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Maxizing ROI on Capex: A Retail Case Study

The Company

Large North American big-box retailer with several hundred stores

The Challenge

The retailer was planning a large-scale capital investment, and needed to know which stores to remodel or relocate, and where to open new locations. The retailer’s history of remodels, relocations, and new store openings offered anecdotal evidence of successes and failures, but management lacked a data-driven understanding of which store types responded best to remodels or relocations. Management also needed a way to evaluate which currently unprofitable stores were better candidates for closure than for further investment.

The Solution

The retailer teamed with APT, and used Test & Learn for Sites™ to predict the true incremental benefit of the alternative options for each store. Test & Learn™ identified which store environments and competition conditions correlated with the highest returns from capital investment in order to target their investment to the most responsive stores. Finally, the retailer used APT’s Network Planner solution to scan all markets for the best opportunities for new store openings.

The Results

The data-driven strategy the retailer developed with APT revised their investment plans dramatically. APT’s software led the retailer to focus investment on upgrades to existing capital stock, and refined its criteria for locating new stores.
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