Retail Location

Sohail Y Ahmad
 Introduction
• Three Most important things in Retailing – is
Location, Location, Location.
• Why Location is Such an important decision for a
Retailer?
1. Prime consideration in Customer’s store choice
decision.
2. Strategic importance - A good Location therefore
can lead to strong competitive advantages, because
location is considered one of the elements of the
retail marketing mix that is “unique” and thus
cannot be imitated by competitors.
3. Location Decisions are risky – Substantial
investment to buy & develop real estate, Long term
lease
 Contd..
• Retailer can change his merchandise mix,
adjust prices, improve communication with
consumers and offer better services, once
store comes into existence, it is fairly difficult
to change the location.
• Moving another location may Result in – Loss
of customer and employees
• Despite the growth of non-store, a rapidly
change in retail environment, and customer
has made the store location even more
significant.
 Contd..
• The shaded portion represents the trading – area
overlap, Where the same customers are served
by both branches.
• The chain must find out the overall net increase
in sales if it add the proposed store ( total revised
sales of existing store + Total sales of new store
– Total previous sales of existing store)
• Other Issues/Factors – The competition, Financial
institutions, Transportation, Labor availability,
Supplier location, Legal restrictions, and so on
can each be learned for the trading area(s)
examined
The Use of GIS in Trading area Delineation
The size and shape of trading areas
 Contd..
• Two stores can have different trading areas even if
they are in the same shopping center.
• Situated in one shopping center could be a branch of
an apparel chain with a distinctive image and people
willing to travel up-to 20 miles and for a shoe store
people willing to travel up-to 5 miles.
• When Store has better assortment, Promotes more,
and/or creates a stronger image, it may then become
a Destination Store and generate trading area much
larger than that of competitor with a me-too appeal.
• That is Why Dunkin’ Doughnuts used the slogan “ It’s
worth the trip” for many years.
 Contd..
• A Parasite Store does not creates its own
traffic
• And has no real trading area of its own.
• This store depends on people who are drawn
to the location for other reasons.
• A magazine store in a hotel lobby and a snack
bar in shopping center are parasite
 Delineating the TA of an Existing Store
• The size, shape and characteristics of trading
area for an existing store – or shopping district
or shopping centre - can usually be
delineated[describe or portray (something)
precisely] quite accurately.
• Store Records(Secondary data) or a special
study (primary data) can be measured in
trading area.
• And many offer computer generated maps
that can be tailored to individual retailer need.
• Trend Analysis : Projecting the future based on
past
• Consumer Survey
 Location Decisions
• Because of its fixed nature, location cannot be
changed in the short term, contrary to other
elements of the retail marketing mix such as
prices, customer service, the product assortment
or advertising.
• These latter factors can be altered if the
environment (e.g. Consumer behaviour,
competition) changes (Wrigley 1988).
• The main attention in the context of retail
location strategies usually focuses on the opening
of new stores. However, location decisions relate
to the entire physical structure of retail outlets
and are thus more comprehensive
 Contd..
• The main types of decisions are
(1) the opening of new stores,
(2) the extension of floor space of existing stores,
(3) the relocation or movement of a store from one
place to another within a particular town or area
where a better site is available,
(4) rationalization decisions, e.g. the closure of
individual stores,
(5) repositioning of locations, e.g. altering of store
image by changing the name or appearance,
 Contd..
(6) refurbishment such as improving or updating
the physical Environment of an existing outlet
or
(7) altering the product range and assortment
(“remerchandising”) to tailor the offer more
closely to local customers
• The opening of new stores comprises the most
complex type of decision, because it is usually
the starting point of activities in a specific
geographic area.
Types of Locations

