Retail Store Retail Store LocationsLocations

UNIT - 2

• Retail Store Locations• Types of Locations• Site Selection• Trade Area characteristics

Let us discuss Let us discuss about the Belowabout the Below• Location

• Retail store Location• Selecting the Store Location

– Market Area Analysis• Factors Affecting the Attractiveness of Market Area

– Trade Area Analysis– Site Selection Process

• Trade Area Analysis– Size and shape of Trade Area– Types of Trade Areas– Factors Determining Trade area– Methods of Delineating Trade Area

• Trend Analysis• Analog Models• Regression Models• Gravity Models – Reilly’s Law and Huffs Model

• What are the Different Type of Locations

• Evaluating Specific Areas for Location

• Trade Area analysis and characteristics

Let see some Let see some PicturesPictures

What might What might have made??have made??

• What might have made Shoppers Stop situate its store at Andheri?????

• What might have made Big bazaar situate its store at Abids??

• What might have made M.G. Road at Chembur??

• What might have made Chet put in Chennai??

• What might have made Bangalore central to locate at Jayanagar??

LocatLocationionLocation …. Location….Location…

• One of the oldest ages in retailing is that Location

• It is the major factor leading a firms success or Failure

• A Good location may let a retailer succeed, on the other hand a poor location may be such a liability that even able retailers cannot overcome.

• A Store Location may necessitate a sizable investment and a long term commitment.

• The choice of location requires extensive decision making due to the number of criteria considered including.

Population size and traits, Competition, Transportation access, Property costs, Length of agreement, Legal Restrictions and other factors.

• Location is the top priority for all new business which it means being at the right place at the right time.

• A Retailer must spend some time and money on the process of the store location and store evaluation as once decision is made it cannot be changed easily.

• First Store or hundredth store ,retailers must spend time and money on the process of store location and store evaluation

• The choice of a store location has a profound affect on the entire business life cycle of a retail operation.

• Location helps retailers gain competitive advantage ,as it is a unique asset.

• Location is the only strategic advantage that competitors cannot copy or imitate easily

• Location is often an integral element of the retail strategy

• Location and site selection comprise the most strategic and crucial decisions made by the retailers.

LocationLocation

Retail Retail LocationLocation

• Retailers have to consider many issues trying to select the ideal location for retailing

• Seek Answers to many questions like Types lo people living in a particular area, their life style, the level of competition expected, the purchasing power of potential customers….

• The Retail Location analyst will have to analyze and assess the overall demand in a particular area, the economies of scale operating in the area, the potential target customers, demographic and life style characteristics, the business climate, competition, and the retailers propensity to manage the particular category of stores

• Any Retailer moving from one location to another faces 3 Potential Problems

1. Some Loyal customers and Employees may be lost, the Greater the distance between the old and new sites, the bigger the loss.

2. A New site may not have the same traits as original one

3. Store Fixtures and renovations at an old site cannot be transferred to a new site

Types of Location – Site Selection and Site Evaluation

An Isolated or Free Standing Store

• An Isolated store is a Free Standing Retail outlet located on either high way or a street.

• Located along a Major traffic artery

• No Adjacent retailers with which this types of store shares traffic

• Discount retailers were the first ones to opt for such locations.

• Necessary that the location of the store and the catchments area for the store be defined keeping in mind the distance that the customer would be willingly to travel for a particular product or service.

• Wall Mart and Giant can afford to select an isolated location, as they are capable of pulling and retaining customers

• Marthally in BangaloreMarthally in Bangalore

Advantages

• No competition and Flexible

• Rental costs are relatively low

• No group rules must be followed in operations and larger space may be obtained

• Isolation is good for stores involved in one – stop or convince shopping

• Better road and traffic visibility is possible

• Easy parking can be arranged

Disadvantages

• Initial customers may be difficult to attract

• Many people will not travel far to get to one store on continuous basis

• Advertising expenses may be high

• A store must often be built rather than rented

• Not suitable for small retailers

Part of a Business Part of a Business DistrictDistrict

• A Business District is a place of commerce in the city, which developed historically as the centre of trade and commerce in the city or town.

• It is a Type of retail Location where two or more stores situate together (or in close proximity) in such a way that the total arrangement or mix of stores was not planned in the initial long range planning

• Stores are situated depending on what suits best for them.

