Gustoso Group, one of the fastest growing branded restaurant operators in Germany, is supporting the expansion of business with new location intelligence technology from specialist Targomo. This is helping the company to efficiently identify the best locations for each of its restaurant brands Cotidiano, Ciao Bella, Ruff’s Burger and Otto’s Burger. With the help of the TargomoLOOP platform, the gastronomy specialists are able to quickly analyse the potential of a possible new location to assess whether it is suited to the target audiences of its various brands.

“We were immediately won over by Targomo. The interactive tool allows us to assess potential locations much more quickly and efficiently,” explains Andreas Reitz, Director Development & Expansion of Gustoso Group. Following a successful trial period, the restaurant professionals are now using TargomoLOOP in their day to day work. In addition to efficient data analysis of a location’s potential, based on its competitive situation, demographics, purchasing power and footfall, the platform also enables the structured evaluation of points of interest. These provide information about the area’s characteristics and visitor attractions, which makes it easier to assess the value of footfall for the company’s own business.

Andreas Reitz’s team uses TargomoLOOP to assess every possible new location and understand its respective potential for the various restaurant brands operated by the group. For example, a location that proves unsuitable for better burger player Ruff’s Burger might well be a good fit for Italian concept Ciao Bella. The varied requirement profiles of the group’s individual restaurant brands, along with key performance metrics from existing locations, have been stored in TargomoLOOP in a way that makes it easy for the gastronomy experts to work interactively with the platform. This allows them to assess the locations’ potential in real time via the user interface without the need to create reports.

With Targomo, the Gustoso Group can now drive efficiency into its processes. “Previously, we entered all relevant data into a huge Excel spreadsheet,” reports Stefanie Langhans, Senior Finance Manager at Gustoso Group, “but over time it became so complex that detailed analyses for each potential location became too time-consuming.” With TargomoLOOP, Gustoso Group can now carry out much more detailed analyses and ensure that it only visits properties whose locations are economically viable for one or more of its restaurant brands. “Leveraging the platform, we can minimise existing uncertainties when making location decisions,” Stefanie Langhans is pleased to say.

The fact that TargomoLOOP also allows to very precisely forecast possible cannibalisation effects of potential new locations on existing restaurants is highlighted by the managers of Gustoso Group as a particular advantage. But the gastronomy professionals have even more plans for the platform: In the future, TargomoLOOP will also actively suggest locations that are likely to replicate the success of strongly performing existing restaurants.

The managers of Gustoso Group are quick to praise the cooperation with the Targomo team: “These are smart people who bring great competence to the table. The strong cooperation is very valuable for us,” says Andreas Reitz. For example, joint workshops between the companies highlighted the roles of competition and points of interest, allowing the location search criteria to be optimised. For the Gustoso Group team, Targomo has provided great support in finding the best locations for the 14 new restaurants planned for this year and thus in pursuing its expansion strategy.

About Gustoso Group

The Gustoso Group is an innovative and fast-growing gastronomy company based in Munich. Since its founding in 2015, the group has grown through organic and inorganic growth to around 75 locations across Germany. The group includes the brands Ciao Bella, Cotidiano, Ruff’s Burger and Otto’s Burger. The company’s declared goal is to become one of the leading multi-brand restaurant platforms for the most innovative and successful gastronomic concepts in Europe.

The old adage “by failing to prepare, you are preparing to fail” has never been more apt than when choosing your next retail location. With so many factors to consider, as well as the pandemic creating shifts in how people shop, and a host of other trends to take into consideration, doing your research is vital.

Start your research journey here, with the help of this list of mistakes to avoid when choosing a new retail location.

While it makes great economic sense to expand your bricks-and-mortar business into multiple locations, it’s important you watch out for ‘retail cannibalisation’.

In the first quarter of 2018, Starbucks – the popular coffee chain with a store on every corner – was suffering from market saturation. With so many stores available, and a burgeoning competitor market, its stock plummeted 11.38% at a time when the overall market was up 4.1%. As a result, it started shutting stores in the United States.

Of course, healthy competition is great for any business, but in the retail industry, cannibalisation occurs when branches of the same chain that are near each other end up competing with one another for the same business.

The same is also true of competitor businesses. If too many similar businesses are located in the same catchment area, customer loyalty and preference is going to favour one business over another. An oversupply of locations also leads to higher operational costs, as Starbucks found to its chagrin.

So before you decide for a location, check how your branches influence each other. A good technology solution lets users immediately see whether the new store would “steal” potential customers from existing shops in the same area and how many. They can also see how many customers they could potentially win from competing shops nearby, and how a competitor’s new location might impact the catchment area of their retail stores.

In 1920, American mathematician Harold Hotelling came up with a theory called Hotelling’s Model of Spatial Competition. His model shows that when competing for locations, every business wants the “central point” as it is the most strategic spot to be as close to as many customers as possible. But because every business has ultimately the same intention, stores become clustered around the same location and end up competing with one another.

Putting that theory into practice, Marc Smookler, a United States retail expert, conducted a study in Austin Texas in 2015. He concluded that CVS and Walgreens pharmacies were, on average, only 1.5kms apart, and Walmart and HEB (a grocery chain) were 1km apart.

