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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

* Involves large capital investment * Affects transportation costs * Affect human resource costs

* Size & characteristics of

* Level of competition * Access to transportation * Availability of parking * Attributes of nearby stores

* Property costs * Length of agreement (if


* Population trends * Legal restrictions

Choosing Particular Locations

- Size of the trade area - Occupancy cost of the location - Pedestrian and vehicle customer traffic location - Restrictions on operations by property managers - Convenience of location for customers
Trade area: the geographic area that encompasses most of
the customers who would patronize a specific retail site

*Process of choosing
Retail Location

* What types of locations are available to

* What are the relative advantages of each

location type?

* Why are some locations particularly well

suited to specific retail strategies?

* Which types of locations are growing in

popularity with retailers?

Levels of location Decision & its Determining Factors

Area within City Customer attraction Quantitative & qualitative nature of competition Availability of access route Zoning regulation Area Expansion potential Site decision Adequacy & Potential traffic Nature of adjacent store Adequacy of parking

Selection of city Size of citys trading area Population & growth trends Purchasing power & its distribution No., size & quality of competition

Market Analysis Model

Location and Retail Strategy

- Shopping behavior of

- Size of Target Market/ - Uniqueness of Retail


Demographic Ex: Spencer

Shopping Situations

- Convenience Goods - Shopping Goods - Specialty Goods

Convenience Goods

- Wants to exert little effort to

acquire product or service

- Wants convenient location - Central business districts - Less concerned with price - No hassles

Shopping Goods

General idea about product or service Relatively High unit price Intensive selling efforts Comparison Buy infrequently &deliberately planned Can travel to buy

Specialty Shopping

- Knows what they want

- Accepts no substitute - High price - Special efforts - Purchased in exclusive stores - Strong loyalty to product or

Size of Target Market

For most retailers, the size of the target market and the location of the highest density of their target market will help determine where their business should be located.

: High rents and rising debt

- Estimate max # of customers eligible to purchase product or service Estimate percentage of potential customers Estimate # times customers could purchase the product or service in a year Estimate highest density of target market

Uniqueness of Retail Offering

- Location doesnt matter as

much because the product is that important or unique

Legal Considerations

- Above ground risks - Hazardous materials

- Sign restrictions - Licensing requirements

Environmental Issues

Zoning and Building Codes

Types of Retail Locations

Free Standing Locations

1. Neighborhood stores 2. Highway Stores

Unplanned business districts/ centre

1. Neighborhood business district 2. Downtown or CBD

Planned shopping centre

1. Regional shopping Centre 2. Neighborhood 3. Specific market 4. Occasion/ Periodic market

Types of Retail Locations

- Freestanding Sites such as outparcels and merchandise kiosks, no other outlets in the vicinity, need own pulling power and promotion to attract customers

- Example: Grocer, highway dhabas, Pantaloon, Peter England in Nagpur, Lifestyle in Bangalore, McDonalds on Mumbai- Pune highway.

Advantages and Disadvantages of Freestanding Locations

- Convenience for customers - Limited trade area when not
around nearby retailers

- High vehicular traffic and


- Need pulling power &


- Modest occupancy costs - Easy parking - Separation from competition

- Usually located where there is little pedestrian traffic Lack of variety for shoppers

Freestanding Sites
Retail locations for an individual, isolated store unconnected to other retailers


Merchandise Kiosks

Merchandise kiosks
Small selling spaces, typically located in the walkways of enclosed malls, airports, train stations, or office building lobbies.

Site Location Shoppers Stop is a free standing store, mostly located away from central business district. Thistype of retail location is basically any stand-alone building. It can be tucked away in aneighborhood location or right off a busy highway. Depending on the landlord, there aregenerally no restrictions on how a retailer should operate his business. It will probably haveample parking and the cost per square foot will be reasonable. The price for all that freedom may be traffic. Unlike the attached retail locations where customers may wander in because they wereshopping nearby, the retailer of a free standing location has to work at marketing to get thecustomer inside.

Neighborhood business districts/ Centre City or Town Locations

- Small cluster - Lower occupancy costs - Higher pedestrian traffic - Nearness & availability

- congestion - Older facilities, lack of space - Parking problems reduce

consumer convenience

Central Business Districts (CBD)

CBD is a hub of retailing activity in a city according to the size of city. It can be planned or unplanned growth. Example: Chilly from umred, Itwari market

- Draws people during business hours - Heavy public transportation - Pedestrian traffic - Residential area as well

- High security required

- Shoplifting
- Parking is poor - Evenings and weekends are slow

Neighborhood/ Main Streets vs. CBDs

- Occupancy costs are generally lower than CBDs - Fewer people are employed - Smaller selection due to fewer stores - Range of entertainment is usually smaller

Planned Shopping Centres

- Shopping centers
- One or more departmental stores - Serves large trading area - High rents - Attract customers across the city &

- Convenient locations - Easy parking - Low occupancy costs

- Limited trade area - Lack of entertainment - No protection from


Shopping Malls
Largest planned shopping centres

Less than 1 million square feet

More than 1 million square feet

Theme/Festival centers

- Located in places of historic

interests or for tourists

- Anchored by restaurants - Generally targeted at

tourists, they may also attract local customers

and entertainment facilities

- A common element of these

centers is entertainment, although some rely solely on the shopping experience

Other Location Opportunities

mobile caterers: bringing the mountain to Mohammad Office-goers are always on the look-out for quick, simple and costeffective options for lunch. meals on wheels

selling low cost apparel in mobile Maruti Omnis

mobile library

- High pedestrian traffic - Sales per square foot are
higher than mall stores

- Rent is higher - Hours are longer - Inconvenient location for

workers means higher wages

Temporary Locations (pop-up stores)

- Good for businesses trying

to create a little hype stores or products business

- Good introduction for new

- Provide visibility for a

- Provide additional sales
during holidays and special events


- Captive audiences - win-win arrangement - non-competing



- Captive audiences - Wealthy customers - People with time on their


* Agglomeration captures the countervailing effects of
complementarily and competition among retailers

*Intra-type - Stores of the same type locating near

one another

*Inter-type - Stores of different types locating near

one another

* Facilitates consumer search * Examples: motor miles and restaurant rows

* Facilitates multi-purpose shopping, virtual one-stop-

shopping, and offers a wider variety of goods to choose from * Examples: shopping centers and shopping malls
Recognizes that consumers may use multiple stores to meet their needs - shopping strategically!!

Beauty Parlors within large college campuses or Ladies hostel Sports goods and apparel inside or opposite Gyms

Gift shops opposite large wedding halls

Consumer Durables near High rise apartment complexes

Central hub concept

Enables service to more locations with

fewer aircraft

Enables matching of aircraft flights with

package loads

Reduces mishandling and delay in transit

because there is total control of packages from pickup to delivery

* Retail Site Selection

* Kind of product sold * Cost factor * Competitors' location * Ease of traffic flow & accessibility * Parking * Market trends * Visibility

Location is a strategically important decision in the hospitality industry The final model had only four variables
Price of the inn/ Positioning income levels State population per inn Location of nearby colleges