Disaggregating sales prediction: a gravitational approach

Official URL: https://dx.doi.org/10.1016/j.eswa.2023.119565

Whenever companies plan to enter new geographical areas, they need disaggregated sales in each location. To make such predictions, sales time series or final customers’ data in geographical disaggregation are necessary. However, for most companies, such datasets are unavailable or impractical. The manuscript has two main goals. One focal problem is how to disaggregate an aggregate sales prediction with no historical proportions. The other is how to improve spatial models using Point of Interest (POI) data. To solve these problems, we combine two literature streams — spatial marketing and sales forecasting — and propose a new hybrid probabilistic approach: Gravitational Sales Prediction (GSP). Our approach uses POI data to estimate area attraction, customer stocks, and flows to predict sales proportions. We later use these proportions to disaggregate an aggregate forecast. GSP is validated using sales data from two countries and more than ten economic segments. When compared to a strong benchmark that relies on past sales proportions, GSP exceeded expectations by achieving not only a similar performance to the benchmark but also outperforming it in some locations. It showed the most promising results in the middle level of aggregation. The result is a powerful and flexible approach that can be embedded in any decision support system.