RETAIL MANAGEMENT

LECTURE 6: RETAIL LOCATIONS

Types of Locations

Types of Locations
• Freestanding
• City or Town Business District
• Shopping Center.

• Retailers can also locate in a nontraditional location such as in an airport or within another store.

• TRADE-OFFS generally involve the size of the trade area, the occupancy cost of the location, the pedestrian and vehicle
customer traffic generated in association with the location, the restrictions placed on store operations by the property
managers, and the convenience of the location for customers.
• TRADE AREA is the geographic area that encompasses most of the customers who would patronize a specific retail site.

Unplanned Retail Locations: Freestanding Sites

• Retail locations for an individual, isolated store unconnected to other retailers; however, they might be near other
freestanding retailers or a shopping center.
• Outparcels are stores that are not connected to other stores in a shopping center but are located on the premises,
typically in a parking area.
• These locations are popular for fast-food restaurants,
• Advantages
• Convenience for customers (easy access and parking)
• High vehicular traffic and visibility to attract customers driving by
• Modest occupancy costs
• Fewer restrictions on signs, hours, or merchandise
• Disadvantages
• Limited trade area
• No other nearby retailers to attract customers interested in shopping at multiple outlets on one trip
• Higher occupancy costs than strip centers because they do not have other retailers to share the cost of
maintenance.
• Little pedestrian traffic, limiting the number of customers who might drop in because they are walking by.

Unplanned Retail Locations: City or Town Locations

• Advantages
• Lower occupancy costs than enclosed malls
• High pedestrian traffic during the day, but not at night.
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LECTURE 6: RETAIL LOCATIONS

• Disadvantages
• Vehicular traffic is limited due to congestion in urban areas, and parking problems reduce consumer
convenience.
• Store signage can be restricted in these locations.
• GENTRIFICATION —the renewal and rebuilding of offices, housing, and retailers in deteriorating areas—coupled with an
influx of more affluent people that displaces the former, poorer residents.
• Central Business District (CBD) is the traditional downtown business area in a city or town.
• Main Street refers to the traditional shopping area in smaller towns or to a secondary business district in a
suburb or within a larger city.
• Inner City refers to a high density urban area that has higher unemployment and lower median income than the
surrounding metropolitan area.

Shopping Centers
• Group of retail and other commercial establishments that are planned, developed, owned, and managed as a single
property.
• By combining many stores at one location, the development attracts more consumers to the shopping center than would
be the case if the stores were at separate locations.
• The shopping center management maintains the common facilities such as the parking area—an arrangement referred to
as COMMON AREA MAINTENANCE (CAM)
• Most shopping centers have at least one or two major retailers, referred to as ANCHORS

Shopping Centers: Neighborhood and Community Shopping Centers (Strip Shopping Centers)
• Attached rows of non-enclosed stores, with on-site parking usually located in front of the stores.
• The most common layouts are linear, L-shaped, and inverted U-shaped. Historically, the term “strip center” has applied to
the linear configuration.
• NEIGHBORHOOD CENTERS: smaller centers that are typically anchored by a supermarket or a drugstore and designed for
day-to-day convenience shopping.
• COMMUNITY CENTERS: larger centers that are typically anchored by at least one big-box store such as a discount
department store, an off-price retailer, or a category specialist.

Shopping Centers: Power Centers

• Shopping centers that consist primarily of collections of big-box retail stores, such as full-line discount stores, off-price
stores, warehouse clubs, and category specialists
• These centers are “open-air,” unlike traditional strip centers
• Include several freestanding (unconnected) anchors and only a minimum number of small specialty store tenants.
• Many power centers are located near an enclosed shopping mall.

Shopping Centers: Shopping Malls

• Enclosed, climate-controlled, lighted shopping centers with retail stores on one or both sides of an enclosed walkway.
• Regional Malls (less than 800,000 square feet)
• Superregional Malls (more than 800,000 square feet).
• Super-regional centers are similar to regional centers, but because of their larger size, they have more anchors,
specialty stores, and recreational opportunities and draw from a larger geographic area.
• They often are considered tourist attractions.

