Retail Locations
Sources Berman-Evans, Sinha-Uniyal, Secondary Research,
. Ranjan Chaudhuris Inputs
Objectives
To thoroughly examine the types of locations
available to a retailer: isolated store,
unplanned business district, and planned
shopping center
To understand the relative advantages of
each of these locations
To note the decisions necessary in choosing a
general retail location
To understand why are some locations
particularly well suited to specific retail
strategies?
The Importance of Store
Location
- Store location is most often the
first consideration in a store
choice
- Having a good location
increases chances of
developing a strong
sustainable competitive
advantage
- Location decisions can be risky
and should be well-thought out
Factors Affecting Selection of a
Store Site
Strategic Fit with Target
Market
Competition
Cost of Operating Stores
3 Types of Locations
Isolated Stores
Large-store
formats
Wal-Mart
Costco
Convenience
stores
7-Eleven
Freestanding/Isolated
Advantages
*
*
*
*
*
*
No
competition
Low rental
costs
Flexibility
Good for
convenience
stores
Better
visibility
Adaptable
Disadvantages
*
*
*
*
*
*
Difficulty
attracting
customers
Travel distance
Lack of variety
for customers
High advertising
expenses
No cost sharing
Restrictive
zoning laws
Unplanned Business Districts
Central Business
District
Neighborhood
Business
District
Secondary
Business
District
String
District
Unplanned Business Districts and Isolated
Locations
CBD Downtown Advantages
Assortment
Public Transportation
Store Types in Area
Price Ranges
Pedestrian Traffic
CBD - Disadvantages
Parking
Congestion
Travel Time
Aging Facilities
Condition of District
Rent
Planned Shopping Centers
Disadvantages
* Limited flexibility
Advantages
* Well-rounded
* Higher rent
* Restrictions on
assortments
offerings
* Strong suburban
* Competitive
population
environment
* One-stop, family
* Requirements for
shopping
association
* Cost sharing
memberships
* Transportation
* Too many malls
access
* Domination by
* Pedestrian traffic
anchor stores
Characteristics of Regional Centers
Features
Total site area
Total sq. ft. leased
Principal tenant
Number of stores
Minimum # of people in
trading area
Driving time of trading
area
Location
Regional Center
30-100+
400,001-2,000,000+
1, 2 or more department
stores
50-100
100,000+
Up to 30 minutes
Outside central city on
highway
Characteristics of Community
Centers
Features
Total site area
Total sq. ft. leased
Principal tenant
Number of stores
Minimum # of people in
trading area
Driving time of trading
area
Location
Community Center
10-30
100,000-400,000
Branch department store
15-25
20,000-100,000
Up to 20 minutes
Close to residential
areas
Characteristics of Neighbourhood
Centers
India - Shopping
Malls
Advantages
Wide variety of stores
Wide assortment of
merchandise
Shopping and entertainment
No inclement weather
Uniform hours of operation
Attracts many shoppers
Disadvantages
Occupancy costs are
generally higher
Mall control over business
operations
Competition can be intense
Trends and Developments
Enhancing the Mall
Experience
Mall managers try to make malls more of an enjoyable experience in an
effort to keep people shopping as long as possible
Common areas
Family lounges
Great food
Playgrounds
Entertainment
Fashion/Specialty
Centers
Composed mainly of upscale apparel shops, boutiques, and gift shops carrying
selected fashions or unique merchandise of high quality and price
Stores in Emporio
Mall
Botega
Gucci
Jimmy Choo
Zegna
Outlet Centers
Shopping centers that contain mostly manufacturers
outlets
- Strong entertainment component
- Becoming more popular outside
the United States
- Tourism is important for outlet
centers
Las Vegas Outlet
Center
Theme/Festival centers
Shopping centers that typically employ a unifying theme reflected in the individual
shops,
shops, design,
design, and
and to
to some
some extent
extent their
their merchandise
merchandise
Located in places of historic
interests or for tourists
Anchored by restaurants and
entertainment facilities
Generally targeted at tourists,
they may also attract local
customers
A common element of these
centers is entertainment,
although some rely solely on
the shopping experience
Ibn Battuta Mall, Dubai
Site Selection and McDonalds
Now, Think and Write
McDonalds in India has a multi location strategy.
Basis your learning in todays session, mention a
the locations that McDonalds in India is in and
discuss advantages and disadvantages of each.
Evaluating a Site for Locating a
Retail Store
n evaluating and selecting a specific site, retailers consider:
ation characteristics
Restrictions
ffic
estimated potential sales
mpetition
ategic Fit
erating Costs
Site Characteristics
Traffic Flow and
Accessibility
When traffic is greater, more
customers shop
Good for convenience retailers
Not necessary for destination
retailers
Too much can impede access
to store
Accessibility to store is as
important as traffic flow
PhotoLink/Getty Images
Traffic Flow and
Accessibility
Road pattern and
condition
Natural and artificial
barriers
Visibility
Traffic flow
Parking
Congestion
McGraw-Hill Companies/Jill Braaten, photographer
What Should Retailers Consider regarding
Parking?
Observe shopping center at various times
Employee parking availability
Shoppers that use cars
Parking by non-shoppers
Typical length of a shopping trip
The McGraw-Hill Companies, Inc./Andrew Resek, photographer
Adjacent Tenants
Complementary (also competing)
adjacent retailers build traffic
What other retailers would Big Bazaar
want to be located near?
Star Bazaar, Apna Bazaar, Spencers?
All target price-sensitive consumers
In an enclosed mall, what retailers would
Lifestyle want to be located near?
Westside, Shoppers Stop?
Locations within a Shopping
Center
Affects both sales and occupancy costs
In a strip shopping center closest to the
supermarket for impulse buying
In a enclosed shopping mall retailers who
sell comparison shopping goods locate close
to the department store anchors
Locate stores that appeal to similar target
markets because consumers shop at places
with a good assortment of merchandise
Cities like Ahmedabad and Pune have
approximately 50% of their income as
surplus after household expenses.
They have large populations, and
combined with the surpluses, this
forms a massive economic
opportunity.
Competition
8-40
ome retailers are going rural:
ack of competition
igher level of disposable income
arge, untapped labor force
The McGraw-Hill Companies, Inc./John Flournoy, photographer
Strategic Fit
Demographic, lifestyle profile, size and
composition of households in an area
Royalty-Free/CORBIS
McDonalds families with kids
REI outdoor enthusiasts
The McGraw-Hill Companies, Inc./John Flournoy,
photographer
Fashion apparels as a
must-have amenity in
luxury condominium
towers in Mumbai
Operating Costs
Vary across areas
Affected by proximity of
area considered vs.
other areas
where retailer operates
Local and state legal
environment has effect
Terms of Occupancy - Some
Considerations
Ownership versus Leasing
Type of Lease
Operations and Maintenance
Costs
Taxes
Zoning Restrictions
Trade area characteristics
A contiguous geographic area that
accounts for the majority of a stores
sales and customers
Primary zone
60
Secondary zone
20
to 65 percent of its customers
percent of a stores sales
Tertiary zone
customers
who occasionally shop at the store
or shopping center
Indices for Assessing Sales
Potential
Market Potential Index (MPI)
Number of Households Purchasing a
Product or Service in a Trade Area
Spending Potential Index (SPI)
Average Amount Spent on a Product or
Service by a Household in a Trade Area