So sometimes you’re drawn to an area because that’s where the market is. But you should also know who your competitors are, what they specialise in, what their USPs are and how your business is similar or different. And most of all: where they are located. Because this gives you the chance to identify “whitespots” with the highest market potential.  

We’re all familiar with the concept of the strip mall (in Germany they’re also known as Fachmarktzentren): an out-of-town shopping area characterised by a centralised parking area and a parade of shops or big box stores clustered together. Over time, and even during the pandemic, these areas have out-performed city centre locations.

According to JPMorgan, “The pandemic had a major impact on retailers in city centres heavily reliant on office workers and tourism. But service-oriented strip mall retailers in densely populated urban and suburban neighbourhoods performed well throughout 2020 and 2021. These properties have consistently performed well regardless of market conditions.”

This successful recipe stems from considering other nearby businesses not as potential competitors, but as opportunities to draw the right target market to the location.

Complementary businesses offer products that relate to or complement yours:  a pharmacy near a doctor’s office, a bar near a restaurant near a hotel, a sports shop near a gym, a pet supply store near a veterinarian, a cafe next to a bakery.

We recently interviewed a retail expansion manager who said “for my client who rents out deposit boxes to store people’s valuables, I analyzed how many banks are located around a potential new site”.

So if you are looking for the ideal location for your business, you should also analyse which other shops in the area complement your offer and are beneficial to your business.

Understanding how people travel to your store is vital. Are you in the middle of a city where parking is at a premium? Are you out of town and far away from public transport? Do customers have to pay to park near your store? Do you sell large, bulky items that require a car?

It’s important not to overestimate how many people will travel to your store by car, and consequently underestimate how many will use public transport or other forms of mobility.

A recent study in Berlin, Germany, discovered that retailers often make the mistake of overestimating the amount of people who travel by car when they go shopping.

The report, which surveyed 145 traders about how they thought customers got to their shops, and interviewed 2,019 shoppers on two shopping streets in Berlin, discovered that shop owners overestimated how far customers travel to visit their businesses.

“Over half (51.2%) of shoppers lived less than 1 kilometre from the shopping street. In contrast, traders on average estimated that only 12.6% of customers live within this distance.” The results appear to show a big discrepancy between the perception of traders about customers’ mobility patterns and the actual reality.

Furthermore, the study appeared to show that traders often misjudged how customers travelled to their shops, underestimating public transport and overestimating car use.

“While only 6.6% of shoppers travelled to the streets by car, on average traders estimated 21.6% of their customers use this mode; a discrepancy of 15%,” says the report. “Further they underestimate transit, pedestrian, and bicycle travel by 8.1%, 6.2% and 3% respectively.”

Before deciding on a location, analyse it for accessibility, considering different modes of transportation such as walking, biking, driving, and public transportation.

Foot traffic is one of the hallmarks of retail. At its most basic, it means the number of people walking past. It’s one of the key metrics for retailers, as the pedestrian activity near a shop influences sales volumes and increases the chance of spontaneous buying or “impulse purchases”.

So if you’re deciding on a location for your new business and benefit from spontaneous purchases or visits, you should take a closer look at this figure. But be careful: often a general figure is not enough. You should also consider whether there are fluctuations throughout the day and how foot traffic behaves on weekends compared to weekdays.

Furthermore, you should also check what causes the traffic. Are vehicle data included, or are only pedestrians counted? Just because a location has high frequency doesn’t mean that people have the time for a spontaneous visit to your store. Therefore, Foot Traffic should only count visitors who spend at least a certain amount of time in the area, not just passing through.

But while foot traffic is important, it’s not the only consideration. During the pandemic lockdowns, foot traffic in some areas went down significantly as people preferred to shop close to their homes because of travel restrictions. Suddenly, hyper-local shopping became popular.

Because of this, it’s crucial to understand the demographics nearby, what the average household size is and how many children live there children, for instance. If you really understand the catchment area, you’ll discover how many potential customers can reach your location. This can give you a good understanding of whether the site is attractive or not and whether it will appeal to your target customers.

As a business owner, you probably have a fair understanding of who your target customer is. But defining who they are and locating them is not so easy. What problem is your business trying to solve for them? What is the benefit of your product? Do you serve a particular niche market, and do you have enough potential customers in your catchment area? What other companies nearby offer the same or a similar product or service as you? According to Marketing Donut, “successful marketing relies on understanding your target market. Who are you selling to? Why should they buy your product? What do they stand to gain?”

In a blog on WordStream, the writer Dan Shewan, said: “If you run a small business, maybe you have an idea of your target market. However, a vague idea is not enough to compete in today’s ruthless business environment. Without detailed knowledge of your target market, you could be losing business to your competitors or missing out on opportunities to increase sales.”

Ultimately, the right location is the place where your target customer visits or lives. With powerful location intelligence, you can unlock the door to compelling insights that could be the difference between business success or failure. With TargomoLOOP, you can analyse data such as population age groups, household size, spending power and lots more to help you understand how you can find and reach your target group.

Finding the right retail location doesn’t happen by chance. With so many factors to consider, from location scouting to customer analysis, an expansion manager can be the driving force to find the perfect place.

