Retail Locations

McGraw-Hill/Irwin Retailing Management, 6/e

Copyright 2007 by The McGraw-Hill Companies, Inc. All rights reserved.

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Retailing Strategy
Retail Market and Financial Strategy Chapter 5, 6 Human Resource Management Chapter 9

Retail Locations Chapter 7 Site Locations Chapter 8 Information and Distribution Systems Chapter 10

Customer Relationship Management Chapter 11

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Elements in Retail Mix

Location Strategy

Customer Service

Store Display And Design Merchandise Assortment

Communication Mix

Pricing

What Are the Three Most Important Things in Retailing?

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Location! Location! Location!

Eddie Tan/Life File/Getty Images

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Why is Store Location Important for a Retailer?

Location is typically prime consideration in customers store choice. Location decisions have strategic importance because they can help to develop sustainable competitive advantage. Location decisions are risky: invest or lease?
F. Schussler/PhotoLink/Getty Images

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Types of Retail Locations

Free Standing Sites City or Town Locations
Inner City Main Street

Shopping Centers
Strip Shopping Centers Shopping Malls

Other Location Opportunities

PhotoLink/Getty Images

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Types of Locations

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Unplanned Retail Locations

Freestanding Sites location for individual store unconnected to other retailer Advantages:
Convenience High traffic and visibility Modest occupancy cost Separation from competition Few restrictions
The McGraw-Hill Companies, Inc./Andrew Resek, photographer

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Unplanned Retail Locations

Merchandise Kiosks small temporary selling stations located in walkways of enclosed malls, airports, train stations or office building lobbies.

Kent Knudson/PhotoLink/Getty Images

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City or Town Locations

Gentrification is bringing population back to the cities.

Advantage to Retailers:
Affluence returned Young professionals Returned empty-nesters Incentives to move provided by cities Jobs! Low occupancy costs High pedestrian traffic

The McGraw-Hill Companies, Inc./Andrew Resek, photographer

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Central Business District

Draws people into areas during business hours Hub for public transportation Pedestrian traffic Residents
Advantages Disadvantages

High security required Shoplifting Parking is poor Evenings and weekends are slow

Spike Mafford/Getty Images

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Main Streets vs. CBDs

Occupancy costs lower than CBDs They dont attract as many people There are not as many stores Smaller selections offered Not as much entertainment Some planners restrict store operations

The Most Expensive Shopping Streets in the World

Street Location New York City Cost / sq foot / year

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Fifth Avenue (48th to 58th St.)

57th Street (5th Ave. to Madison Ave.) Oxford Street

$580

New York City

$500

London

$400 $375

Madison Avenue (57th New York City to 72nd St.) Ave. des Champs Elysee Paris

$360

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Inner City

Inner city retailers achieve high sales volume, higher margins and higher profits

(c) Brand X Pictures/PunchStock

Unmet demand tops 25% in many inner city markets

Inner city customer wants branded merchandise

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Shopping Centers
Shopping Center Management Controls:
Parking Security Parking lot lighting Outdoor signage Advertising Special events for customers

The McGraw-Hill Companies, Inc./Andrew Resek, photographer

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Types of Shopping Centers

Neighborhood and Community Centers (Strip Centers) Power Centers Enclosed Malls Lifestyle Centers Fashion Specialty Centers Outlet Centers

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Neighborhood and Community Centers

Managed as a unit
The McGraw-Hill Companies, Inc./Andrew Resek, photographer

Attached row of stores

Onsite parking

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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

Convenient Desirable shopping experience

Modest vehicular and pedestrian traffic

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The Largest North American Shopping Malls

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Mall of America
Located near Minneapolis, MN Largest mall in the US Enough people to qualify as the third largest city in Minnesota Has more than 42 million visitors a year More people visit than Disney World, the Grand canyon and Graceland combined
Digital Vision/Getty Images

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Advantages and Disadvantages of Shopping Malls

Advantages:
Many different types of stores Many different assortments available Attracts many shoppers Main Street for todays shoppers Never worry about the weather Comfortable surrounding to shop Uniform hours of operation

Disadvantages:
Occupancy costs are high Tenants may not like mall management control of operations Competition can be intense

PhotoLink/Getty Images

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Challenge to Malls
Time pressured society makes it impractical to wander malls Fashion apparel sold in malls experiencing limited growth Malls are getting old and rundown unappealing to shop Anchor tenants are decreasing due to retail consolidation

