Scarb Eesbm6e PPT 14

CHAPTER
Choosing
Choosing the
the Right
Right
Location
Location and
and Layout
Layout
Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall
14
Choosing a Location
The right region of the country

The right state in the region
The right city in the state
The right site in the city
Ch. 14: Location and Layout
14 - 2
Choosing the Region:

Sources of Information
Census data
ZoomProspector
www.zoomprospector.com
Population Reference Bureau
http://www.census.gov/
http://factfinder.census.gov
www.prb.org
STAT-USA
http://www.statusa.gov
14 - 3

Demographics USA
Lifestyle Market Analyst
Survey of Buying Power
Editor and Publisher Market Guide
The American Marketplace:

Demographics and Spending Patterns
14 - 4

(continued)
Commercial Atlas and Marketing Guide
Zip Code Atlas
Geographic Information Systems (GIS)
U.S. Census Departments TIGER
14 - 5
Geographic Information
Systems (GIS)
Computerized programs combining

map-drawing with database
management capability.
Search through virtually any database

and then plot the results on a map.
Visual display reveals

otherwise hidden trends.
14 - 6
Choosing the State
Proximity to markets
Proximity to needed raw materials
Wage rates
Labor supply needs
Business climate
Tax rates
Internet access
Total operating costs
14 - 7
State Evaluation Matrix

State Weighted Score (Weight x Score)
Location Criterion
Weight
Score (Low =
1, High = 5)
State 1
State 2
State 3
Quality of labor force

Wage rates
Union activity
Property/building costs
Utility costs
Transportation costs
Tax burden
Educational/training assistance
Start-up incentives
Raw material availability
Quality of life
Other:
Other
TABLE 14.1
Total Score
14 - 8
Choosing the City
Population trends
Competition
Clustering
Compatibility with community
Local laws and regulations
14 - 9
Choosing the City

(continued)
Appropriate infrastructure
Cost of utilities and public services
Incentives
Quality of life
14 - 10
Location Criteria for

Retail and Service
Trade area size the region

from which a business can
expect to draw customers
Retail compatibility
Degree of competition
Index of retail saturation (IRS)
14 - 11
Index of Retail Saturation

C
x
RE
IRS =
RF
Where:
C = Number of customers in the trading area
RE = Retail expenditures equals the average
expenditure per person for the product in
the trading area
RF = Retail facilities = the total square feet of
selling space allocated to the product in
the trading area
14 - 12

Retail and Service
(continued)
Trade area size the region

from which a business can
expect to draw customers.
Retail compatibility.
Degree of competition.
Index of retail saturation (IRS).
Reillys law of retail gravitation.
14 - 13
Reillys Law of Retail Gravitation

BP
1
d
Pb
Pa
Where:
BP = Distance in miles from location A to the
break point
d
= Distance in miles between locations A and B
Pa = Population surrounding location A

Pb = Population surrounding location B
14 - 14

Retail and Service
(continued)
Transportation network
Physical and psychological barriers
Customer traffic
Adequate parking
Reputation
Visibility
14 - 15
Retail & Service Location Options
Central Business Districts (CBDs)
Neighborhood locations
Shopping centers and malls
14 - 16
Shopping Centers and Malls
Neighborhood shopping centers
Community shopping centers
3 to 12 Stores; anchor is supermarket or

drugstore; serves up to 40,000 people.
12 to 50 stores; anchor is department or variety
store; serves 40,000 to 150,000 people.
Power centers
Combine drawing power of a mall with

convenience of neighborhood shopping center;
anchor stores typically occupy 80% of space.
14 - 17

(continued)
Theme or festival centers
Outlet centers
Employ a unifying theme, often involving

entertainment, to attract tourists.
Feature manufacturers and retailers outlet
stores selling name-brand goods at discount
prices; usually follows open air design.
Lifestyle centers
Located near affluent residential

neighborhoods; designed to look more like
a central business district than a shopping
center or mall.
14 - 18
Regional shopping malls
50 to 100 stores; anchor is one or more major

department stores; draws customers from a
large trading area, often 5 to 15 miles or more.
Super-regional shopping malls
Similar to a regional mall but bigger; trading

area is 25 miles or more in all directions.
Examples
Mall of America (Bloomington, MN), the
largest mall in the U.S.
West Edmonton Mall (West Edmonton,
Canada), the largest mall in North America.
14 - 19
FIGURE 14.1 Shopping Mall Patterns

Centers.
Source: International Council of Shopping
14 - 20
Retail and Service

Location Options
(continued)
Near competitors
Inside large retail store
Outlying areas
Home-based businesses
14 - 21
Location Decisions for