As retail experts, expansion managers have the industry contacts, the expertise and the technology to help store owners make an informed decision about where to put their business, whether it’s their first shop or your next. They can also take care of all the contract negotiations, providing retailers with a seamless turn-key solution that works around their business’ needs.

To bring more light to the work of an expansion manager and find out how they discover the best retail locations for their clients, we spoke to Samuel Vogel, owner of retail and real estate consultancy The Bird.

“I work in the field of real estate search,” explains Samuel. “I’m scouting for the right retail objects. Additionally, I examine a building’s technical specifications. I make a full location analysis. I also take care of branch network expansion. Everything really, up until the handover of the keys.”

Samuel Vogel advises clients such as shopping mall manager Unibail-Rodamco-Westfield and safe deposit box company Trisor. He has worked for several other retailers, including VIU Eyewear and bakery chain Zeit für Brot.

For Samuel, knowing his client’s customers is key to helping them achieve their retail goals. “My first question is always ‘who is your customer’,” he says. To give us an example, Samuel mentions one of his clients, Trisor, who rents out deposit boxes to people who want to secure their valuables away from home.

“This service is about the feeling of security, because the service is deposit boxes. Therefore, locations should be reachable 24 hours a day and have good parking. Furthermore, you want to know where there is a high density of potential customers, what their incomes are and what kind of products they buy. This helps me to find the optimal locations,” says Samuel. “The more questions you ask about customers, the closer you get to identifying the optimal locations, and the more you map their needs, the easier it is to find the right location.”

What the retailer sells and how it sells it is another important factor, whether that’s a product or a service. Some companies, like jewellers, benefit from a premium façade to convey the feeling of luxury, whereas a fitness chain would benefit from a solid structure that can handle heavy gym equipment, while a restaurant would seek an acceptable level of sound insulation and air ventilation. In the case of Trisor, its security deposit boxes are very heavy, so Samuel needed a building that could handle this weight. Again, with Trisor, the front of the building has to convey a feeling of security if a customer is to trust placing gold bars or other valuables in there.

“A visit to the places is a decisive factor,” explains Samuel. “I have to see the building and develop a feeling for the place. An image in a brochure can be perfect, but if something near the place doesn’t match the brand and product, that building could go off the list.”

The customers’ needs and the brand’s image determine the requirements that a location should meet. Samuel uses this list to request real estate options from his network of property brokers, and make a preselection of suitable locations. When retail space could be a good match, he will always have a visit in person.

“One of the important tasks of an expansion manager is to clearly explain to the agency or owner who might not be familiar with the product, what we are looking for,” says Samuel. “The landlord wants a reliable tenant with long-term plans. It is therefore vital to give the landlord a good introduction to the retailer’s business. If they don’t understand the product, they won’t accept me as a tenant.”

Once Samuel receives the real estate offers, he will rank them in terms of best fit for the retailer based on their needs and of course their customers’.

Knowledge is power, and when it comes to retail, accurate geo-referenced information and location data is crucial, from demographics of potential customers to footfall, as Samuel explains. “Firstly, I take a macro perspective: I look at the whole country and cities that could be suitable for my client. If it is a new business setting up locations, I still have an ‘empty’ map, so to speak. The logical step is to look at urban areas and big cities and see where the biggest potential is. Secondly, after I have identified specific locations, I examine these places with location data to see whether that site truly is a good match for the retailer.

“With Trisor, for example, I analyzed how many banks are located around a potential new site, and more specifically, how many deposit boxes are likely to be on offer there. We can’t get exact figures about the number, but I can make an analysis to estimate supply and demand. To do this, I used Targomo’s technology.”

With Targomo, Samuel was able to see how many banks and gold shops were located in this area so that he could make a supply and demand analysis to see if there is a need for this service. “The exciting thing about Targomo’s analytics platform is that it allows me to combine external data with internal data,” he says. “The more location-referenced data I have in the platform, TargomoLOOP the more accurate the analysis becomes. The more I know about my business, the better I can position myself in the market. TargomoLOOP allows you to scientifically compare different locations based on data and evidence.”

FREE TRIAL: Learn how technology supports retailers with site selection and expansion in TargomoLOOP.

Luukas, what exactly is Huuva’s business model?

Huuva offers a turn-key service for restaurants that want to expand and grow their business. We manage delivery and takeaway-only kitchens which are powered by our own proprietary software and technology. Our partner restaurants pay us a commission fee, already including delivery and rent costs.

This sounds like a shared kitchen?

Partly. In general, the restaurant brands get their own sub-kitchen inside the larger venue. What is being shared is the dispatching part. Huuva provides a shift manager who helps the restaurants in the packaging and dispatching the food to the delivery couriers. This operation is supported by our technology.

Compared to other ghost kitchen companies, what is different about Huuva?

