La Curacao has opened 10 department stores in Southern California and Arizona since 1980 on the strength of its most loyal customers – first- and second-generation Hispanics, many of them undocumented.

Through multiple points of contact — everything from credit card and loyalty programs to travel and telephone services and Internet access — La Curacao pays close attention to the demographic group that drives its success, especially when it comes to real estate issues that
affect store locations.

“Our customers refer to us as the ‘Hispanic Best Buy,’” says Jeff Forman, manager of real estate for La Curacao. “We are the go-to store for electronics, appliances and home goods.”

La Curacao uses its myriad means of contact to understand where its customers live, how far they are willing to travel to shop, the kinds of products they buy most often, ways that the current population could grow — and in which directions. To make sense of all that data, La Curacao brought in location intelligence technology from Pitney Bowes MapInfo.

The company begins its search for potential new locations by targeting areas with 250,000 Hispanics. “Our customers are primarily the first and second generation, and you can’t find that information in other demographic sources,” Forman says.

“MapInfo is able to take this information and drill down to where that first-generation Hispanic consumer is and take us in the right direction.” Other pertinent details include a population group’s annual income, typical spending, average ticket size and credit worthiness.

“MapInfo will define a trade area for us, but it’s not easy to find a centroid location for our 100,000-sq.-ft. stores, Forman says. “We might have to look two or three miles away from the preferred location and, with that change, we might be going in the wrong location — away from our core customers.”

La Curacao recently called on MapInfo for guidance in a marketing program, as well.

“We were trying to target a mailer in the Phoenix market, so we used them to identify the ZIP codes with the highest potential for having our customers,” Forman says. “We were sending a big brochure, and we wanted to streamline our mailer. If we were off the mark, we wouldn’t get the best bang for our buck.”

La Curacao also has MapInfo put together “a customer profile analysis for us once every other year for all the markets we might be interested in, and then we go to them for analysis on specific markets we are considering,” Forman says.

Key advantages
There are several key advantages to using location intelligence technology. All that data from a specific market area can be used to make important decisions quickly, and with a high degree of certainty that those decisions are correct. And then there’s the flip side: that same data can also help senior managers avoid making poor decisions that can have long-term negative consequences.

Troy, N.Y.-based Pitney Bowes MapInfo develops a profile of the client’s customers based on 200 demographic characteristics, says Adam Frazier, MapInfo’s senior analytics consultant for La Curacao. “When you have a million points of data, it gets down to the individual customer on a particular block and their shopping habits. It’s a lot of information.”

“We’re generating information on an address,” says Al Beery, MapInfo’s director of client services. “We are looking at the amount spent, where the shopping took place — the specific La Curacao store — and then we can go forward and find out how they are interacting with the store, how far they are driving to shop that store, where did the person live who bought something at a La Curacao store, and what are the demographic characteristics of those areas where the customer is coming from.” That data may also provide information about income, education and occupation, he says.

Retail clients could also focus on residents’ occupations, the presence of children in households, the number of vehicles driven, the homes’ value, the percentage of adult women in the local population and the range of income.

While data is more readily available when the retail client has a credit card or loyalty program, the POS system can also prove helpful.

“Retailers can get that information through a shopper’s ZIP code, but increasingly, that’s not specific enough,” Beery says. “Many retailers are going through a telephone number and doing a reverse search to get a street number, block and a neighborhood. But in some states [like California], that’s not allowed.”

For some clients, MapInfo performs intercept surveys, asking customers “about the reason for their visit, how much they spend and where they came from,” Beery says.

“It’s all about optimizing markets for specific clients, whether it’s the placement of stores … [or] the choice of merchandise assortment,” Frazier says.

Calculating ROI
Calculating the typical timeframe for a client’s return on investment is problematic, Beery says, noting that although improvements to the client’s bottom line can “happen quickly,” it is more difficult to measure “how the efficiency of decision-making is improved by having more solid research.

“Clients are able to make decisions more quickly, to open stores more quickly, and they are more efficient with internal staff resources,” he says. “And, yes, they are avoiding bad decisions. Making a research-based decision will put you in a position to make a moderate improvement versus avoiding a very bad decision.”

With a million square feet of retail space divided among just 10 locations, La Curacao’s real estate department can’t afford to make a major mistake.

“We have a huge investment in each store that we open, so it’s important to hit the mark with each one,” Forman says. “We don’t have 100 other stores to help make up for a poor-performing location.

“We don’t do a cost/benefit analysis of our investment with MapInfo,” he says. “It’s more a case of the problems we have been able to avoid.”