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 Types of retail Location
(Unplanned Retail Location)
• Some retailers put their Stores in unplanned
locations for which there is no centralized
management to determine where specific stores are
how they are operated. 2 types of unplanned retail
location- Freestanding & City or Town location
Freestanding sites/ Location or Isolated store
• Located along a major traffic artery without any
other competitive retailer around.
• Isolated store unconnected to other retailers.
• They might be near other freestanding retailers, a
shopping centre, or in case of a kiosk, inside an office
or shopping centre.
 Contd..
Advantages
• Customer – Easy access & parking, High
vehicular traffic and visibility to attract
customers driving by
• Modest occupancy cost
• Separation from direct competition.
• Few restriction on sign(Promotional, Location,
Institutional, Information, Marquee).
 Contd..
• Large store formats(Walmart supercenters &
Castco membership club) and convenience
oriented retailers(7-eleven) are usually best
suited.
• Walgreens stores that have moved to
freestanding sites , away from strip centers,
attract 10% more customers and achieve 30%
higher revenues.
• In India Gas station, convenience stores hotels
and fast-food restaurant on highway operate as
free-standing location
 Unplanned Retail Locations
• Freestanding Sites – location for individual
store unconnected to other retailer
• Advantages:
– Convenience
– High traffic and visibility
– Modest occupancy cost
– Separation from competition
– Few restrictions

• Disadvantages:
– No foot traffic The McGraw-Hill Companies, Inc./Andrew Resek, photographer

– No drawing power
JCPenney, Sears, Walgreens are shifting to stand alone locations
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 Merchandise Kiosk
• Small temporary selling spaces typically
located in the walkways of small of enclosed
malls, airports, train stations, or office building
lobbies.
• 40 to 500 sq. ft.
• Usually have short term leases
• Often are operated seasonility
 2.City or Town Locations
• Inner city vs. Suburbs
• Many urban areas are going through a process of
GENTTRIFICATION – the renewal and rebuilding of
offices, housing and retailers in deteriorating areas -
coupled with an influx of more affluent people that
often displaces earlier, usually poor residents.
• Young professional and retired empty nest moving
into areas to enjoy convenience of shopping.
• In general Urban Location –
• Low Occupancy cost
• Location is central business district
• Often have high pedestrian traffic
 City or Town Locations
Gentrification is bringing population back to the cities.

Advantage to Retailers:
•Affluence returned
•Young professionals
•Returned empty-nesters
•Incentives to move provided by cities
•Jobs!
•Low occupancy costs
•High pedestrian traffic
The McGraw-Hill Companies, Inc./Andrew Resek, photographer

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 Contd..
• Vehicular traffic is limited due to congession
• Parking Problem
• Restricted in their signage & store operation are
limited
a> Central Business district(CBD)
• Traditional downtown business area in a city or town.
• Due to its daily activity , it draws many people and
employees into the area during business hours.
• CBD – Hub of public transport – High level of
pedestrian traffic.
• CBD popularity – Declining in USA - High security
required because of shoplifting is most common –
Parking problem discourage the shoppers from
Suburbs
 Central Business District (CBD)
•
Advantages

Draws people into areas during business hours

• Hub for public transportation
• Pedestrian traffic
• Residents

• High security required

Disadvantages

• Shoplifting
• Parking is poor
• Evenings and weekends are slow
Spike Mafford/Getty Images

7-34
 Contd..
• Shopping in evening and weekends is slow
• CBD – suffers from lack of planning – Upscale
boutiques next to low income housing, -
Consumers may have not enough interesting
retailers that they can visit on a shopping trip.
b>Main Street
• Another city or town location alternative is
Main Street
• Traditional shopping area of smaller towns or
secondary business district in a suburb or
within a large city
 Contd..
• Often street in these areas have been converted
into pedestrian walkways.
• MS share most of the characteristics of Primary
CBD.
• Occupancy cost are generally low.
• Do not draw as many people as the primary CBD
• MS typically don't offer the range of
entertainment and recreational activities as CBD .
• Planning organization of the town or
redevelopment often imposes some restrictions.
• IN U.k 80% of retail sales are made by small
retailers in main street (referred in the UK as High
Street)
 Main Streets vs. CBDs
• Occupancy costs lower than
CBDs
• They don’t attract as many
people
• There are not as many
stores
• Smaller selections offered
• Not as much entertainment
• Some planners restrict store
operations