We work to make the food delivery industry more enjoyable, convenient, and profitable for all parties involved: consumers, restaurants, and the delivery partners. For consumers, we bring top restaurants to their favorite food delivery platform. When ordering on a platform – whether it’s UberEats, FoodPanda, or whatever – they are able to combine menu items from different restaurants into a single delivery. You can think of this like having a food court in your pocket. Also, our customers can rely on hot meals and excellent quality, as the kitchens are optimized for delivery. From the restaurant perspective, our model is a low-risk and low-cost way to grow. Huuva doesn’t demand any multi-year rental agreements, we do not require any heavy upfront renovations or other investment cost, and we take care of regulations and bureaucracy that comes with setting up a new kitchen. With us, restaurants can start cooking and serving new neighborhoods in a matter of days. With respect to delivery companies, we are able to improve their KPIs and add quality restaurant offering to their platforms.

When you say that your kitchens are optimized for delivery, what does that mean precisely?

Optimization starts already with site selection. We choose locations that support high volume delivery operations, as they are frequently visited by couriers on bikes and scooters. We also plan a layout that minimizes the number of steps people have to make inside the kitchen. Besides the physical aspects of the kitchen, our software helps the different brands to schedule their cooking under one roof, so that multi-brand orders are getting done at the right time. This way, the cooks don’t have to do any tedious cross-organizing.

How are the restaurants reacting?

Restaurants faced enormous challenges during Covid-19 and the lockdowns. Additionally, we see that consumer demands and trends are changing quickly, especially among younger generations in large cities. Restaurant owners also see that change. As with startups, many restaurant brands don’t live more than 5 years, so you need to innovate constantly and ideally stand out from the crowd. We see that cloud kitchen approach can help the ambitious restaurant owner in tackling all of these challenges and support them with rapid concept development and testing alongside getting most value out of their existing brands.

As head of expansion at Huuva, how do you decide where to move your business next?

We have very ambitious growth plans over the upcoming years. Naturally, we started in our headquarter country Finland, but are already expanding abroad. We want to be present in the fast-paced markets with enough volume in the delivery business already today and an exciting, lively food and restaurant scene. One of the best parts of our job is to learn and immerse ourselves in neighborhoods, city and country-specific consumer trends and plan how Huuva would fit there.

Can you give an example of how these trends differ geographically?

It’s crucial for us to find out how common food delivery is in the specific markets. In the Nordics, a consumer orders a meal delivery twice per month on average. As a contrast, in Greece, the average number is 15. And in Central Europe it’s something in between. And the consumption profiles can differ quite a lot. For example, Indian is super popular in London and the whole UK, it is not as popular in all of the Central European countries. But there are also differences from city to city and even from neighborhood to neighborhood.

 What is your strategy when entering new markets?

We have two approaches: The first one is bringing top quality restaurants to underserved neighborhoods. We believe that the trendiest and hottest restaurants shouldn’t be the privilege of city centers or certain hot spots, so we want to bring them to areas where we see customer demand which is not currently met with the existing restaurant supply. The second approach is to work in these city centers and hotspots by helping the restaurants there to separate their delivery business from their brick-and-mortar kitchen. When the dining hall is full, brick-and-mortar kitchens quickly reach their capacity limit, making them miss out on potential revenue.

 How do you assess the potential of new sites?

We do our own scientific location analysis with Targomo’s platform TargomoLOOP. It provides us with all the relevant sociodemographic data that is key to understanding different possible delivery zones. Combined with its analytics functionalities, the tool allows us to explore geographic areas that are new to us and objectively compare locations. The second step is to then evaluate how the prospective venue supports our layout and operational requirements.

 Where do you see the delivery market moving within the next few years?

McKinsey & Company released a topical and on-point analysis on the food delivery market in September 2021 which highlights the fact that the restaurant industry requires new business and operating models now and in the future. The cloud kitchen space has already seen different models, from virtual restaurant brands, optimizing the use of existing restaurant kitchen space to simple kitchen rental models. At Huuva, we see that you need to consider the challenges of all parties involved in the restaurant and food delivery industry to drive real, sustainable change and growth. Nothing else is certain than change and we are committed at Huuva to delight consumers daily and enable restaurants and food delivery companies to do sustainable business.

Thank you for the interview!

If you want to use TargomoLOOP to expans your location network or create delivery zones, learn more about the location intelligence platform or directly book your demo!

They look beautiful and can be incredibly powerful when added to interactive map applications: Isochrones. Whether you want to show which areas are within walking distance of an office building or analyze the accessibility of a school by public transportation, isochrones offer a quick and easy solution. In essence, they show how far you can travel from a certain starting point, and often the individual travel time segments are also color-coded for better clarity. Here we give a brief introduction to the different ways isochrones can be used.

Targomo offers a wide range of geospatial tools that can be used to perform powerful location-based analysis, visualize detailed statistics, and solve complex logistical problems. However, here we will focus on one of the simplest, but most useful and therefore most popular APIs: the Isochrone API. The Isochrone API is used to visualize reachable areas from a source or a group of sources as polygons. 

So what is an Isochrone? Merriam-Webster defines an isochron(e) as “a line on a chart connecting points at which an event occurs simultaneously or which represents the same time or time difference.”. The shapes returned by the Isochrone API represent this by connecting all the furthest reachable points in the routing network from the given sources into a polygon. We refer to these as “reachability polygons” or “isochrones”. The definition is somewhat broader in our case, as we can visualize both time and travel distance, and also provide the ability to define multiple sources and aggregate the resulting isochrones. 

