Retailers and commercial real estate analysts are no stranger to site selection. The success of a brick-and-mortar store is often dependent on its location and the market conditions of the surrounding area. For example, a quick service restaurant that has popular lunch options has a higher chance of success if located near office buildings than it does if located in a rural, sparsely populated area. Identifying the right spot for a new brick-and-mortar location often comes down to identifying success factors for other stores and finding lookalike markets to expand into. For years, retail analytics insights have increasingly incorporated local market data to give users an edge in site selection.
But what about when a business is looking to close locations? Sure, they can evaluate store performance and close locations that are losing money. However, this method involves relying on a lagging indicator rather than taking a proactive approach to cutting costs. Retailers who truly stay ahead not only have a site selection strategy, but also a site deselection strategy. When a brand is struggling or anticipating economic uncertainty, retail analytics strategy become even more important as they reveal insights that can make or break a business.
As with choosing new locations to open, deciding where to close an existing location requires thorough investigation and analysis, and is often conducted using analytics platforms powered by location data.
What is site deselection? It involves looking at trends in how consumers are interacting with a brand’s stores, their competitors, and their complementary brands to anticipate which locations will underperform in the future and act.
Combined with the latest market landscape data, including which businesses have opened and closed nearby and how they intersect with trade areas, these insights enable brands to make strategic decisions before a location truly starts to underperform. In many ways, site deselection follows the same steps and requires the same inputs as site selection but focuses on risk indicators instead of opportunities.
Having a solid site deselection strategy is critical for any brand in any economy, but even more so during (or ahead of anticipated) times of economic downturn. For example, the pandemic economy drastically altered the quick service restaurant industry, resulting in some brands experiencing increases in demand and others closing shop due to a lack of customers.
So with some economists warning we may be headed for a recession, how can brands best prepare to weather the storm? While a recession economy is different from a pandemic economy, there are learnings brands can glean from their COVID-19 experience. Insight into where competitors and complementary businesses are opening and closing can indicate how trade areas are changing, while consumer behaviour data offers clues into how demand may shift. Leveraging economic downturn retail data through analytics platforms enables retailers to build a proactive approach to site deselection.
To see how businesses in the US are faring in these uncertain economic times, we looked at regional trends in place closings for the month of April 2022 using SafeGraph Places data.
First, we look at overall place closures by state. States shaded blue saw fewer closures, while states shaded orange saw more. Hawaii had the most closures, with 0.36% of all places open in March being closed in April. However, at the state level, businesses appeared relatively stable.
When drilling down to a more granular level, we can see more distinct brick-and-mortar closure trends. Auburn–Opelika, Alabama and Michigan City–La Porte, Indiana had the highest percentage of places closed in April, at 0.56% and 0.54% respectively. More variation is visible at the MSA level than at the state level. For example, while California appeared high in closures at the state level, MSA-level data revealed substantial regional differences.
Looking at restaurant closures by MSA shows that the industry is stable in some regions and changing rapidly in others. The Casper, Wyoming metro area saw 2.23% of restaurants close in April. However, the same metro area saw only 0.23% of retail stores close during the same timeframe.
With these regional and industry insights, retail analytics insights allow retailers to identify which markets are likely to expand or contract in coming months. This enables brands to develop proactive site deselection strategies that help them stay ahead of the competition.
Each month, SafeGraph pulls similar insights for the retail and restaurant industries to provide a snapshot of how markets are performing.
The SafeGraph team sources our Places data from a variety of sources, including publicly available store locators that many brands offer online. When a brand updates their store locator to reflect a closure, that change is ingested into our pipeline.
Learn more about our opened_on and closed_on columns.
Ready to learn more about the data needed for effective site deselection? Here are some resources for site deselection to help you get started:
A proactive site deselection strategy is no longer optional in an uncertain economic environment. By combining retail analytics insights, brick-and-mortar closure trends, and economic downturn retail data, brands can move beyond reactive cost-cutting and make informed, forward-looking decisions. Regional analysis and timely market intelligence enable retailers to protect performance, reduce risk, and respond strategically to changing consumer behaviour.
Site deselection is the process of identifying underperforming locations and proactively deciding which sites to close based on data-driven risk indicators.
While site selection focuses on growth opportunities, site deselection strategy focuses on minimizing risk and avoiding future underperformance.
Brick-and-mortar closure trends vary significantly by metro area, making regional analysis essential for accurate decision-making.
Retail analytics insights reveal consumer behaviour, competitive dynamics, and market shifts that signal future performance risks.
Economic downturn retail data helps brands anticipate demand changes and adjust their physical footprint accordingly.
Location data, consumer behaviour data, competitive intelligence, and market closure trends are all key inputs.
SafeGraph offers multiple resources for site deselection, including webinars, guides, and analytics tools to support decision-making.
