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Location is an important decision for a retailer because -once started ,it is very difficult to change (loyal customers and employees lost, store fixtures cannot be easily removed) 90% of retail formats are store based A good retail location may let a retailer succeed
Market identification (which country to enter- attractiveness of a market ) Determine the Market potential ( Demographic features of the population(population urban/rural , level of literacy, level of education ) The characteristics of the households in the area ( income level, age profile Competition and compatibility starting a gift shop near department store or theatre Laws and regulations- hours, minimum wages, holidays required Trading area analysis Primary trading area, secondary and tertiary area analysis
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Competition
TRADING AREA ANALYSIS A trading area is geographic area containing the customers of a particular firm. it is the geographic area that generates the majority of the customers for the store. Knowing the boundaries of the trade area helps the retailer estimate the number of potential customers that may patronize store . Helps the retailer in gathering information about demographic and lifestyle Understanding of the trade areas also gives key inputs to the retailer for the promotional and communication strategies to be adopted by the firm Internationally many retailers use GIS software's to understand the characteristics of trading area
Primary trading area- covers between 50- 80 % of the stores customers and the area closest to the store- 4 miles. Secondary trading area- 15-25 % of the stores customers-5 miles. The fringe of tertiary trade area- covers the balance customers-10 miles
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Traffic Accessibility of the market Total no. of stores and types of stores that exists in the area amenities available To buy or to lease The product mix offered
Specific site
Visibility ,placement in the location, size and shape of the lot, size and shape of the building, condition and age of the building
Ownership or leasing terms, operations and maintenance cost, taxes and other restrictions General location and specific store
1.THE ISOLATED STORE/Free standing location- is a free standing retail outlet located on either a highway or a street; there are no adjacent retailers Advantages No competition Rental costs are low Larger space may be obtained Better road and traffic visibility More parking space Disadvantages Initial customers may be difficult to attract Many people will not travel very far to get to one store on a continuous basis Many people like variety in shopping A store must often be built rather than rented Costs such as outside lighting, security etc are not shared
2.THE BUSINESS DISTRICT- is the place of commerce in a city ,which developed historically as the centre of trade and commerce in the city or town. It can be classified into central business district, secondary or a neighborhood business district.
CENTRAL BUSINESS DISTRICT- is the main centre of commerce and trade in the city. eg.in Mumbai colaba or Nariman point and in Delhi- Connaught place Characteristics-peak land rates, intense development, vehicular and pedestrian traffics are very high ,shoppers drawn from the whole urban area and has at least one major department store and a number of specialty and convenience stores Advantages excellent goods /service assortment access to public transportation variety of store type wide range of prices and customer services high level of traffic and nearness to social and entertainment facilities Disadvantages inadequate parking traffic and delivery congestion more travel time for those living in the suburbs high rent and high cost for property discontinuity of offerings, such as four shoes store and no pharmacy
SECONDARY BUSINESS DISTRICT- is one which has evolved over a period of time, with the spread of population within the city .A city may have more than one SBD Characteristics- stores are smaller than those in the CBD, smaller trading area and it includes traditional department stores and some specialty stores Advantages access to public transportation less crowding and personal service placement nearer to residential area Disadvantages discontinuity of offering high rent and parking difficulty fewer outlets
Advantages
good location long store hours and a good parking less hectic atmosphere
Disadvantages
limited selection of goods and services price is higher less competition
STRING- it is located along a street or highway .A string may start with an isolated
store ,success then breeding competitors
3.PLANNED SHOPPING CENTRE- A group of retail and other commercial establishments that is planned ,developed, owned and managed as a single property. Availability of parking is an important feature of a shopping centre Positive attributes family shopping sharing of common costs creation of distinctive ,but unified shopping centre image pedestrian traffic parking space access to highway low theft rate Limitations reduce retailers flexibility (working hours) higher rate than isolated store domination by large stores competition expansion is a problem
The International Council of Shopping Centers has defined eight principal shopping center types, shown in the accompanying table.
Onsite parking
7-23
Power Centers
Big box stores Available parking Open air set up Many located near enclosed malls Large trade areas
PhotoLink/Getty Images
Free-standing stores
Low occupancy costs Limited small specialty stores
7-24
Lifestyle Centers
Photo provided by ICSC and used with permission of Aspen Grove Lifestyle Center
7-25
Lifestyle Centers
Usually located in affluent residential neighborhoods
Open-air configuration
Design ambience and amenities Upscale stores Restaurants and often a cinema or other entertainment Small department store format may be there
7-26
7-27
Outlet Centers
These shopping centers contain mostly manufacturers and retail outlet stores
7-28
7-29
Royalty-Free/CORBIS
Alternative Locations
Mixed Use Developments MXDs Hotels
Rob Melnychuk/Getty Images
Office Buildings
Civic Centers
D. Falconer/PhotoLink/Getty Images
7-30
Alternative Locations
Airports
7-31
Alternative Locations
Resorts
7-32
Royalty-Free/CORBIS
Alternative Locations
Hospitals
7-33
Royalty-Free/CORBIS
Huffs Model
Based on the premise that the probability that a given customer will shop in a particular store or shopping center becomes larger as the size of store or center grows and distance or travel time from customer shrinks
Huffs Law
Assumptions: The proportion of consumers patronizing a given shopping area varies with the distance from the shopping area The proportion of consumers patronizing various shopping areas varies with the breadth and depth of merchandise offered by each shopping area The distance that consumers travel to various shopping areas varies for different types of products purchased The pull of any given shopping area is influenced by the proximity of competing shopping areas
Probability = .43 .43 x 12,000 students = 5,160 customers 5,160 customers x $150 = $774,000
Repeat steps 1 to 3 for the remaining areas and then sum them.
His theory basically implies that a retailer needs to clearly check the demand for a particular product or service that he wishes to retail and the number of stores offering the same. Thus, checking demand and supply is of importance.
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