• In this District all stores similarly sell what suits best for them

• Four shoe stores may exist in an area with no pharmacy

• Ex: Janatha shoe stores in Besant Road – Vijayawada, Marwadi shops (Gift Shops)

NeighborhoodBusiness District

Central BusinessDistrict

SecondaryBusiness District

String District

• Four Types of unplanned business District ExistFour Types of unplanned business District Exist

Unplanned Business Districts and Unplanned Business Districts and Isolated LocationsIsolated Locations

• It is the hub of retailing also the traditional centre for retailing in the city

• The CBD exists where there is a density of office buildings and stores, large offices, railway and bus stations, entertainment facilities like pubs, clubs an cinemas and a town hall

• CBD resulting in a high level Vehicular and pedestrian traffic

• The core of CBD is often no more than a square mile, with cultural and entertainment facilities around it

• Shoppers are drawn from the urban area and include all ethnic groups and all classes of people.

• The CBD has at least one major department store and a number of specialty and convenience stores

• Arrangement of stores follows no pre – store format

• Ex: SIRIPURAM

Central Business District

Revitalized Central Revitalized Central Business DistrictBusiness District

Advantages

• Excellent Goods and services assortment

• Access to public transportation

• Variety of store types and positioning strategies with one area

• Wide range of prices

• High Level of Pedestrian traffic

• Nearness to commercial and social facilities

Dis– Advantages

• High Rents and taxes for the most popular sites

• Movement of some popular downtown stores to suburban shopping centers

Secondary Secondary Business DistrictBusiness District

• It is an unplanned shopping centre in a city, which is generally bounded by the junction of two major streets.

• Big cities like Mumbai in India have many SBD’s

• Each containing at least a mini department store, a variety store, and some big specialty stores apart from many small stores.

• Stores located in SBD are small outlets, which offer a limited variety products with a shallow assortment.

• They offer greater portion of convenience goods.

• The SBD’s major strength include solid product selection, access to thoroughfares and public transportation, less crowding and more personal service and a placement near to residential area’s.

• The SBD’s major weakness include the discontinuity of offerings, high rents and taxes, aging facilities, parking facilities and fewer chain outlets

Secondary Secondary Business DistrictBusiness District

Neighborhood Business District.

• An Unplanned shopping area that has developed to serve the needs of the neighborhood.

• It is situated on the major streets of a residential area

• It is characterized by the presence of stores like a supermarket, stationery stores, medical shops, dry cleaner, barber shop, beauty saloon, a liquor store and a restaurant etc.

• An NBD offers good location, long store hours, good parking, and a less hectic atmosphere. NBD’s are usually situated on the main streets of residential areas.

• There is a limited selection of goods and services, and price tends to be higher.

• It appeals to the convenience shopping and service needs of a single residential area.

Neighborhood Business Neighborhood Business District.District.

String

• A String is a unplanned shopping center, consisting of a group of retail outlets, generally offering similar or related products, situated along a street.

• car dealers, apparel retailers, Jewelry Stores are often situate in strings.

• A String has many advantages like low rent, more flexibility, better road visibility, and parking, low operating costs

• Also disadvantages like Less product variety, increased travel for many customers, higher advertising costs

The Planned Shopping Centre OR Part of a Shopping centre

• A planned shopping centre consists of a group of architecturally unified commercial establishments on a site that is centrally owned or managed, designed and operated as a unit, based on balanced tenancy, and accompanied by parking facilities.

• Through Balanced Tenancy the stores here complement each other as to the quality ad variety of their product offering, and the kind and number of stores are linked to overall population needs.

• Planned shopping centre contains one or more anchor stores(larget stores in a shopping mall) along with a variety of smaller stores.

Advantages and Advantages and DisadvantagesDisadvantages

Advantages• Well Rounded assortment of goods and services based on long rage planning• Strong suburban population• Interest in one – stop family shopping• Creation of Distinctive, but unified , shopping centre images• Maximization of Pedestrian traffic for individual stores• Access to high ways and availability of parking for consumers• More appealing than city shopping for some people• Growth of Discount Malls and other newer types of shopping centersDIS – Advantages• Restrictions on Goods\ services that can be sold by each store• A competitive environment with in the Centre• Too many malls in a number of Areas• Rising Consumer boredom with and disinterest in shopping's as an activity• Aging facilities some older centers• Domination by large Anchor Stores

Regional Regional Shopping Shopping

CentreCentre• A Regional shopping centre is a planned shopping centre catering to a geographically

dispersed market

• It usually consists of at least one big department store and 50 or more small retailers

• Regional shopping centers offer a very broad and deep assortment of products and services that are aimed at enhancing the shopping experience of consumers.

