Reid had the opportunity to conduct an interview with Jim
Auten, MPSI's president and CEO.MPSI primarily provides data such as traffic counts and demographics, and modeling services, to the petroleum and convenience store markets.Auten shares the company's latest goals and new areas of interest.
Hal Reid (HR): I notice that the new Technical
Advisory Board consists entirely of academics from both the
information technology, including artificial intelligence and modeling.
In addition, I see expertise in imagery and remote sensing.As your
business seems to be focused on petroleum and convenience retailers,
how exactly are you going to use these academic experts?
Jim Auten (JA): Although MPSI's recent past has focused on the
Petroleum and Convenience retailers, our retail expertise has
application beyond these industry segments and we intend to exploit
potential leverage of that expertise.While maintaining our commitment
to traditional businesses, our diversification strategy will target new
departments within our core customer base where we believe there are
substantial growth opportunities with customers we know, and new
retailing industries where decisions are based on convenience retailing
concepts.We've increased our direct sales force and established
partnerships with complimentary companies that are actively helping us
to grow both our traditional and non-petroleum customer base.
We established the Technical Advisory Board to bring next-generation
technologies into our product and service offerings.The combination of
new scientific methods with MPSI's retail expertise will allow us to
identify new products and guide the techniques employed to insure that
our data and modeling products set the standards within our business
niche and are at the same time cost effective applications for our
HR: One of your products, TrafficMetrix, is used by almost every
retailer as part of a standard set of data for market and site
evaluation.As you now seem to be focused on petroleum and convenience
retailers, what is going to be the direction of this product? Is it
going to remain, be enhanced, or perhaps become an international
JA: Our U.S.TrafficMetrix is in fact used by customers in a
variety of industries including restaurants, coffee retailers,
telecommunications, discount retailers, commercial realtors,
pharmacies, rental car agencies, grocery retailers, etc.MPSI recently
announced the availability of a significant enhancement and update to
the TrafficMetrix product and we will continue to dedicate resources to
this product in order to keep the information up-to-date with
We currently offer an international TrafficMetrix product in 18
different countries.New countries will be added as our modeling
customers take us to new areas around the globe.The majority of our
international TrafficMetrix data is collected via MPSI field surveyors
taking manual counts which are fed into a model that we've developed,
which takes into consideration time of day and day of week and converts
the count to an annual average daily traffic (AADT).This model was
developed and validated against known counts in countries where this
information is available.
HR: A unique
offering that you have for petroleum and convenience retailers is
photographs of the competition.Just how extensive is this database and
does it cover other types of retailers?
JA: In the U.S.
alone, MPSI has digital photographs for more than 100,000 retail
outlets that are primarily gasoline stations, convenience stores and
car washes.We also do business in 85+ international countries where it
is standard procedure for our surveyors to take digital photographs.As
we diversify into other retailing industries, digital photographs are a
purchase option that we offer our customers.
HR: With the
new Technical Advisory board as a resource, are you planning some
additional modeling products beyond the Huff Model? If so, are these
going to be more oriented toward retail petroleum than traditional
Technical Advisory Board will be an important resource in helping us to
identify the technologies to best serve the needs of our customers.We
recently held our first Technology Board meeting, at our corporate
headquarters, where we identified, defined and prioritized a number of
potential new data and modeling products.We believe these new products
will appeal to traditional retail as well as petroleum and will expand
MPSI's brand value into the strategic planning arena which supplements
our traditional concentration on capital and operational planning.
HR: On your
Web site there is mention of tapping into the expertise of the Santa Fe
Institute.Can you elaborate on how this is going to impact your
business and what resources they will bring to MPSI?
JA: Our company has been a member of the Santa Fe Institute
since 2002.This membership provides us with access to leading-edge
research and provides a source of expertise to support and solve
complex retail modeling challenges.In the past, we have incorporated
techniques learned from the institute to model new retailing concepts.
We also continually review the research they've done to determine if
any of these new techniques could be incorporated into our models to
improve accuracy and processes to reduce costs and/or timing.
HR: A topic of
general international business interest is the level of oil consumption
in both China and India.Are these new dynamics having any major impact
on your business?
JA: Yes.We expect these to have a major impact in the near
future.Both of these markets have been regulated which means that
petroleum retailing has been done through government companies having
basically no competition.With deregulation underway and markets
opening up, MPSI will move in either with its traditional clients that
expand into these markets or through existing localized petroleum
companies.Our goal is to teach companies how to implement best of
breed practices in retail network planning in these countries.
HR: With a lot
of consolidation among gasoline retailer and the transition to
C-store/gasoline combo stores in the US, how have these changes
affected the balance of your business, domestic and international?
MPSI's business has grown steadily over the last several years.The
brand consolidations in the states have gone beyond the rapid growth
stage and have now stabilized.With low margins on gasoline sales,
retailers are placing stronger emphasis on their ancillary offerings,
including convenience store, quick service restaurant and car wash.
These changes in focus have made MPSI's products even more important in
helping them understand these offerings and compete successfully.
Consolidations have also stabilized internationally.Unlike the U.S.,
England, and France where a lot of product is sold through
non-traditional retailers or independent marketers, other countries are
beset by traditional global petroleum refiner marketers and/or local
refiner marketers that have been operating in a regulated market.The
opening up of these regulated markets and the consolidation of mergers
has provided growth opportunities for MPSI with both the global and
HR: I see one
of your product offerings is Huff's Market Area Planner.Dr.Huff
consults currently with ESRI and is using additional modeling
methodology within Business Analyst.Is this product's growth or
functionality affected by this or do you have another link to
JA: Huff's Market
Area Planner is a very technical product that requires the user to have
a strong statistical background as well as access to substantial
consumer research data, site location data and industry-specific retail
knowledge.Because of this, we have found this product to primarily
appeal to colleges and universities that wish to use this as a teaching
tool.While we still intend to offer the product to customers who have
the expertise and data, we do not have any plans to update or enhance
it primarily due to the fact that this group of users constitutes only
a small sample of those that need models.
We provide another multivariate modeling product, Retail Explorer,
which includes pre-packaged algorithms and a variety of other modeling
techniques that we customize for specific industries.Retail Explorer
does not require the user to have a statistical background or any data
for that matter.MPSI has field surveyors to collect supply-side data
and can provide demographics and traffic count information for any
location in the US to drive the demand-side of the model.Retail
Explorer is a desktop/laptop application that MPSI has refined and
improved over its 35-year history.More than 200 retailers around the
globe license and use Retail Explorer to support their network planning