5th Edition

PPT 8-1
 Chapter 8

Site Location

McGraw-Hill/Irwin
PPT 8-2 Retailing Management, 5/e
Levy/Weitz: Copyright © 2004 by The McGraw-Hill Companies, Inc. All rights reserved.
 Retailing Strategy

Retail Market and Human Resource

Financial Strategy Management
Chapter 5, 6 Chapter 9

Retail Locations
Chapter 7
Site Locations
Chapter 8

Information and Customer

Distribution Relationship
Systems Management
Chapter 10 Chapter 11
PPT 8-3
 Location Chapters

• Chapter 7
– General Description of the Location Types
– Advantages and Disadvantages of Different Location
– Appendix – Terms and Condition Involved in Leasing
Sites

• Chapter 8
– Considerations in Selecting Area for Locating Store
– Issues in Evaluating Specific Sites

PPT 8-4
 Three Levels of Analysis

PPT 8-5
 Trade Area Issues

• Which Trade Areas Are Most Attractive for

Locating Retail Outlets?
• How Many Outlets to Locate in a Trade Area?
– More Stores Increases Economies of Scale and
Reduces Costs
– More Stores also Results in More Cannibalization
and Less Sales per Store

PPT 8-6
 Factors Affecting Demand
for a Region or Trade Area

PPT 8-7
 Factors Affecting the
Attractiveness of a Site

• How Attractive Is the Site to the Retailer’s

Target Market?
– Match Between Trade Area Demographics and
Retailer’s Target Market
– Likelihood of Customers Coming to Location
• Convenience
• Other Attractive Retailers At Location
Principle of cumulative attraction - a cluster of similar
and complementary retailing activities will have greater
drawing power.

PPT 8-8
 Convenience of Going to Site
Accessibility

• Road pattern and condition

• Natural and artificial barriers

• Visibility
• Traffic flow
• Parking
• Congestion
• Ingress/egress

PPT 8-9
 Location Within a Center

• In High Traffic Areas

•Near Anchor
•Center of Shopping Area
• Near Stores Selling Complementary
Merchandise
•Clustering Specialty Stores Appealing to
Teenagers
• Better locations cost more
PPT 8-10
 Map of Dallas’ North Park Center

PPT 8-11
 Estimating Demand for a New Location

• Definition of the Trade Area

– Primary, Secondary, Tertiary Zones

• Approaches for Estimating Demand

– Analog Approach
– Regression Approach
– Huff Gravity Model

PPT 8-12
 Trade Area

Primary zone - 60 to 65 percent of its customers

Secondary zone - 20 percent of a store’s sales
Tertiary zone - customers who occasionally
shop
at the store or shopping center

PPT 8-13
 Factors Defining Trade Areas

•Accessibility
•Natural & Physical Barriers
•Type of Shopping Area
•Type of Store
•Competition
•Parasite Stores

PPT 8-14
 Oblong Trade Area Caused by
Major Highways and Natural Boundaries

PPT 8-15
 Sources of Information

• Customer Spotting
• Census Data
• Geodemographic Information
Systems
– ACORN
• Information on Competition
– Yellow Pages

PPT 8-16
 Customer Spotting

Purpose: to spot, or locate, the residences of

customers for a store or shopping center.

How to obtain data:

• credit card or checks
• customer loyalty programs
• manually as part of the checkout process
• automobile license plates

PPT 8-17