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 Contd..
c> Inner City
• IC in US high density urban areas consisting of
consisting of apartment buildings populated
primarily by lower-income consumers.
• About 8 million household in America’s ICs.
• 85 billion annual retail buying power – USA
• IC customers desired to buy branded
merchandise from nationally recognized retailers
• Although income levels are lower in ICs –
Retailers achieve – Higher sales volume, higher
margin – Resulting in higher profit.
 Contd..
• ICs potential – untapped market & incentive
from local Govt. – developer focus increased.
• Retailing plays important role in IC
redevelopment activities – needed services –
jobs for residents – property taxes to support
redevelopment.
• Controversies – Increased Traffic & Parking
difficulties .
 Inner City

Unmet demand tops 25%

in many inner city
markets

Inner city retailers achieve high sales volume,

higher margins and higher profits

Inner city customer wants branded merchandise

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 Shopping Centers
• A shopping center is a group of retail and other
commercial establishments that is PLANNED,
DEVELOPED, OWNED, and MANAGED by single
property.
• 1950s to 1980s Suburban shopping centers grew
as population shifted.
• By combining many stores at one locations,
disproportionately more consumers are attract
more consumers are attracted to the shopping
centre.
• Not uncommon – store sales increase after a
competing stores enters a shopping centre.
 Contd..
• Developer & SC Management carefully select
a set of retailers that are complementary to
provide consumers with -
• One stop shopping experience
• With well balanced assortment of
merchandise
• SC management maintains the common
facilities- CAM(common area maintenance) –
Providing Parking area, security, Parking lot
lighting, Outdoor signage for the centre , and
advertising and events to attract consumers.
 Contd..
• Stores typically Annual fees – Size & CAM
• Most SCs Have at least one or two major
retailers – ANCHORS
• These retailers are courted by the centre
developer
• Because they attract significant number of
consumers and consequently make the centre
more appealing for other retailers.
 Shopping Centers
Shopping Center Management Controls:

•Parking
•Security
•Parking lot lighting
•Outdoor signage
•Advertising
•Special events for customers

The McGraw-Hill Companies, Inc./Andrew Resek, photographer

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 Types of Shopping Centers
• Neighborhood and Community Centers (Strip
Centers)
• Power Centers
• Enclosed Malls
• Lifestyle Centers
• Fashion Specialty Centers
• Outlet Centers

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 Neighborhood and Community Shopping
Centers
• Are an attached row of stores managed as a Unit
• With onsite Parking located in the front of the stores
• Not enclosed – referred as “open air centre”.
• Most Common Layouts are – Linear – L shaped or
inverted U shaped.
• Historically the term Strip Centre has applied to
linear configuration
• Smaller centers (neighborhood centers) are typically
anchored by supermarket or a drugstore
• Larger Centers (Community Centers) have additional
anchors such as discount stores, off-price stores or
Category specialists.
 Neighborhood and Community Centers
Managed as a unit
Advantages

The McGraw-Hill Companies, Inc./Andrew Resek, photographer

Convenient locations
Easy parking
Low occupancy costs

Disadvantages

Limited trade area

Lack of entertainment
No protection from weather

Attached row of stores

Onsite parking
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 Power Centers
• PCs are shopping centers that consist of primarily of
collections of Big-Box retail stores (Target), off price
retail stores(Marshalls) Warehouse clubs (Costco)
and Category Specialist(Lowe’s, Staples, Michals,
Barnes & Nobel, Toy “R” Us.
• While centers are open Air unlike traditional strip
centers power centers often include several
freestanding (unconnected) anchors and only a
minimum number of small specialty tenants
• Many PCs are located near enclosed shopping malls.
• PCs were virtually unknown before 1990s, but have
steadily grown in number as sales of category
specialist have grown .
 Contd..
• Many are larger than regional malls
• Trade area as large as regional malls
• It offers low occupancy cost.
• Modest level of consumer convenience
• Vehicular and pedestrian traffic.
 Power Centers

Shopping centers that consist primarily of

collections of big-box retail stores such as
discount stores (Target), off-price stores
(Marshall’s), warehouse clubs (Costco), and
category specialists (Lowe’s, Best Buy, Dick’s)
• Open air set up
• Free-standing unconnected anchors
• Limited small specialty stores
• Many located near enclosed malls
• Low occupancy costs

