“Placer’s insights into customer transfer have transformed how we look at underwriting store closures and remodels, and reaffirmed how our customers shop our stores. With it, we can optimize our stores and markets, and improve the revenue models we use to make these decisions.”
~ Jane Dapkus, Senior Director of Real Estate at Floor & Decor
The Challenge
Floor & Decor is a well known retailer of hard surface flooring and related accessories, with 200 locations in the U.S. and growing. As one of Fortune’s 100 fastest-growing companies, it has significant activity throughout its new and existing markets, including remodels, new store openings, closures, and more. Jane Dapkus, Senior Director of Real Estate for Floor & Decor, shared a recent example in the Atlanta market, where they closed one store, opened a new store nearby, and closed a third location temporarily for a stay-in-place remodel. Her team was tasked with answering a key question:
Was the existing customer transfer model for closed stores or stores closed for temporary remodels reasonable for their revenue models?
The image below shows all Floor & Decor locations in the Atlanta market, and notes which stores were impacted and the action taken for each.
The Solution
Placer Data Shows Customer Transfer Patterns Were different than Expected
To analyze how stores performed following closures or openings, Floor & Decor coupled internal store sales with Placer visit traffic counts overall and by zip code, then compared this to pre and post-closure time periods for the impacted store and for all other area stores.
As an example, the team analyzed visitation to the Kirkwood store in the 4 weeks before the nearby I-85 store temporarily closed to remodel and the 4 weeks after, finding that the Kirkwood store saw more than a 900% increase in visits from the 30318 zip code in the 4 weeks after the I-85 remodel started vs. the 4 weeks before, while traffic from the 30083 zip code decreased by 44%.
Learn more about Visitors by Origin
Extending the analysis to look at how the temporary closure for the I-85 remodel, the Southlake permanent closure, and the Cumming, GA grand opening impacted each Atlanta-area store, the team shared its findings, including a customer transfer rate that was an 80% improvement over prior estimates.
The Outcome
OUTCOME: 80% Better Customer Transfer Rate Informs Market / Site Decisions, Improves Models
A more exact knowledge of the portion of customers that moved from one Floor & Decor location to another when a change occurred, coupled with in-house purchase history analysis, affirmed that customers shop for hard surface flooring and accessories infrequently and according to their specific need and proximity to home. In other words, customer demand around a closing store will shift to a nearby store if they are near each other and if the customer is in an active puchase cycle.
The implications for Jane’s team were clear: given the infrequent nature of flooring purchases, modeling revenue impacts of store closures, temporary closures for store remodels, and/or new store openings should focus more on aggregate demand surrounding the store’s location and less on repeat customers transferring between stores. These planning and modeling changes are being used within the broader organization.