Manufacturers
Foreign trade zones
14 - 22
FIGURE 14.2
How a Foreign Trade Zone (FTZ) Works
14 - 23
Manufacturing Locations
Foreign trade zones
Empowerment zones
Business incubators
14 - 24
Business Incubators
Organizations that combine low-cost,

flexible rental space with a multitude of
support services for their small business
residents.
More than 1,100 in operation across the U.S.
They work!
Companies that graduate from incubators

have a success rate of 87%.
84% of graduates stay in the local community,
creating local job opportunities.
14 - 25
FIGURE 14.3 Business Incubator Tenants by Industry

Source: National Business Incubation Association.
14 - 26
Layout
The logical arrangement of the physical
facilities of a business that contributes
to efficient operations, increased
productivity, and higher sales.
Study:
Employees believe that the quality and

quantity of their work would increase by
an average of 25% with better workplace
design.
14 - 27
Layout: External Factors
The size must be adequate to

accommodate business needs.
The appearance must create the proper

image or personality for the business
in the customers eyes.
The entrance must invite

customers to come in.
14 - 28
Layout: External Factors

(continued)
Must comply with Americans with

Disabilities Act (ADA).
Pay attention to the business sign,

the most direct method of reaching
potential customers.
14 - 29
A Business Sign
Tells potential customers who you are

and what youre selling.
Contrasting colors and simple typeface.
Should be visible, simple, and clear.
Should be legible both day and night.
Must be maintained properly.
Must comply with

local sign ordinances.
14 - 30
Building Interiors
Ergonomics is an integral part of any design.

Proper layout and design pays off in higher
productivity, efficiency, or sales.
Proper lighting is measured by what is ideal
for the job being done the use of natural
light can increase retail sales.
Sound and scent should appeal to all

customers and can boost sales.
Environmental-friendly design for efficiency
and appeal.
14 - 31
Layout Guidelines
Know your customers buying habits

and plan your layout accordingly.
Display merchandise as attractively as

your budget will allow.
Display complementary items together.
Recognize the value of floor space;

never waste valuable selling space with
non-selling functions.
14 - 32
FIGURE 14.4
Space Values for a Small Store
Source: Retailing, 6e, 1997 Prentice Hall
Dale M. Lewis
Ch. 6: Franchising and the Entrepreneur
14 - 33
Three Retail Layout Patterns

In addition to the text
Grid
Rectangular with parallel aisles;
formal; controls traffic flow; uses
selling space efficiently.
Supermarkets and self-service
discount stores.
14 - 34

Free-Form
Free-flowing; informal; creates
friendly environment; flexible.
Small specialty shops.
14 - 35

Boutique
Divides store into a series of
individual shopping areas, each
with its own theme; unique
shopping environment.
Small department stores.
14 - 36
Layout for Manufacturers
Type of product
Type of production process
Ergonomic considerations
Economic considerations
Space availability
within the facility
14 - 37
Manufacturing Layouts
Analyzing production layouts: Avoid

the 7 forms of waste
Transportation
Inventory
Motion
Waiting
Overproduction
Processing
Defects
14 - 38
Conclusion
Location is an important decision for
businesses in the areas of:
Retail
Service
Manufacturing
The criteria for site selection, layout,

design, and ADA considerations
present challenges and opportunities
for entrepreneurs.
14 - 39
All rights reserved. No part of this publication may be

reproduced, stored in a retrieval system, or transmitted, in any
form or by any means, electronic, mechanical, photocopying,
recording, or otherwise, without the prior written permission of
the publisher. Printed in the United States of America.
14 - 40

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CHAPTER

Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall

The right region of the country

Ch. 14: Location and Layout

Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall

Choosing the Region:

Population Reference Bureau

Ch. 14: Location and Layout

Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall

Choosing the Region:

Lifestyle Market Analyst

Survey of Buying Power

Editor and Publisher Market Guide

The American Marketplace:

Ch. 14: Location and Layout

Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall

Choosing the Region:

Commercial Atlas and Marketing Guide

Zip Code Atlas

Geographic Information Systems (GIS)

U.S. Census Departments TIGER

Ch. 14: Location and Layout

Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall

Computerized programs combining

Search through virtually any database

Visual display reveals

Ch. 14: Location and Layout

Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall

Choosing the State

Ch. 14: Location and Layout

Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall

State Evaluation Matrix

Quality of labor force

Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall

Choosing the City

Compatibility with community

Local laws and regulations

Ch. 14: Location and Layout

Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall

Choosing the City

Cost of utilities and public services

Ch. 14: Location and Layout

Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall

Location Criteria for

Trade area size the region

Index of retail saturation (IRS)

Ch. 14: Location and Layout

Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall

Index of Retail Saturation

Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall

Location Criteria for

Trade area size the region

Index of retail saturation (IRS).

Reillys law of retail gravitation.

Ch. 14: Location and Layout

Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall

Reillys Law of Retail Gravitation

= Distance in miles between locations A and B

Pa = Population surrounding location A

Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall

Location Criteria for

Physical and psychological barriers