A Three-Phase Multiobjective Mechanism for Selecting Retail Stores to Close

Abstract

To operate a successful and growing business, a retail store manager has to make tough decisions about selectively closing underperforming stores. In this paper, we propose using a three-phase multiobjective mechanism to help retail industry practitioners determine which stores to close. In the first phase, a geographic information system (GIS) and k -means clustering algorithm are used to divide all the stores into clusters. In the second phase, stores can be strategically selected according to the requirements of the company and the attributes of the stores. In the third phase, a neighborhood-based multiobjective genetic algorithm (NBMOGA) is utilized to determine which stores to close. To examine the effectiveness of the proposed three-phase mechanism, a variety of experiments are performed, based partly on a real dataset from a stock-list company in Taiwan. Results from the experiments show that the proposed three-phase mechanism can help efficiently decide which store locations to close. In addition, the neighborhood radius has a considerable influence on the results.