Our first annual Sustainability Report, detailing 2023 performance, is now available. View Here

Our 2023 Sustainability Report is now available. View Here

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The Influence of Store Openings on Ecommerce Sales

Today’s most successful omni-channel retailers know that a customer’s interaction with their brand doesn’t begin and end with a visit to a brick and mortar location. They also know that not all omni-channel customers are created equally, and its more than just access (or lack of access) that fuels Ecommerce business. While traditional stores continue to account for the majority of most retailers’ transactions, Ecommerce continues to grow in double digits.  Although the pace of growth slows for many retailers on a year-over-year basis, many retailers want to know what affect a new brick and mortar store location will have on Ecommerce sales.  That question will be explored in this post.

Let’s start by assuming that opening a new location will affect your Ecommerce sales throughout the trade area of the new location. The question that has been addressed by Tango (at least for every customer I’ve worked with over the past 8 years), is whether there is a uniform impact on Ecommerce sales contributions throughout the trade area or does the impact differ by demographic make-up, and therefore by geography, throughout the trade area.

To assume that a new brick and mortar store would result in a static percent increase in e-channel growth within the store’s trade area would be a gross over-simplification of the store’s influence, and a misunderstanding of the channel’s best (and worst) customers. To more accurately understand a new store’s influence on Ecommerce sales, some other considerations need to be examined:

Area of Influence

How far from the new store should be included in the study area before declining influence is observed in Ecommerce? 15 minutes, 20 minutes?  Trade area?  Maybe the entire market? Understanding the area of the new store’s influence is critical to each additional consideration listed below.

Customer Profiles

Like your traditional in store customers, Ecommerce customers are not created equal.  In fact, Ecommerce or multi-channel customers tend to be even more variable.  Customer segmentation can help provide insight into who is, and who is not, shopping the channel, and what affects a store opening may have. Your best brick and mortar customers may be less willing to shop online. If that’s the case, will they leave the Ecommerce channel once a more convenient brick and mortar location is provided?

What about the consumer who doesn’t shop your brand online because you don’t have a substantial presence, or in other words low brand equity, in the market?  Will this customer turn to the Ecommerce channel once a store location is provided and brand awareness increases?  These questions can be answered by segmenting your historical customer data and store openings.

Market Saturation/Brand Awareness

The influence of market presence can’t be overstated when we look at Ecommerce channel changes across markets. Growth rates tend to increase more significantly as initial locations are added to the market and as brand awareness and marketing dollars increase. This is the old adage that “a rising tide lifts all boats”.

However, this growth also tends to decline at a certain point when customers have multiple locations to visit and are fully aware of the brand. Essentially you reach a point of diminishing returns after brick and mortar saturation has occurred.  These varying market-based factors must be accounted for in any channel growth estimate.  The analytical effort must include a time lapse of past growth trends in a market based on increasing levels of brand equity and store presence. While all customers are created equal, not all markets are created equal either. Many analytics vendors try to project their expertise in conducting Ecommerce model development, but are inexperienced in the sophisticated techniques that only a well-seasoned statistician combined with a practical real estate analyst can bring to this effort.


While Ecommerce only retailers (ie. Amazon) are ubiquitous across all markets, that may not necessarily be the case for traditional brick & mortar competitors. Your competitors may over, or under–influence particular markets based upon similar factors that affect your performance: brand awareness and saturation.  Accounting for this influence from your competitors is as important as your own. Again an inexperienced market research firm might simply examine the Ecommerce trends across all new store trade areas without accounting for the varying degrees of competitive influences that occur in each market.

Embracing Omni-Channel

Establishing the key milestones in the Ecommerce lifecycle is critical for an analyst to understand. Knowing when a customer had the ability to ship to or pick-up from a store, make mobile purchases, or return items purchased online, ultimately reaching the point where your organization completely embraces the channel. At each step, how your customer interacts with the channel could change, altering results if these milestones are not accounted for as your brand fully integrates into the channel.

By understanding and quantifying these relationships, retailers can get a better picture of store opening influence within the Ecommerce channel.  In some cases, knowing the Ecommerce potential for a new store may be enough to move the needle from an average opportunity to an above average one.  Your customers, and maybe your marketing team, have blurred the lines between channel shopping experiences.  Your real estate decisions should account for that distinction as well.

It is important to note that there are a multitude of layers to peel back on this onion we call Ecommerce modeling.  Tango has conducted this type of analysis and actually deployed the interactive modeling for clients for both brick and mortar and Ecommerce.  Our client base is now using the combined models for calculating IRR in their detailed pro-forma analysis for the budgeting for new store openings.

Interested in learning more? Download Tango’s Predictive Analytics datasheet below.

Download Tango Predictive Analytics


Adam Winters

Tango 2023 Sustainability Report

We have released our first Sustainability Report for 2023, marking an important step in our sustainability journey. In the report, we announce our goal of becoming carbon neutral by 2030, setting us apart as a pioneer in the larger ecosystem of real estate technology providers.