Choice of location

What is the challenge?

The choice of location has an impact on the success of the company. However, site selection is a complex undertaking and requires the combination of a variety of information. The complexity of site selection increases in the context of digitization, as, for example, the labor cost factor becomes less significant due to the increasing automation of repetitive activities. In addition, new forms of employment such as mobile office are becoming possible, so that location decisions are changing with a view to attracting workers.

What data can help?

• Geospatial data?
• Demographic data (households, inhabitants, age structure, origin and purchasing power, rent index)
• Data on the market environment (local competitors, distance to competitors, complementary companies)
• Infrastructure data (transport links, parking spaces, supplier network)
• Data on access to labor (age structures, educational institutions, specializations)

How can companies use their data?

Data usage and digital solutions can significantly systematize and support the site selection process. With the help of a suitable database, location analyses, assessments and simulations are possible. The company’s wealth of experience is combined with data-based expertise so that improved location decisions can be made. This can significantly reduce investment risk. 

Where is this use of data already being applied?

The start-up Nexiga supports companies in choosing the right business location with the help of data analysis, such as potential analysis, environment analysis, market share analysis. The organic market chain dennree uses this service for its expansion planning.

The consulting company Eoda supports companies in creating a better knowledge base for location decisions. To this end, various data sources are integrated and evaluated. 

How does this use of data contribute to value creation?

Data-based location decisions allow an objective comparison of the profitability of location alternatives. The added value changes directly in the improvement and acceleration of the selection processes and indirectly on the basis of improved management decisions, from which an overall increase in value added can result in the long term.  

Sources: Nexiga (2016), eoda GmbH (2018)