This can be used in a variety of useful applications, all of which fall into one of the 3 following scenarios: 

Whenever you want to intuitively visualize the areas that can be reached from a starting point within a certain travel time or distance, isochrones offer a quick, easy and relatively simple solution. You can implement them in such a way that users can choose between car, bike, e-bike, walking and public transport.  

The travel mode is crucial, because the results will vary greatly. This is due to the underlying routing, which represents realistic travel scenarios:  When traveling by train, your journey is largely determined by the location and number of bus and subway stops. When traveling by car, speed limits, the road network and traffic lights determine how far you can travel. 

Since realistic routing always takes into account obstacles such as lakes, rivers, bays, bridges, and mountains, isochrones provide a much more accurate representation of reachable areas than a radius ever could, regardless of the mode of transportation you choose.   

Once you start adding source locations, you can visualize and analyze much more complex reachability scenarios. One of the industries where this is becoming increasingly important is real estate search: On many real estate portals, people looking for apartments can create their individual search area based on several personal addresses (e.g., the workplace and child’s school) as well as the preferred mode of transportation. In a related use case, companies looking for new office buildings are starting to consider their employees’ addresses and commute times.  

It is easy to create polygons with more than one source, and you can define how these sources interact with each other. In terms of Targomo’s Isochrone API, we distinguish between three intersection modes: 

When displaying a group of locations to a user (such as a client, a business partner, or simply as part of a larger presentation), you may want to filter them by their accessibility from one or more starting locations. This is particularly useful for creating lists that take into account the user’s travel time constraints – for example, displaying workplaces that can be reached within 30 minutes by car, or vacation homes that are a 15-minute walk from the beach.   

With isochrones, it is easy to display only the places that are accessible according to individual travel preferences. The algorithm only needs to check  

By intersecting the point with isochrone polygons, you can determine which time-band the points are within (i.e. “< 10 minutes by car”) and sort them accordingly. This way, you can conveniently filter locations that are either 15, 30 or 45 minutes away from the source and help your users make sense of the data displayed.       

If you want to display or analyze the exact accessibility of places in terms of travel time, you should check out Targomo’s Travel Times API.   

Are you interested to dive deeper into isochrone creation? Our developer Gideon Cohen created a detailed step-by-step tutorial showing you how to create your own polygon maps with JavaScript. You could also jump directly into the code in the corresponding Github Repository.    

Thanks to the global pandemic, the business of micro-fulfillment is booming. Here, we take an in-depth look at the trend, how it works, how it expanded recently and if it’s possible for those living outside of urban metropolis areas. 

Short answer? According to DHL, ‘Think of it as AirBNB for logistics.’ Long answer? It’s the accelerated last-mile delivery of goods, thanks to the efficient positioning of small-scale distribution warehouses that utilize location intelligence systems to fulfill orders at a fast pace. Shorter distances between retailer and consumer ensure online businesses can operate in a much more productive (and profitable) manner. 

Over the last couple of years, this particular business model has grown exponentially. Take grocery delivery for example—during the pandemic, newcomers like Gorillas, Weezy, Flink and Gopuff gained serious market share, and are now expanding across Europe and the United States. And they’re picking up traction in more ways than one. This year alone, US-based Gopuff acquired British-born Fancy, and Berlin-based Gorillas was valued at over $1 billion. As a result, we expect micro-fulfillment to grow rapidly across other continents as well. 

If you’re wondering how these companies make money, it’s quite simple. Let’s compare it to the traditional grocery store: While the supermarket needs a larger space in an area that is also visible, a micro fulfillment center or dark store can be as small as 300sqm because the product range is limited to mostly premium brands. This leads to lower rents on average for the quick commerce players. 

Of course, there is other overhead to be considered, like riders, pickers and the overall number of dark stores that are needed to serve a city. However, if all these elements are well planned, there is a very high probability to run the business net positive. 

It’s been proven that micro-fulfillment can work seamlessly in urban settings with high population density. That’s where the micro-fulfillment centers can get close access to consumers and retailers can offer faster delivery at a low cost. The key is to actually ensure that a critical number of potential customers can be reached within the promised delivery time. Tools like Targomo Loop help to analyze the areas around the micro-fulfillment centers, and to create an overview of the catchment areas.  

The analyses take demographic data such as population density, household size, purchasing power, and consumer profiles into account, which allow the delivery services to precisely calculate their potential markets. 

By combining location and demographic data, Targomo Loop can visualize not only how far an e-bike can travel from a central micro-fulfillment center in 10 minutes, but how many people it can serve. However, retailers may need to specifically look for certain target groups and identify the cities and regions with the highest target group density. 

In this example, we are targeting people with age between 20 and 50 years and with medium to high income in the city of Berlin. 

As you can see, the people reached by that micro-fulfillment center are 109,138. 

A sufficient number of orders and the size of the shopping cart are crucial to the success of the business model. This is the reason why the service mainly benefits residents of a region with a very high population density. But would this system be successful and profitable in a more rural, less densely populated area? Let’s find another place, far away from the city, where the same target group density can be guaranteed. 

