ALBERTSONS OPTIMIZES SITE SELECTION PROCESS 2004-11-01 (1)

CHRISTINE BLANK

ORLANDO, Fla. -- Adding a market-optimization tool to its store-site selection system has helped Albertsons pick better sites to build new food and drug stores, Danielle Jordan, director of research and market analysis for Albertsons, Boise, Idaho, told attendees at Food Marketing Institute's Retail Store Development Conference here last week.

The technology, added about six months ago to Albertsons' in-house site selection software, helps the retailer determine the potential sales of a grocery or drug store in the market for five years, as well as the actual sales of drug stores in the region. It also figures available sales: what is left over after competitors take their sales out of the market, and the potential number of Albertsons sites in that market.

"This model does this continuous drill-down, then ranks sites," Jordan said, adding that the technology does not replace site selection work done by its real-estate developers. Rather, it narrows down a "target area" in the potential market where they should look for sites.

Even sales from smaller pharmacies near the potential site are calculated as part of the total. "You can't ignore those other types of channels," Jordan said. Albertsons also tries to determine the potential sales from new competitors coming to market, which Jordan admitted is often the "biggest slip-up" and the hardest potential factor to determine.

Albertsons implemented the technology and other site selection tools to develop a more scientific methodology for selecting stores. "We wanted better statistical models and better comparison analysis," Jordan said. In one "ethnic profile" model, Albertsons considers the "ethnic" population near existing stores and potential sites, and categorizes the shoppers as "Hispanic," "ethnic mix," "white low income" or "upscale."

Meanwhile, conference attendees asked Jordan whether Albertsons believes that adding drive-throughs to its new drug stores is effective.

"I don't know that they're adding anything. We just all have them; it's the 'me too' thing," she said.

Studies that the retailer did a couple of years ago on drive-throughs were inconclusive, she added.