Chapter 7

Retail Locati ons

7-2
Ret ai l Locati ons
Chapt er 7
Si te Locati ons
Chapt er 8
Ret ai l Str ateg y
Chapt er 5
Fi nanci al Str at egy
Chapt er 6
Human Resour c e
Manag ement
Chapt er 9
Custo mer
Rel ati onshi p
Manag ement
Chapt er 11
Informati on and
Di st ri buti on
Syst ems
Chapt er 10
7-3
Questi ons
What types of locations are av ailable to
retailers?
What are the relativ e adv antages of each
location type?
Why are some locations particularly well suited
to specific retail strategies?
Which types of locations are growing in
popularity with retailers?
7-4
El ements i n Retail Mi x
Cus tomer Serv i c e
Merc handi se
As s ortment
Pri c i ng
Communi c ati on Mix
Store Di s pl ay
And Des i gn
Locat ion St rat egy
7-5
What Are the
Three Most Important Things in Retailing?
Eddie Tan/Li feFil e/Getty Images
Location! Location! Location!
7-6
Facts on Retail Space
Per Capi ta Retail Space Compar i son
US 46.6 square feet
UK 23.0 square feet
Canada 13.0 square feet
Australia 6.5 square f eet
India 2.0 square feet
Mexico 1.5 square feet
7-7
Why i s Store Locati on Important for a Retail er?
Location is t ypically prime consideration
in customers store choice.
Location decisions have strategic
importance because t hey can help to
develop sustainable competiti ve
advantage.
Location decisions are risky: invest or
lease?
F. Sc huss ler/PhotoLink/Getty Images
Unplanned Business Districts and Isolated Locations
7-9
Types of Retail Locati ons
Free Standing Sites
City or Town Locations
Inner City
Mai n Street
Shopping Centers
Strip Shopping Cent ers
Shopping Mal ls
Other Location Opportunities
7-10
Selecting a parti cul ar l ocati on type
Inv olves ev aluating a series of trade-offs between
The size of the trade area (geographic area
encompassing most of the customers who would
patronize a specific retail site)
the occupancy cost of t he location
The pedestrian and vehicle customer traffic
The restrictions placed on store operations by t he
property manager
The convenience of the location for customers
7-11
Tradeoff Between Locations
Rent
Tr affi c
There ar e relati ve adv ant ages
and di sadvantages to consi der
with eac h l ocat ion.
Corner Inf luence and Old Navy
7-15
Types of Locati ons
7-16
Unpl anned Retail Locati ons
Freestanding Sites location f or individual store
unconnected to other retailer
Adv antages:
Conv enienc e
High traffic and v isi bi lity
Modest occ upancy cost
Separati on fr om competiti on
Few restr ictions
Disadvantages:
No foot traffic
No drawi ng power
TheMc Graw-Hil l Companies, Inc./AndrewResek ,photographer
JCPenney, Sears, Wal greens ar e shifting to stand alone locati ons
7-17
Unpl anned Retail Locati ons
Merchandise Kiosks small temporary selling
stations located in walkway s of enclosed malls,
airports, train stations or office building lobbies.
KentKnuds on/PhotoLink/Getty Images
7-18
Ci ty or Town Locati ons
Gentr ific ation is bri nging popul ati on back to t he cit ies.
TheMc Graw-Hil l Companies, Inc./AndrewResek ,photographer
Advantage to Ret ailers:
Affluenc e retur ned
Young prof ess ionals
Returned empty -nesters
Incentiv es to move prov ided by cit ies
Jobs!
Low occ upancy c osts
Hi gh pedestr ian traffic
7-19
Central Busi ness Di stri ct (CBD)
Draws people i nto areas duri ng bus iness hours
Hub for public tr ans portati on
Pedestri an traffic
Res idents
Hi gh s ecurity requir ed
Shopl ifting
Park ing is poor
Eveni ngs and week ends are s low
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Spik e Mafford/Getty Images
7-20
Mai n 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
7-21
Inner Cit y: refers to a high densi ty urban area that has higher
unempl oyment & lower medi an i ncome than the surroundi ng
metropoli tan area.
Inner city retailers achieve high sales volume,
higher margins and higher profits
Unmet demand tops
25% i n many i nner city
mark ets
Inner city customer wants branded merc handis e
7-22
Shopping Centers
Shopping Center Management Controls:
Parking
Security
Parking lot lighting
Outdoor signage
Advertising
Special events for customers
TheMc Graw-Hil l Companies, Inc./AndrewResek ,photographer
7-23
Types of Shopping Centers
Neighborhood and Community Centers (Strip
Centers)
Power Centers
Enclosed Malls
Lif esty le Centers
Fashion Specialty Centers
Outlet Centers
7-24
Neighborhood and Community Centers
Attached row of st ores
Managed as a unit
Onsite parking
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Adv antages
Conveni ent loc ati ons
Easy park ing
Low occ upancy c osts
Dis advantages
Limited trade ar ea
Lack of ent ertainment
No protection from weather
7-25
Power Centers
Shopping centers that consist primarily of collecti ons of big-box retail
stores such as discount stores (Target), off-price stores (Marshalls),
warehouse clubs (Costco), and category specialists (Lowe s, Best
Buy, Di cks)
Open air set up
Free-standing anchors
Limited small specialty
stores
Many located near
enclosed malls
Low occupancy costs
Convenient
Modest vehicular &
pedestrian traffic
Large trade areas
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7-26
Shopping Mal l s
Regional shopping
malls (less than 1
million square feet)
Super regional malls
(more than 1 million
square feet)
The South China Mall in Dongguan, China
10- 27
Planned Shopping Cent er s
7-28
Advantages and Di sadvantages of
Shopping Mal l s
Adv antages:
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
Dis advantages:
Occupancy costs are high
Tenants may not like mall management control of operations
Competition can be intense
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7-29
Chall enge to Mall s
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
Strategies?