As expected, this isn’t an easy feat. With Targomo Loop we checked the town of Brandenburg an der Havel. The business model of Berlin city would not work, as just 11,208 people could be reached within a 10-minute e-bike ride. If someone wanted to roll out the quick commerce business in this area as well, they would need to adjust the conditions. From a location intelligence point of view, it would be possible if: 1) you swap e-bikes for cars as a mode of transportation, 2) increase the delivery window from 10 to 25 minutes, and 3) extend the target group to other demographics. 

Let’s take a look at the numbers:  

With these adjustments, it’s necessary to rethink the entire model. Swapping e-bikes for cars would significantly increase the overhead for the start-ups. Furthermore, an increase in delivery time from 10 to 25 minutes will lead to riders delivering fewer orders a day. On the other hand, with cars covering larger distances, provided consumers order around the same time, more households could potentially be serviced on the same trip, saving on delivery times and labor costs. 

Our take? The last-mile revolution seems to find its most fertile ground in big urban areas and may not come to rural residents anytime soon. 

What’s clear is that, to work, the micro-fulfillment industry needs precise location analysis. Businesses need to integrate their own data to analyze and predict order volumes. They need to fully customize their catchment areas: select means of transportation, speed and travel time. They need to calculate how many households they will be able to reach from a specific location. They need to anticipate which products will be in high demand in specific areas. And if they have a location network, they need to learn where they should open new centers to serve as many customers as possible.  

SERIES: RETAIL TRENDS THAT ACCELERATED DURING THE PANDEMIC

Hyperlocal shopping and services have gotten a tremendous boost during the pandemic. Ever more people are favoring to visit neighborhood stores and order products for immediate delivery. In this third article of our retail series we’ll discuss why hyperlocal has become more important, and how retailers are responding to this trend.

The term hyperlocal has been around for some time, but it has gained a lot of traction recently. In the context of retail, hyperlocal shopping refers to consumers buying products in their neighborhood. The coronavirus outbreak has supported hyperlocal shopping in two ways. Firstly, the pandemic has limited the mobility of citizens, forcing many of us to work from home. Even as lockdown measures have been eased or lifted in large parts of the US and Europe home office remains a reality for many. When life returns to a new normal, many employees plan to keep working from home, at least part time. Moreover, Businesses are considering to implement hybrid models. This reinforces the importance of local offerings around peoples’ s homes like shops, cafes and restaurants.

Secondly, the pandemic has changed the attitude towards local shopping. People see an increased value in local offerings and they have come to realize that their local spending keeps neighborhood stores alive. An international study by Adyen and Opinium found that two-thirds of those surveyed want to continue buying from local retailers to help them stay open, even after the pandemic.

Sales figures clearly point to increased demand in local stores. Last year in the UK, when citizens endured two lockdowns, total consumer spending dropped 7.1 percent versus 2019. However, local shops saw revenue growth of 29 percent, according to Barclaycard payments data.

Local purchases expanded even stronger this year. UK shoppers spent an extra 69 percent at local food and drink retailers, such as butchers, bakeries and convenience stores, in May 2021 compared with May 2020, according to Barclaycard figures. This happened even as shopping restrictions had been lifted in the country a month earlier, and outpaced overall consumer spending growth of 7 percent in May.

For consumers, local shops offer clear benefits. Neighborhood stores are easy to reach, and take less time to enter and exit compared with their big-box peers. Similar to on-demand delivery of groceries or meals, these hyperlocal shops offer instant fulfillment, and therefore convenience. These benefits can outweigh the disadvantage of running a smaller product assortment, which is often the case for local stores.

Retailers are aware of the need for hyperlocal shopping and are resetting priorities. Even before the pandemic hit, businesses such as supermarket chain Target, sports brand Nike and fashion store Nordstrom had been opening smaller, local shops. This trend has accelerated. A few months ago, French supermarket chain Système U announced plans to open almost 400 new locations of its U Express convenience stores by 2024, up from 800 currently. Ikea, known for its car-friendly locations on the city’s outskirts, is opening 50 new small-format stores in urban areas around the world, including Queens, New York City. Customizing products and services to local tastes and reaching new target groups are among the prime reasons for Ikea to open these smaller, local shops.

In a research note, consultancy BCG sums it up as follows: “Where consumers value ultra convenience, retailers must evolve their physical footprint from large stores spread over wide areas to a dense network of smaller stores hyperclose to the point of consumption.”

Hyperlocal also refers to services and products fulfilled and delivered locally. Often, people order them online, such as groceries and meals, and receive them instantly. This is also known as hyperlocal e-commerce, quick commerce, or on-demand delivery. We’ve discussed examples in our previous articles about grocery delivery and ghost kitchens.

Home services such as appliance repairs, cleaning and personal grooming can also be classified as hyperlocal. Companies offering these services typically hire or contract a team of employees to work in specific geographic areas, where demand is expected to be high. The hyperlocal services market, which also includes food and grocery ordering, and logistics services providers, is expected to more than double to reach $3.6 trillion by 2027, according to Allied Market Research.