• One types of regional centre is the Mega Mall an enormous planned shopping centre with 1million+ Sqft of Retail face, multiple anchor stores, up to several hundred specialty stores, food courts, and the Entertainment Facilities

• Cross Roads is one of the India’s largest shopping malls. It offers the customers the shoppertainment a blend of shopping and entertainmentcal

•Mega Mall - Gurgon

•Sevens Shopping mall in Germany

Power Centre: It is a shopping type with

• a) Up to a half dozen or so category killer stores or Big Box Retail chain(Best Buy, EBay) which focuses in few categories of merchandise and offers a wide selection of merchandise)and a mix of smaller stores

• b) Several complementary stores specializing in one product category

• C) A Power centre usually occupies 250,000 to 750,000 square feet on a major high way or road intersection.

• It is likely to have more money spent on features and architecture

• White Hall Square is one of the example of Power centre

•Puente Hills Mall in California

Life Style Centre

• An open Air shopping site

• Typically includes 150,000 to 500,000 square feet of space dedicate to upscale, well – known specialty stores

• The focus is on Apparel, Home Products, Books and music and as well as Restaurants.

• Coco walk in coconut Grove is the best of Life style shopping centers

Life Style Life Style CentreCentre

Coco Walk: A Life-Coco Walk: A Life-Style Center35Style Center35

Theme/ Theme/ Festival Festival CentersCenters

• Located in places of historic Located in places of historic interests or for touristsinterests or for tourists

• Anchored by restaurants and Anchored by restaurants and entertainment facilitiesentertainment facilities

Community Shopping Centre

• It is a medium sized planned shopping centre consisting of the branch of a department store, a variety store, a category killer store and many more small stores

• It caters to the needs of consumers coming from one or better – populated residential areas located close-by

• This type assortment offers a moderate assortment of both shopping and convenience products and services

• A Community shopping centre usually serves about 20000 to 100000 people residing near by the shopping centre.

• A Better long range planning for a community shopping centre than a neighborhood shopping centre

• Two types of community shopping centers Power Centers and Life style centers

Neighborhood shopping Centre

• A Planned shopping centre which aims at providing convenience products that meet the daily needs of customers in a particular neighborhood.

• Other stores in the neighborhood shopping centre include bakery, a dry cleaner, a stationary store, a beauty saloon, a grocery store and a restaurant.

• A neighborhood shopping centre offers convenience goods and services to customers residing or working in the immediate vicinity.

• It typically serves 3000 to 5000 people who are located with in 15 minute driving distance.

Neighborhood Neighborhood shopping Centreshopping Centre

The selection of the site for a retail store can be a…………………

• Non – systematic process, which is based on gut – feeling or ‘environmental observation’ or an imitation of competitors.

• Systematic Process, which would be based on certain parameters and steps to be followed..

• The retailer has to answer the first question where he has to locate the retail store – (Region in the city, a state or an international market that he wishes to tap).– After identifying the region the following steps have to be followed..

1. Identify the Market in which to locate the store

2. Evaluate the demand and supply with in that market, i.e, to determine the market potential or market size and estimate the number of shops that would be required to serve the market.

3. Identify the most attractive sites.

4. Select the best site alternative

Site Selection

Selecting the store Location

• A retailer when seeking a location must analyze regional and local markets

• Why?? To determine the area that seems to offer the highest market potential. Called as MARKET ANALYSIS

• Demographics, business climate and the level of competition are considered during market area analysis

• Retailer must examine specific areas with in those market areas called trade areas,, An area from which customers are drawn, which is called TRADE AREA ANALYSIS

• Finally, the retailer must select the most suitable site with in the preferred trade area. i.e. the one that satisfies the firms objectives and meets customer needs, the process of choosing the best site is known as the SITE SELECTION PROCES.

Market Market AnalysisAnalysis

• The best regions are those that generate the highest demand or sales for a Retailer

• A Market Area Analysis consists of regional area analysis and Local area analysis.

• Selecting a particular region, the retailer has to analyze one or more local markets with- in that region.

• After identifying promising Market Areas, the retailer should estimate their sales potential so as to choose the market area with highest sales potential

• Many retailers like Shoppers stop, Pantaloons, Titan and Food World have successfully established stores at key locations in different states in India.

