Choosing the right location is one of the most important and difficult decisions a business owner must make. You could rely on pavement-pounding research, intuition, and a good real estate agent, or you could turn to a new model that analyzes businesses in much the same way that physicists model interactions between spinning atoms.
Pablo Jensen of the Ecole Normal Superiure in France studied the locations of businesses in Lyon to determine which stores seem to attract each other and which stores repel each other (much as atoms can attract or repel each other in various materials). The analysis leads to a quality index Q that automatically reveals promising store locations throughout the city. Q might be high for a jewelery store in a particular location if there are other accessory stores nearby selling shoes or hats, but few neighboring grocery or hardware stores.
Jensen confirmed his model by looking at business data for Lyon in 2003 and 2005. He found that bakeries, for example, that were located in low quality locations in 2003 tended to fail by 2005. Meanwhile, new bakeries popped up preferentially at locations where their Q index is high.
Jensen is currently working with the Lyon Chamber of Commerce to use his model's predictions of Q to help aspiring business owners find promising locations, as well as advising city officials on ways to improve Lyon's commercial opportunities.
The above post is reprinted from materials provided by American Physical Society. Note: Content may be edited for style and length.
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