The higher importance of local shopping represents a big shift for retailers. Traditionally, footfall has been the key metric to determine where to open new branches, while neighborhood demographics mattered little. But when local shoppers are a retailer’s focus, data on residents become crucial in addition to the footfall in the micro-environment. Location selection needs to take this into account.

Furthermore, it has an effect on the product assortment. As Ikea’s example shows, knowing the local makeup of neighborhoods and residents’ preferences is essential to create the right offering in each area. The hyperlocal trend is closely linked to catering to local tastes. The focus on neighborhood communities allows retailers to trim down their product mix, and only offer what is in demand in a specific area.

Combined with people’s changed consumption and working behavior following the pandemic, hyperlocal shopping and service delivery may continue to be an important trend for many retailers in the future.

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Berlin / Winterthur – Swiss location intelligence consultancy Crosswind has teamed up with technology provider Targomo, offering companies in Switzerland even more options in the area of location and geo analytics. By combining deep knowledge of corporate processes, market expertise and state-of-the-art geo-technology, Crosswind and Targomo are making customized location analytics available to Swiss customers.

Crosswind, based in Winterthur, enables organizations to integrate geographic referenced data into existing business processes. It helps companies to develop tailor-made, geo-analytical procedures, making their operations more efficient and performant. “There is incredible potential in location-based data,” says Tobias Brühlmeier, managing director of Crosswind. “The spatial component in business intelligence is becoming more and more important, and the analytical possibilities ever more diverse. Targomo’s technologies, such as routing, offer customers the possibility to analyze geodata in very large quantities very quickly, and to visualize it in a way that is easy to understand for the customer.”

Targomo, a thriving Berlin-based technology company, offers TargomoAPI, a collection of data services to create custom maps and geospatial data and geospatial analysis applications. Crosswind has already successfully used these applications to analyze, for example, customers’ travel times in the retail industry, or to calculate the costs of relocating telecommunications cables.

Through the cooperation, Swiss customers now also have the opportunity to use location intelligence platform TargomoLOOP at an enhanced level with professional support from experts in business and geo analytics. “With Crosswind’s expertise and market knowledge, country-specific consulting is now available,” says Hennig Hollburg, managing director of Targomo. “This includes the procurement of Switzerland-specific data as well as the enrichment of corporate data with geo-referenced data, which Swiss companies can benefit from.”

TargomoLOOP not only enables businesses in retail, hospitality and logistics to analyze their locations and optimize their networks. They also gain valuable insights to increase sales, save costs and create decisive competitive advantages. Organizations in the mobility and energy supply industries can also profit from TargomoLOOP, for example, when it comes to planning a network of electric charging stations.

Crosswind is a company specialized in location intelligence, analysis of geographic information and optimization of geo and address data. Geo-enabling business processes, geographic profiling of customers and branches, process-optimized preparation of geodata and the cleansing and consistent structuring of address data are our passions – since our founding in 2013. Customers include BKW, KünzlerBachmann, Mobility, Swisscom, Sunrise UPC and Volvo, among others. www.crosswind.ch

Targomo helps business and public organizations harvest the power of advanced spatial analysis. Targomo was founded in 2013 and is based in Berlin and Potsdam. The Location Intelligence company was awarded as one of Europe’s top five Deep Tech companies at the EIT Digital Challenge in 2020. Targomo has customers in more than 20 countries and include retailers, such as Deichmann and Getränke Hoffmann, and real estate portals like SeLoger, Immowelt and newhome.

SERIES: RETAIL TRENDS THAT ACCELERATED DURING THE PANDEMIC

The pandemic has forced restaurants and bars in Europe to close their doors for months on end. Only recently have they been allowed to serve customers again. The only way to keep cooking and serving during the lockdown was to deliver meals to people’s home. And this has indeed happened exponentially, driving the sales of Just Eat Takeaway.com, Delivery Hero, Grubhub and similar order and delivery services across the globe.

In this second article of our retail series we’ll have look at the meal delivery industry, which has propelled the existence of so-called ghost kitchens, or dark restaurants. These cater to people ordering online, have no seats, and often combine different types of cuisine under one roof.

In the first article we’ve discussed how convenience has become front and center for many consumers. This was already a big trend before the pandemic, but the coronavirus outbreak has accelerated it. People not only want to buy books and electronic goods online and have them delivered, but also food. For many during the pandemic, the only way to get to get a meal without cooking it yourself was to have it delivered. And they did in droves.

Figures from the big players proof the point: DeliveryHero, which operates in 50 countries around the globe, saw the number of orders jump by 96% to 1.3 billion orders in 2020 (this figure also includes orders for grocery and non-food items). The orders were worth €12.4 billion ($15 billion). Other delivery companies, such as Glovo, DoorDash and Uber Eats, have reported similar double-digit growth figures.

Exact figures about the global industry vary widely, but according to a study by Research and Markets worldwide sales are expected to reach $127 billion this year, up 10% from 2020, and grow further to $192 billion in 2025. Interestingly, the study says that “cost of supply chain and logistics will be the key restraint for the online food delivery services market.” Businesses could even “lose up to 26% of their profit if they fail to upgrade their logistics system to ensure on-time delivery”.