Mak e shoppi ng mor e enjoyabl e (e. g., sofas, chil dren s pl ay ing ar eas)
Great food desti nat ion (fast food and f ull -ser vic e rest aur ants)
Tail or make its offeri ng to cater to changi ng demographics ( e.g.,
reposit ioni ng ol der s hopping center s for Hispanic mark ets)
Mal l renov ati on and redev el opment
Oct 10, 2011
7-30
RS 22,000 CRORE...
THE AMOUNT OF MONEY SUNK
INTO BUIL DING INDIA S 255
MALLS.
MORE WILL BE SPENT AS MORE
MALLS COME UP
Ernst & Young say that 80 % of
Indi a s 255 mal l s ar e ai l i ng
7-31
7-32
Li festyl e Centers
Photoprov ided by ICSCandused wi th permi ssi on of Aspen Grov e Lifes ty le Center
Attractiv e to speci alty r etai lers
7-33
Li festyl e Centers
Usual ly l ocat ed in affl uent
resi denti al nei ghborhoods
Includes 50K sq. ft. of ups cale
chain s peci alty stor es
Open-air confi gur ati on
Des ign ambience and
amenit ies
Ups cale stor es
Rest aur ants and often a
cinema or ot her entertai nment
Small department stor e format
may be there
7-34
Fashi on Specialty Centers
Upscale apparel shops
Tourist areas/central business
districts
Need not t o be anchored
Dcor is elegant
High occupancy costs
Large trade area
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7-35
Outlet Centers
Thes e shoppi ng c enters c ont ai n most ly manuf actur ers and retail outl et stor es
Courtesy of Beal ls , Inc.
7-36
7-37
Theme/Festi val Centers
Located in places of
historic interests or for
tourists
Anchored by
restaurants and
entertainment f acilities
7-38
Larger, Multi -format Devel opments:
Omni centers
Combines enclosed malls, lif estyle center, and
power centers
Larger dev elopments are targeted
to generate more pedestrian traffic and longer
shopping trips
To capture cross-shopping consumers
7-39
Mi xed Use Devel opments (MXDs)
Combine several
different uses int o one
complex, including
shopping centers, office
tours, hotels, residential
complexes, civic cent ers,
and convention centers.
Offer an all-inclusive
environment so that
consumers can work,
live, and play in a
proximal area
7-40
Other Location Opportunities
Airports
Resorts
Store within a Store
Temporary or pop-up stores
7-53
Alternative Locations
Ai rports
Airports: Why wait with nothing to do?
Rents ar e 20% hi gher than mall s
Sal es/s quare ft ar e 3- 4 times hi gher than mal ls
Best airports ar e ones wit h many connecti ng fli ghts
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7-54
Alternative Locations
Resort s
Captive audience
Well-to-do customer
Customers have time to shop
Royal ty -Free/CORBIS
7-56
Located within other, larger stores
Examples:
Grocery store with ser vice providers (coffee bars,
banks, clinics, video outlets)
Sephora in JCPenney
Alternative Locations
Store wi thi n a Stor e
7-57
Alternative Locations
Hospi tal s
Pati ents cannot l eave
Gi fts ar e avai l abl e
Royal ty -Free/CORBIS
7-58
Matchi ng Locati on to Retail Strategy
The selection of a location t ype must reinforce the ret ailers
strategy
be consistent with
the shoppi ng behavi or
size of the tar get mark et
The ret ai ler s posit ion in its target mar ket
Department St ores Regional Mall
Specialty Apparel Central Business District, Regional
malls
Category Specialists Power Centers, Free Standing
Grocery Stores Strip Shopping Centers
Drug Stores Stand Alone
7-59
Shopping Behavi or of Consumers
i n Retail ers Target Market
Factors affecting the location choice
Consumer Shopping Situations
Convenience shopping
Comparison shopping
Specialty shopping
Density of Target Market
Ex. Convenience stores in CBD; comparison
shopping stores next to Wal-Mart
Uniqueness of Retailing Offering
Convenience of locations is less important
Ex. Bass Pro Shop
7-60
Conveni ence Shoppi ng
Minimiz e the cust omers effort to get
the pr oduct or s erv ice by l ocat ing
store c los e to where c ustomers are
loc ated
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7-61
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.
Ry an McVay /Getty Images
Typic al for f urnitur e,
appl iances, appar el,
cons umer electronics,
hand tools and
cameras.
Competing ret ai lers loc ate
Near one another
7-62
Category Speciali sts
Offer the benefits of compari son shoppi ng
Consumer s can see almost al l br ands & models i n one st ore
Dest ination stor es
TheMc Graw-Hil l Companies, Inc./AndrewResek ,photographer
7-63
Specialty Shoppi ng
Cust omers know what t hey want
Designer labels
Convenient locat ion mat t ers less
TheMc Graw-Hil l Companies, Inc./AndrewResek ,photographer
7-64
Vi rtual Shopping
7-65
Envir onmental I ssues
Abov e-ground risks - such as asbest os-cont aining
mat erials or lead pipes used in const ruct ion.
Hazardous materials - e.g. dry cleaning chemicals,
mot or oil, that have been st ored in the ground.
Retailers Protection
St ipulat e in the lease t hat t he lessor is responsible
f or removal and disposal of this mat erial if it s
f ound.
Ret ailer can buy insurance t hat specif icall y
prot ect s it f rom t hese risks.
7-66
Ot her Legal Issues
Zoning and Building Codes
Zoning determines how a particular site can be
used.
Building codes det ermine the t ype of building,
signs, size, type of parking lot, etc. t hat 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