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Lifestyle Centers

Photo provided by ICSC and used with permission of Aspen Grove Lifestyle Center

Courtesy of General Growth Properties

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Stores and Restaurants at Lifestyle Centers

Williams-Sonoma Victorias Secret

Restoration Hardware
Barnes & Noble/Borders Pottery Barn The Gap Bed Bath & Beyond Eddie Bauer Ann Taylor Starbucks Aeropostale Hallmark Johnny Rockets Dicks Sporting Goods Panera Bread Coldwater Creek

Banana Republic

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Lifestyle Centers
Usually located in affluent residential neighborhoods

Includes 50K sq. ft. of upscale chain specialty stores

Open-air configuration Design ambience and amenities Upscale stores Restaurants and often a cinema or other entertainment Small department store format may be there

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Fashion Specialty Centers

The McGraw-Hill Companies, Inc./Lars A. Niki, photographer

Upscale apparel shops Need to be anchored Dcor is elegant

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Outlet Centers
These shopping centers contain mostly manufacturers and retail outlet stores

Courtesy of Bealls, Inc.

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Tradeoff Between Locations

There are relative advantages and disadvantages to consider with each location.

Rent Traffic

Relative Advantages of Major Retail Locations

Location
Issues Large size draws people to area

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City

Strip
Center

Shopping
Mall

Free
Standing

People working/living in area provided source of customers

Source of entertainment/ recreation Protection against weather

+ +

Relative Advantages of Major Retail Locations

Location
Issues Security Long, uniform hours of operation Planned shopping area/balanced tenant mix Parking Occupancy costs (e.g. rent)

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CBD

Strip
Center

Shopping
Mall

Free
Standing

+ -

+ + +

+ -

+ +

+ +

Relative Advantages of Major Retail Locations

Location Issues Pedestrian traffic Landlord City Strip Center Shopping Mall Free Standing

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+ + +
?

+ +
?

+ ?

+ +
?

control
Strong competition Tax incentives

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Other Retail Location Opportunities

Mixed Use Developments Airports Resorts Hospitals Store within a Store

Royalty-Free/CORBIS

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Alternative Locations
Mixed Use Developments MXDs Hotels
Rob Melnychuk/Getty Images

Office Buildings

Civic Centers

D. Falconer/PhotoLink/Getty Images

Skip Nall/Getty Images

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Alternative Locations
Airports

Airports: Why wait with nothing to do?

Rents are 20% higher than malls Sales/sqft are 3-4 times higher than malls Best airports are ones with many connecting flights

Kim Steele/Getty Images

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Alternative Locations
Resorts

Captive audience Well-to-do customer Customers have time to shop

Royalty-Free/CORBIS

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Alternative Locations
Hospitals

Patients cannot leave Gifts are available

Royalty-Free/CORBIS

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Matching Location to Retail Strategy

Department Stores Regional Mall Specialty Apparel Central Business District, Regional Malls Category Specialists Power Centers, Free Standing Grocery Stores Strip Shopping Centers Drug Stores Stand Alone

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Shopping Situations
Convenience Shopping

The McGraw-Hill Companies, Inc./Andrew Resek, photographer

Minimize the customers effort to get the product or service by locating store close to where customers are located

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Shopping Situations
Comparison Shopping

Customers have a good idea of what type of product they want, but dont have a strong preference for brand, model or retailer.

Typical for furniture, appliances, apparel, consumer electronics, hand tools and cameras.

Ryan McVay/Getty Images

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Category Specialists
Consumers can see almost all brands and models in one store

The McGraw-Hill Companies, Inc./Andrew Resek, photographer

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Shopping Situations
Specialty Shopping

Customers know what they want Designer labels Convenient location matters less
The McGraw-Hill Companies, Inc./Andrew Resek, photographer

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Environmental Issues
Above-ground risks - such as asbestos-containing
materials or lead pipes used in construction.

Hazardous materials - e.g. dry cleaning chemicals,

motor oil, that have been stored in the ground.

Retailers Protection
Stipulate in the lease that the lessor is responsible for removal and disposal of this material if its found. Retailer can buy insurance that specifically protects it from these risks.

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Other Legal Issues

Zoning and Building Codes
Zoning determines how a particular site can be used. Building codes determine the type of building, signs, size, type of parking lot, etc. that can be used

Signs
Restrictions on the use of signs can also impact a particular sites desirability

Licensing Requirements
Some areas may restrict or require a license for alcoholic beverages