INSTITUTE OF MANAGEMENT, NIRMA UNIVERSITY

(MBA-FT 2016-18, YEAR-II, TERM-IV)

4. Parameters of Retail locations w.r.t

Store Types
Group Assignment
In Partial Fulfilment of the Requirement of Retail Marketing course

Submitted to:
Prof. Sapna Parashar

Submitted by:
Group 11
Section: C
Name Roll Number
Nidhi Agarwal 161135
Ankit Agarwal 161204
Visharad Agarwal 161267
Abhik Das 151202
Rikita Shukla 161342
Literature Review

1. The role of geodemographic segmentation in retail location

strategy
-scar Gonzlez-Benito and Javier Gonzlez-Benito

This paper studies the role of geodemographic segmentation in the development of an optimal
retail location strategy. Location is a very important decision to ensure the viability of retail
stores. The retail site determines the market area, means it determines the set of consumers
willing to travel to the store for shopping. The quantity of consumers that make up this market
area, as well as their affinity with the store in terms of shopping needs and habits, are key
questions to reach a profitable sales level. Geodemographic segmentation seeks to capture the
spatial heterogeneity of the market by classifying intra-urban areas in terms of the characteristics
of their residents. The viability of a retail store depends to a great extent on its capability to
satisfy the expectations of the consumers that make up its market area. Only those sites
surrounded by consumers in accordance to the positioning of the store should be selected.

Retail location decisions can be managed at different levels of geographic aggregation: choice of
region, metropolitan area, intra-urban area, specific site, etc. But the factors to bear in mind in
the assessment of possible locations are classified into two types: 1) market factors, relating to
the potential of the location for attracting consumers and enhancing sales; 2) operative factors,
relating to the effort involved in opening and operating the store. The former refer to the
capability to generate income, while the latter refer to the costs involved. The key factors are as
mentioned below:
Geodemographic segmentation refers to the classification of consumers by the type of residential
area in which they live. It is therefore based on the differentiation of residential areas according
to the demographic, socioeconomic or even psychographic characteristics of their residents. The
geodemographic profile can also be an indirect indicator of the presence of complementary
facilities that allow retailers to generate and capture flows of possible customers, or the presence
of specific types of competitor that weaken or strengthen the expected attraction for the new
store. Finally, the geodemographic profile can also be an indirect indicator of the costs involved
in the opening and maintenance of the store in each possible location.

In the study an empirical analysis was conducted on some leading supermarket chains in Spain.
Its results showed that the commercialization of standard geodemographic classifications
covering the urban geography of most of the developed countries allows retailers to develop a
detailed analysis of the spatial heterogeneity of the market and identify the residential zones that
are more adequate for the opening of new stores. The utility of these standard classifications
becomes reinforced when they are complemented with additional information recorded in the
geographic information systems that support them.

This result confirms the potential of geodemographic segmentation for the spatial delimitation of
retail chains target markets. It should be taken into account that once the utility of
geodemographic segmentation has been proved, the interest lies in identifying the relationships
between geodemographic dimensions, consumers shopping needs and habits, and the attributes
and qualities of the stores that satisfy them.
References:
Gonzlez-Benito, ., & Gonzlez-Benito, J. (2005). The role of geodemographic
segmentation in retail location strategy. International Journal Of Market Research, 47(3),
295-316