Shopping Centers: Lifestyle Centers

• Shopping centers that have an open-air configuration of specialty stores, entertainment, and restaurants, with design
ambience and amenities such as fountains and street furniture.
• Resemble the main streets in small towns, where people stroll from store to store, have lunch, and sit for a while on a
park bench talking to friends.
• Cater to the “lifestyles” of consumers in their trade areas. Attractive to specialty retailers.
• Some lifestyle centers are anchored by department stores

Shopping Centers: Mixed-Use Developments (MXDs)

• Combine several different uses into one complex including retail, office, residential, hotel, recreation, or other functions.
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LECTURE 6: RETAIL LOCATIONS

• They are pedestrian- oriented and therefore facilitate a live, work, play environment.
• Appeal to people who have had enough of long commutes to work and the social fragmentation of their neighborhoods
and are looking for a lifestyle that gives them more time for the things they enjoy and an opportunity to live in a genuine
community.

Shopping Centers: Outlet Center

• Shopping centers that contain mostly manufacturers’ and retailers’ outlet stores.
• On average, outlet center rent rates are lower than those at shopping malls, and their sales per square foot are
comparable.

Shopping Centers: Theme / Festival Centers

• Shopping centers that typically employ a unifying theme carried by the individual shops in their architectural design and,
to an extent, in their merchandise.

Shopping Centers: Larger, Multiformat Developments—Omnicenters

• New shopping center developments are combining enclosed malls, lifestyle centers, and power centers.
• Represent a response to several trends in retailing, including the desire of tenants to lower common area maintenance
charges by spreading the costs among more tenants and to function inside larger developments that generate more
pedestrian traffic and longer shopping trips.

OTHER LOCATION OPPORTUNITIES

• Pop-up stores
• Stores within a store
• Kiosks
• Airports

OTHER LOCATION OPPORTUNITIES: Pop-Up Stores

• Stores in temporary locations that focus on new products or a limited group of products.

OTHER LOCATION OPPORTUNITIES: Store Within a Store

• Retailers, particularly department stores, have traditionally leased space to other retailers, such as sellers of fine jewelry,
furs, or high-end designer brands.
• Grocery stores have been experimenting with the store-within-a-store concept for years with service providers like coffee
bars, banks, film processors, and medical clinics.

OTHER LOCATION OPPORTUNITIES: Merchandise Kiosk

• Small selling spaces, typically located in the walkways of enclosed malls, airports, college campuses, or office building
lobbies.
• Some are staffed and resemble a miniature store or cart that could be easily moved.
• Others are 21st century versions of vending machines, such as the Apple kiosks that sell iPods and other high-volume
Apple products.

OTHER LOCATION OPPORTUNITIES: Airports

• A high-pedestrian area that has become popular with national retail chains is airports.
• Passengers arrive earlier for their flights than they did in the past, leaving them more time to shop.

LOCATION AND RETAIL STRATEGY

• The selection of a location type must reinforce the retailer’s strategy.
• Location-type decision needs to be consistent with:
• The shopping behavior and size of the target market
• Retailer’s positioning in its target market

Shopping Behavior of Consumers in Retailer’s Target Market

• Types of Shopping Situations
• Convenience shopping
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LECTURE 6: RETAIL LOCATIONS

• Comparison shopping
• Specialty shopping

• Convenience Shopping
• Consumers are primarily concerned with minimizing their effort to get the product or service they want.
• They are relatively insensitive to price and indifferent about which brands to buy.
• Consumers don’t spend much time evaluating different brands or retailers; they simply want to make the
purchase as quickly and easily as possible.
• Comparison Shopping
• Consumers have a general idea about the type of product or service they want but they do not have a well-
developed preference for a brand or model.
• Purchase decisions are more important to them, so they seek information and are willing to expend effort to
compare alternatives.
• Consumers typically engage in this type of shopping behavior when buying furniture, appliances, apparel,
consumer electronics, hand tools, and cameras.
• Specialty Shopping
• Consumers know what they want and will not accept a substitute.
• They are brand and/or retailer loyal and will pay a premium or expend extra effort, if necessary, to get exactly
what they want.
• Examples of these shopping occasions include buying organic vegetables, adopting a dog from the animal shelter,
or buying a new, high-quality stovetop and oven.

Density of Target Market

• A good location has many people in the target market who are drawn to it.

Uniqueness of Retail Offering

• Convenience of their locations is less important for retailers with unique, differentiated offerings than for retailers with an
offering similar to other retailers.
• Customers will travel to wherever the store is located, and its location will become a destination.