the level of complexity is compounded with each new layer added to the map.

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9 responses to “How Geographic Information Systems Work for Retailers

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