SELECTING THE STORE LOCATION

Retail and service centers are often the final stocking points in a
physical distribution network. They include facilities like departmental
stores, supermarkets, branch banks, medical centers etc. Location
analysis for these points is highly sensitive to revenue and accessibility
factors rather than cost factors.

Few Factors that influence Location Selection in Retail outlets are:

Proximity to Competitors Population Make up Customer Traffic
Patterns Nearness to Complimentary Outlets Parking Availability
Community Attitude Nearness to complimentary outlets

The Location of the Retail Store plays a very important Role in its
Success. It is an integral n crucial part of the Retail Strategy as the
location of the Store conveys a lot about its image. It also influences
the merchandising mix and layout of the store.

As once Set-up, a retailer can change its merchandise mix, adjust

prices, improve communication/ services but its very difficult to
change the location. So a lot of Planning, Resources, and Research go
in before Deciding upon some Location, Be it about penetrating into a
new city, new customer segment or a new location within the city but a
lot of thought goes into every single thing.

Where you choose to locate your retail business will have a major
impact on everything your shop does. The difference between
selecting the wrong location and the right site could be the difference
between business failure and success.

TAKING SOME FACTORS IN DETAIL TYPE OF GOODS

What kind of products the business is selling, as some goods will
require certain types of locations. Would your store be considered a
convenience store, a specialty shop or a shopping store?
Convenience goods require easy access, allowing the customer to
quickly make a purchase. A mall would not be a good location for
convenience goods. This product type is lower priced and purchased by
a wide range of customers.

Specialty goods are more unique than most products and customers
generally won't mind traveling out of the way to purchase this type of
product. This type of store may also do well near other shopping
stores.
A shopping store usually sells items at a higher price which are bought
infrequently by the customer. Furniture, cars and upscale clothing are
examples of goods found at a shopping store. Because the prices of
theses items are higher, this type of customer will want to compare
prices before making a purchase. Therefore, retailers will do well to
locate their store near like stores.
POPULATION AND THE CUSTOMER
If the retailer is choosing a city or state to locate the retail store, a
through research of the area before making a final decision is to be
carried out. Reading local papers and speaking to other small
businesses in the area helps. Obtaining location demographics from
the local library, chamber of commerce or the Census Bureau also
gives a lot of idea. Any of these sources have information on the area's
population, income and age. Knowing who are the customers, and
assuring a location where your customers live, work and shop.
ACCESSIBILITY, VISIBILITY AND TRAFFIC
Don't confuse a lot of traffic for a lot of customers. Retailers want to be
located where there are many shoppers but only if that shopper meets
the definition of their target market. Small retail stores may benefit
from the traffic of nearby larger stores.
How many people walk or drive past the location. Is the area
served by public transportation? Can customers and delivery trucks
easily get in and out of the parking lot? Is there adequate parking?
Depending on the type of business, it would be wise to have
somewhere between 5 to 8 parking spaces per 1,000 square feet of
retail space.
When considering visibility, look at the location from the customer's
view point. Can the store be seen from the main flow of traffic? Will
your sign be easily seen? In many cases, the better visibility your retail
store has, the less advertising needed. A specialty retail store located
six miles out of town in a free standing building will need more
marketing than a shopping store located in a mall.
SIGNAGE, ZONING AND PLANNING
Before signing a lease, be sure you understand all the rules, policies
and procedures related to your retail store location. Contact the local
city hall and zoning commission for information on regulations

regarding signage. Ask about any restrictions that may affect your
retail operation and any future planning that could change traffic, such
as highway construction.
COMPETITION AND NEIGHBORS
Other area businesses in your prospective location can actually help or
hurt your retail shop. Determine if the types of businesses nearby are
compatible you're your store. For example, a high- end fashion
boutique may not be successful next door to a discount variety store.
Place it next to a nail or hair salon and it may do much more business.
LOCATION COSTS
Besides the base rent, consider all costs involved when choosing a
retail store location.
Who pays for lawn care, building maintenance, utilities and security?
Who pays for the upkeep and repair of the heating/air units? If the
location is remote, how much additional marketing will it take for
customers to find you? How much is the average utility bill? Will
you need to make any repairs, do any painting or remodeling to have
the location fit your needs? Will the retailer be responsible for
property taxes?
The location you can afford now and what you can afford in the future
should vary. It is difficult to create sales projects on a new business,
but one way to get help in determining how much rent you can pay is
to find out what sales similar retail businesses are making and how
much rent they're paying.
PERSONAL FACTORS
If you plan to work in your store, think about your personality, the
distance from the shop to home and other personal considerations. If
you spend much of your time traveling to and from work, the commute
may overshadow the exhilaration of being your own boss. Also, many
restrictions placed on a tenant by a landlord, management company or
community can hamper a retailer's independence.

