GfK GeoMarketing
Full speed ahead on expansion course
The furniture discounter POCO-Domäne has been expanding at an impressively rapid pace in recent years. The company has gone from a mid-sized regional business to a nationwide company thanks to a series of take-overs and the establishment of new branch locations. POCO has been using the services of GfK GeoMarketing for the past five years for planning and evaluating potential new locations.
As expressed by its slogan "good living for less money", POCO-Domäne offers its customers furniture at discounted prices. Created through the merging of POCO, Domäne and Möbelix in 2008, POCO-Domäne Holding is based in the German federal state of North Rhine-Westphalia in Lower Saxony, where it has a particularly dense network of furniture markets. In the meantime, the company has also increased its presence in the federal states of Baden-Württemberg, Bavaria and the Hamburg and Berlin metropolitan areas. Today POCO-Domäne is represented in all of Germany's federal states and continues to expand its network. With the opening of the fourth furniture market in Monheim in the beginning of September, the company now has a total of 88 locations.
Establishing new retail branch locations poses significant challenges. Perhaps contrary to expectations, financing and competitive pressures are not the greatest obstacles. As recently confirmed by a survey carried out by Hahn Retail Real Estate Reports (see picture) among heads of expansion divisions in Germany, planning permission issues and a lack of suit-able locations indisputably constitute the greatest challenges.
Jürgen Hildebrandt, head of expansion at POCO-Domäne, knows these challenges all too well. He works to find suitable, planning-approved locations for POCO-Domäne on a daily basis. Responsible for this aspect of the business since 2006, Hildebrandt has contributed toward the transformation of a mid-sized regional company into a nationally active furniture discounter. Four new branch locations this year can be attributed to his efforts alone.
It's a long road from the identification of possible target regions and the pinpointing of suitable locations to receiving approval and then opening an actual site. POCO-Domäne relies on the expertise of GfK GeoMarketing throughout this process. "We regularly receive offers on existing properties, planned construction projects and available plots," explains Hildebrandt. "We intensively evaluate the objects that meet our formal criteria - for example, our size requirements. As part of this process, we regularly consult the expertise of GfK GeoMarketing."
The consultancy is tailored to the unique situation of each location. A frequent task is the carrying out of a location and market analysis in asso-ciation with POCO-Domäne. This kind of analysis involves assessing whether a given location has the potential for sustainable success.
The analysis entails both a micro- and macrogeographic evaluation of the location. The microgeographic analysis involves going on-site to determine certain parameters, such as the location's visibility from key transport routes, accessibility, space for parking, surroundings, etc. In the case of an existing property, the structure and condition of the object itself obviously play a central role. In terms of the macrogeographic analysis, GfK's comprehensive pool of market data is used in order to determine the potential catchment area and the number of inhabitants it encompasses. A general qualitative examination of the competition is also carried out as part of this process.
All of these factors are used to determine the expected level of target turn-over, which helps POCO decide for or against the location in question. "GfK GeoMarketing's location studies have certainly proven their merit to us," says Hildebrandt. "We need clear and insightful evaluations of all relevant location factors, illustrated, where necessary, by images, graphics and maps. This type of study has also proven its value with regard to our internal communications."
However, in some cases, a turnover evaluation of a particular location is not sufficient. For example, additional efforts are needed in the case of completely new locations for which planning permission must be obtained. In these instances, a retailer must prove to the public authorities that its construction plans are compatible with the city's zoning ordinances and, in some cases, a specific retail concept. In other words, public authorities want to ensure that a new construction will not negatively impact the city's urban structure, centralized shopping area and existing retailers over the long-term. GfK GeoMarketing carries out so-called impact analyses in these situations. These analyses entail evaluating the relevant competitors in the city and neighboring municipalities.
In the case of POCO-Domäne, this means determining not only the details of existing furniture stores in the region (including their total sales area) through on-site evaluations, but also all retailers who offer peripheral product lines such as home textiles. In addition to furniture stores, this includes textile suppliers and department stores. These studies represent a logistical challenge, which means it's even more important that they be efficient and absolutely reliable from a legal standpoint. GfK GeoMarketing is one the few companies that carries out these tasks solely with its own personnel. Thanks to a comprehensive review of the company's own datasets relevant to the project in question, a thorough, objective evaluation of the competitive situation in the region is provided within a short time. Finally, on the basis of this information, a turnover switching value is determined, which serves as an indicator of how the distribution of turnover will likely be affected by the new location. The impact analysis serves as a basis for an objective discussion between public authority representatives and the company regarding the pros and cons of the proposed business site. "Impact analyses are an excellent example of GfK GeoMarketing's ability to provide competent, reliable results," says Hildebrandt. "As we plan to continue expanding for the foreseeable future through the addition of new locations, we will keep drawing on the expertise of GfK GeoMarketing."
Contact
Jürgen Hildebrandt
juergen.hildebrandt(at)poco.de
www.poco-domaene.de