The boom of this meal delivery industry has created a new type of restaurant, so-called ghost kitchens. They’re also known as dark, cloud, or digital-only restaurants. These establishments usually only cook to deliver. They typically have no seats and no waiters. They take orders online (some perhaps also by phone). They may also combine different types of cuisine under one roof, for instance pizza and pasta in one part of the kitchen, and burgers in another part.

You usually can’t find ghost restaurants in shopping malls or Class A locations, and may not even recognize them from the outside. Instead, they are located in residential neighborhoods or on parking lots close to their customers. The proximity to customers is crucial: This helps the kitchens quickly bring the meals to the home or office from where the orders are placed.

Virtual restaurants typically only exist in the apps of meal delivery companies, such as FoodPanda, Deliveroo or Wolt. Some are owned and operated by real restaurants, while others are set up by delivery companies themselves. For example, Deliveroo operates three dozen sites, which house 220 ghost kitchens on four continents. Some of them are housed in shipping containers on parking lots, or in warehouses. Delivery Hero’s brand FoodPanda operates its own ghost kitchens in Asia and also plans to open them in Germany.

Some of these delivery companies rent out kitchen space to existing restaurants, which can then expand their reach into new neighborhoods. The establishments benefit from new orders, which their physical locations could not fulfill. There are also companies specialized in setting up these ghost kitchen sites and renting them out, such as Reef and Cloud Kitchen in the US.

There are three clear advantages in operating ghost kitchens, says Thomas Primus, CEO and Co-Founder of FoodNotify, which helps restaurants digitize operations, such as real-time supply management and digital recipe management.

“In many cases, there are additional cost savings to be had by sharing space and locations. Additionally, ghost kitchens don’t need to spend money on the interior, such as tables and seats, staff waiters and printed menus. Secondly, there are many kitchens whose utilization can be increased by serving customers online, for instance by offering lunches, or a completely new line of products, for example, wraps and burritos in addition to pizzas. Thirdly, ghost kitchens offer a low-cost option to expand into new neighborhoods or cities, and reach new customers,” explains Thomas.

He thinks that especially smaller restaurant owner could benefit from the concept, because they don’t have to invest heavily into a new, full-fledged establishment if they want to expand. They can simply set up a kitchen, or rent space in a ghost outlet to reach new customers. People seeking to launch a new restaurant could also benefit, because they can first test their idea as a virtual kitchen and see what runs well or what does not.

Thomas finds it difficult to give predictions for the ghost kitchen market, but he does believe it will continue to grow. In Europe, the market is still relatively small and considered a niche market, but in the US and China it is already reaching size: More than 1,500 ghost restaurants exist in the United States, and more than 7,500 in China. In her Food Report 2021, the Austrian food scientist and expert Hanni Rützler expects the trend of ghost kitchens to gather pace, even when the pandemic has been overcome.

The fact that the delivery companies themselves continue to set up new ghost kitchens underlines the market’s potential. Deliveroo itself plans to double the number of ghost kitchen sites to 64 this year, from which hundreds of different cuisines will operate. Supermarket chain Walmart has teamed up with the company Ghost Kitchen Brands to set up dozens of dark kitchens in Walmart’s stores in the US and Canada. Kroger, the biggest US grocery chain, is also expanding its ghost kitchen operations.

Phantom-like as they may sound, ghost restaurants will likely be as normal as buying cars or fashion online.

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Deichmann Group, Europe’s biggest shoe retailer, has chosen Targomo’s technology to support its site selection in Germany. Deichmann will use Targomo’s location intelligence platform to predict the potential of new sites and further improve the performance of existing shops.

The German retailer, which operates in 30 countries with leading chains such as Deichmann, vanHaren and Rack Room Shoes, has selected location analytics platform TargomoLOOP for a pilot project to support its site selection in Germany, where Deichmann operates more than 1,400 stores.

TargomoLOOP is an AI-powered platform to analyze a network of locations with numerous location-related statistics. By combining locations with demographic data and precise travel time calculations, the platform allows companies to more quickly and easily identify sites that are best reachable for as many customers as possible.

The project with the Berlin-based tech company will give Deichmann additional insights into its branch network and the advantages of digitally provided location-based retail analytics. It will support Deichmann in keeping the right balance between the proximity to its customers and running its stores in changing market conditions.

Another objective is to support the forecasting of the revenue of potentially new locations and help analyze the profitability of existing sites. To make this possible, Targomo will analyze and bundle many of the variables that impact performance.

By using TargomoLOOP, Deichmann will obtain data-based indications for different performance levels. Combined with on-site expertise, the retailer can analyze realized performance and identify new locations. Ultimately, it hopes to support footfall and conversion rates in its stores, further increasing turnover and profitability of all its store locations.

Targomo helps business and public organizations harvest the power of advanced spatial analysis. Targomo was founded in 2013 and is based in Berlin and Potsdam. The Location Intelligence company has customers in more than 20 countries and was selected as one of Europe’s top five Deep Tech companies at the EIT Digital Challenge in 2020.

The AI-powered location analytics platform TargomoLOOP allows users in retail, hospitality, real estate and logistics to optimize their location networks. Users obtain valuable insights to increase revenue, save costs and gain decisive competitive advantages.