Trading-Area Analysis

A trading area is a geographic area containing the customers of a

particular firm or group of firms for specific goods or services

Trade area analysis and mapping describe the characteristics of the

area around a store or network of stores. Without accurate trade area
definitions, you cannot measure the key statistics that impact a store's
performance.
Use trade area analysis to aid site selection and target
marketing.
Trade area analysis and mapping tell you:

Where a store's customers are coming from

How many customers you have in a trade area

Where to look for for more customers

Benefits of Trade Area Analysis

Identify gaps or overlaps in the market coverage of your existing
store network, and make corrections by opening, closing or
moving stores

Make better site selection decisions by using characteristics of

existing trade areas to predict trade areas around potential
locations

Define a geographic area to analyze for market potential, market

penetration, and competitive threats

Become more efficient and effective at target marketing by

reaching out only to those customers and prospects in a store's
trade area

Use as a key input into customer profiling

Factors that Impact Trade Areas

Analyzing trade areas should be performed regularly to provide key
metrics for improving sales and marketing performance.
Adding new stores to your network will cause the trade area of nearby
stores to change. In a saturated market, or if stores are placed too close
to one another, cannibalization can occur.
A change to product offerings will impact the trade area, as will shifts in
population and demographics, the existence of competitors, changes to
highways and roads, and the addition of other businesses that attract
people to the area.

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

EXTRA

Different tools must be used when an area must be evaluated in terms of

opportunities rather than current patronage and traffic patterns
Trend analysis
Consumer surveys
Computerized trading area analysis models

23. Computerized Trading-Area Analysis Models

Analog Model Regression Model
Gravity Model

24. Reillys Law

o Reillys law of retail gravitation, a traditional means of trading-area
delineation, establishes a point of indifference between two cities or
communities, so the trading area of each can be determined
25. Limitations of Reillys Law
o Distance is only measured by major thoroughfares; some people will travel
shorter distances along cross streets
o Travel time does not reflect distance traveled. Many people are more
concerned with time traveled than with distance
o Actual distance may not correspond with perceptions of distance
26. Huffs Law
o Huffs law of shopper attraction delineates trading areas on the basis of
product assortment (of the items desired by the consumer) carried at
various shopping locations, travel times from the shoppers home to
alternative locations, and the sensitivity of the kind of shopping to travel
time.

RETAIL MARKET ANALYSIS FOR DEVELOPMENT SITES

Demand Side Analysis
Define market or trade area
Determine number of households and total household income (US Census Data,
BEA Population & Income Estimates)
Estimate spending for different product and store categories (Consumer
Expenditure Survey)
Can build more complex spending model tailored to different income and
demographic groups
Adjust for likely market share/capture rate based on competitive differentials (site
locations, size and quality of competing centers, and normal leakage.
Estimate square feet of retail space supportable by resulting sales (Dollars and
Cents of Shopping Centers)
Supply Side Analysis
Identify competing stores in and near trade area
Assess competitive differences between site and competing stores. Consider store
location, access, size, and quality in defining competitiveness.
Consider planned or potential stores that may enter the market areanational
and regional retail trends are important
Based on this data, estimate the market share of trade area sales that a planned
type of store at the site could achieve
Calculate the dollar value of this market share
Translate this sales level into supportable square footage. Use industry data on
average sales per square foot for comparable stores.
Analysis can be tailored to focus on demographic groups served by the store or site
(e.g. Brockton example for minority households)

OR
http://www.netmba.com/marketing/market/analysis/