PhotoLink/Getty Images
• Convenient
• Modest vehicular and pedestrian traffic
• Large trade areas

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 Shopping Malls
• SMs are Enclosed , climate controlled lighted
shopping centers with retail stores on one or
both side of enclosed walkways.
• Classified as – Regional (less than 1 million Sq
ft) and Super Regional ( more than 1 million
Sq Ft)
• Both are similar but due to larger size Super
regional have more Anchor Stores and
Specialty stores and recreational activities.
• Often consider tourist attraction
Advantages and Disadvantages of
Shopping Malls
Advantages:
Many different types of stores
Many different assortments available
Attracts many shoppers
Main Street for today’s shoppers
Never worry about the weather
Comfortable surrounding to shop
Uniform hours of operation

PhotoLink/Getty Images
Disadvantages:
Occupancy costs are high
Tenants may not like mall management control of operations
Competition can be intense

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 Challenge to Malls
• Time pressured society makes it impractical to wander malls
• Fashion apparel sold in malls experiencing limited growth
• Malls are getting old and rundown – unappealing to shop
• Anchor tenants are decreasing due to retail consolidation
• Strategies?
– Make shopping more enjoyable (e.g., sofas, children’s
playing areas)
– Great food destination (fast food and full-service
restaurants)
– Tailor make its offering to cater to changing demographics
(e.g., repositioning older shopping centers for Hispanic
markets)
– Mall renovation and redevelopment
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Lifestyle Centers

Photo provided by ICSC and used with permission of Aspen Grove Lifestyle Center

Attractive to specialty retailers

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 Lifestyle Centers
• Open Air configuration of up-scale specialty stores,
entertainment, and restaurants with design
ambience and amenities such as fountain And street
furniture.
• Typically located near affluent neighborhoods and
cater to the lifestyles of consumers in their trade
areas.
• Ease of parking – convenient for shoppers.
• Smaller than enclosed malls smaller trade area
• Shoppers find it attractive energetic places to meet
their friends and have fun.
• Pedestrian traffic is greater than strip malls.
• occupancy cost and operating restrictions are less
than those of enclosed SM but > than Strip centers
 Fashion Specialty Centers
• Upscale apparel shops
• Tourist areas/central business
districts

The McGraw-Hill Companies, Inc./Lars A. Niki, photographer

• Need not to be anchored
• Décor is elegant
• High occupancy costs
• Large trade area
• Ex. Phipps Plaza in Atlanta

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 Outlet Centers
These shopping centers contain mostly manufacturers and retail outlet stores

Courtesy of Beall’s, Inc.

7-58
 Theme/Festival Centers
• Located in places of
historic interests or
for tourists
• Anchored by
restaurants and
entertainment
facilities

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 Larger, Multi-format
Developments: Omni centers
• Combines enclosed malls, lifestyle center, and
power centers

• Larger developments are targeted

– to generate more pedestrian traffic and longer
shopping trips
– To capture cross-shopping consumers

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 Mixed Use Developments (MXDs)
• Combine several different
uses into one complex,
including shopping centers,
office tours, hotels,
residential complexes, civic
centers, and convention
centers.
• Offer an all-inclusive
environment so that
consumers can work, live,
and play in a proximal area

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 Other Location Opportunities
• Airports
• Resorts
• Store within a Store
• Hospital

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 Alternative Locations
Airports

Airports: Why wait with nothing to do?

Rents are 20% higher than malls

Sales/square ft are 3-4 times higher than malls
Best airports are ones with many connecting flights

Kim Steele/Getty Images

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Alternative Locations
Resorts

Captive audience
Well-to-do customer
Customers have time to shop

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Royalty-Free/CORBIS
Alternative Locations
Store within a Store

• Store within a Store

• Located within other, larger stores
• Examples:
– Grocery store with service providers (coffee bars,
banks, clinics, video outlets)
– Sephora in JCPenney

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 Alternative Locations
Hospitals

Patients cannot leave

Gifts are available

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Royalty-Free/CORBIS
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