Retail Management

Lecture 12
Choosing a Store Location
 Factors to Consider in
Evaluating Retail Trading Areas
1. Population Size and Characteristics
 Total size and density
 Age distribution
 Average educational level
 Percentage of residents owning homes
 Total disposable income
 Per capita disposable income
 Occupation distribution
 Trends
 3. Closeness to
2. Availability Sources of
of Labor Supply

 Management  Delivery costs

 Timeliness
 Management trainee
 Number of Manufacturers
 Clerical
 Number of wholesalers
 Availability of product Lines
 Reliability of product lines

4. Economic Base
 Dominant industry
 Extent of diversification
 Growth projections
 Freedom from economic and
seasonal fluctuations
 Availability of credit and
financial facilities
5. Competitive
Situation
• Number and size of existing
competition
• Evaluation of competitor
strengths and weaknesses
• Short-run and long run
outlook
• Level of saturation
6. Availability of 7. Regulations
Store Locations
 Number and type of store • Taxes
locations • Licensing
 Access to transportation • Operations
 Owning versus leasing • Minimum wages
opportunities • Zoning
 Zoning restrictions

 Costs
Types of Location
 Many types of locations are available for retail stores, each
type with its own strengths and weaknesses
 Retailers have three basic types of locations to choose from:

 Freestanding
 City or town/business district
 Shopping center

 Retailers can also locate in a nontraditional location such

as in an airport or within another store (Shop in Shop
concept)
Freestanding Sites
Freestanding sites are retail locations for an individual,
isolated store not connected to other retailers; however, they
might be near other freestanding retailers or a shopping center.

The advantages of freestanding locations are

 Convenience for customers (easy access and parking)
 High vehicular traffic
 Visibility to attract customers driving by
 Modest occupancy costs
 and fewer restrictions on signs, hours, or merchandise, as are
typically imposed in shopping centers
City or Town Locations

In general, urban locations have

 Lower occupancy costs than enclosed malls
 Often have high pedestrian traffic during the day, but
not at night.
 Vehicular traffic is limited due to congestion in urban
areas
 Parking problems reduce consumer convenience
 Unlike freestanding locations, store signage can be
restricted in these locations
Shopping Center
A shopping center is a group of retail and other commercial establishments
that are planned, developed, owned, and managed as a single property

By combining many stores at one location, the development attracts more
consumers to the shopping center than would be the case if the stores were at
separate locations

The developer and shopping center management carefully select a set of

retailers that are complementary to provide consumers with a comprehensive
shopping experience, including a well thought-out assortment of retailers

However, surprisingly, it’s not uncommon, for instance, for a store’s sales to
increase when a competing store enters the shopping center
Pop-Up Stores and Other
Temporary Locations

Retailers and manufacturers sometimes open pop-up stores,

which are stores in temporary locations that focus on new
products or a limited group of products
Store within a Store
 Another nontraditional location for retailers is within other, larger
stores

 Retailers, particularly department stores, have traditionally leased

space to other retailers, such as sellers of fine jewelry, furs, or high-end
designer brands

 Grocery stores have been experimenting with the store-within-a-store

concept for years with service providers like coffee bars, banks, film
processors, and medical clinics.
LOCATION AND RETAIL STRATEGY

 The selection of a location type must reinforce the retailer’s

strategy

 The location-type decision needs to be consistent with the

shopping behavior and size of the target market and
the retailer’s positioning in its target market
Shopping Behavior of Consumers
A critical factor affecting the type of location that
consumers select to visit is the shopping situation in
which they are involved

Three types of shopping situations are

1. convenience shopping
2. comparison shopping
3. and specialty shopping
1. Convenience Shopping
When consumers are engaged in convenience shopping situations,
they are primarily concerned with

 Minimizing their effort to get the product or service they want

 They are relatively insensitive to price and indifferent about which brands

to buy

 Thus, they don’t spend much time evaluating different brands or retailers

 They simply want to make the purchase as quickly and easily as possible
2. Comparison Shopping
Consumers involved in comparison shopping situations have a general idea
about the type of product or service they want
but
they do not have a well-developed preference for a brand or model
However
the purchase decisions are important to them,
so
they seek information
and
are willing to expend effort to compare alternatives

Consumers typically engage in this type of shopping behavior when buying

furniture, appliances, apparel, consumer electronics, hand tools, and cameras
3. Specialty Shopping

When consumers go specialty shopping,

they know what they want

and

will not accept a substitute

They are brand and/or retailer loyal and will pay a

premium or expend extra effort, if necessary, to get exactly
what they want
Shopping Center
A shopping center is a group of retail and other commercial establishments
that are planned, developed, owned, and managed as a single property

By combining many stores at one location, the development attracts more
consumers to the shopping center than would be the case if the stores were at
separate locations

The developer and shopping center management carefully select a set of

retailers that are complementary to provide consumers with a comprehensive
shopping experience, including a well thought-out assortment of retailers

However, surprisingly, it’s not uncommon, for instance, for a store’s sales to
increase when a competing store enters the shopping center