Demographics of population & area

Competition

Laws & Regulation

Trade area analysis

Factors Affecting the Attractiveness of Market Areas• Demographics

– Total Size and density– Age Distribution– Average level of Education– Percentage of Population having own houses– Occupation and Distribution– Trends

• Proximity to Supple Source

– Cost of Delivery– On time delivery– Number of Manufacturers and Whole Salers– Availability and reliability of product line

• Economic Base

– Dominant Industries or Companies– Employment Rate– Total and percapita disposable incomes– Growth Forecasts– Economic and Season fluctuations– Access to Credit and Financial facilities

• Competition

Number and size of the competitors present Availability of Transportation long Term versus Short Term Outlook Saturation Levels

• Store Locations and Availability

Own Versus leased Locations Number and type of Locations Cost of occupancy and operation Availability of Transportation

• Regulations

Licensing Procedure Operational Procedures Minimum Wages prevalent Zoning Tax Structure

LocatioLocation/ Site n/ Site EvaluatEvaluat

ion ion CheckliCheckli

stst

Trade Area Trade Area AnalysisAnalysis

• A trade area is the geographic area that generates the majority of the customers for the store.

• knowing the boundaries of the trade area that helps the retailer estimate the number of potential customers that may patronage the store.

• It is necessary to understand that trade areas can vary depending on factors like the type of products\ services sold, or the different market segments of customers.

• An Understanding of the trade areas a lot gives key inputs to the retailer for the promotional and communication strategies to be adopted by the firm.16

Trade Areas

• Retail trade area is “that area, typically around the store, from which the store derives most of its patronage” (Lea 1998b, p.140).

• The Geographical area that represents where a business customers are coming from.

• Retail trade area analysis focuses on locating and describing the target market.

• Choosing a retail site in the absence of sound trade area analysis is a lot like flying an airplane with blinders

• Essentially, trade area analysis is a methodology, process or technique that provides a basis for understanding, visualizing and quantifying the extent and characteristics of known or approximated trade areas.

A trade area analysis typically includes:

• Mapping existing customers in relation to store locations

• Calculating distance/drive times from customers to store locations

• Determining all variables that define and impact your trade areas

• Developing a model for predicting trade areas around new sites

• Using the results as an input into analyzing market potential or customer • profiling or to help make decisions about site selection or targeted

marketing

Size and Shape of the trade Area

• A Trade area typically contain three parts – Primary, Secondary and fringe or tertiary.

• The Primary trading area covers between 50 to 80% of the stores customers, it is the area closest to the store.

• The secondary trading area contains the additional 15 to 25% of the stores customers.

• The fringe or territory trade covers the balance customers.

Trading areas are dependent on distance.

Different business types will have different trade areas. The size and shape of the trade area are influenced by store types, store size, the location of competitors, housing patterns, travel time and traffic barriers. Each individual store have its own unique trade area, these areas can often be generalized in to two different types;

• Convenience Shopping Trade: Are based on the ease of access to these types of products.. That is where people will obtain these products form, will depend on travel distances or travel time.

• Comparison Shopping Trade: Based on Price, Selection, quality and style. People are more likely to compare these types of goods as well as longer distance for their purchase. Trade area will shrink and grow depending on the products sold

• Store Types : Destination Store and Parasite Store

• Store Size : Depends on the Merchandise holding

• Merchandise Type : convenience, specialty, shopping goods

• Location and competition : Intra store, Inter store

• Housing Patterns

• Travel Time

Factors that determine the size and shape of Trade Area

Trade area analysis provides the Trade area analysis provides the foundation forfoundation for

• Understanding the geographic extent and characteristics of store patronage.

• Assessing performance.

• Performing competitive analysis.

• Evaluating market penetration and market gap analysis.

• Target marketing.

• Merchandising.

• Identifying/quantifying effects of cannibalization.

• Developing and exploiting demographic profiles.

• Site suitability and site selection studies.

Methods of Delineating Trade Area

Defining the Trade Area of a Existing Store :Primary dataSecondary Data

Defining the Trade Area of a New Store:

• Trend Analysis: Involves predicting the future based on the past. using consumer surveys

• Analog Models: Estimates the Sales potential of anew store on the basis of the revenues of existing stores.

• Regression Models: Develops a series of mathematical equations representing the relationship between the potential sales of the store and the various independent factors of each location.

• Gravity Models: Based on the fact that people tend to shop at stores that are closer and more attractive than their competitors. Two Models (Reilly’s Model and Huff’s Model)

Characteristics of Trade Area

• Population size and Characteristics: – Total Size and Density– Age Distribution– Average Education Level– Percentage of residents owing homes

• Availability of Labor– Management – Management Trainee– Clerical

• Closeness to sources of supply– Delivery Costs– Timeliness

• Promotion facilities– Availability and Frequency of Media– Costs

• Economic Bases– Dominant Industry– Extent of Diversification– Growth Projections

• Competitive Situation– Number and size of the existing

competitors– Evaluation of competitor strengths/

• Availability of Store Location– Number and types of locations– Access to Transportation– Owing versus leasing opportunities

• Regulations– Taxes– Licensing– Operations