Choosing a location for a boutique

Team-4
Pavan K
Reddy
Kowshik
Jaswanth

Facts of the case:

Stephanie Wilson is in her late 30s & has been working with the municipal government
ever since college.
She is divorced, with two children (aged five & eight).
She has a flair for fashion & wants her own business, to be able to spend more time with
her children.
She has taken evening courses in fashion design & retail management.
She has to decide location of her ready-to-wear boutique from the following available
options:
The Downtown Arcade
Tenderloin Village
Appletree Mall

Types of locations for a retail store

Shopping
centre
Modern trade

City or Business
Dist.

Airport,
Petrol
bunk

Free standing

Factors influences a retail store

Economic conditions:
location

Resources availability
Growth of population and areal development
Pedestrian and vehicle traffic generated by location

Competition: level of competition

Strategic fit:
Location associated market size and target segments
Demographics and lifestyle profile
Cost of operating: Store Occupancy
Cost of location, utilities and other cost
Size of the trade area, Accessibility, parking
Restrictions on store operations by property owner
Proximity to other business

Pluses & minuses of each

location
I. The Downtown
Arcade
II. Tenderloin Village
III. Apple tree Mall

The Downtown Arcade

Pluses:
Located in the central business district ,Prime location
Massive redevelopment which attract a lot of customer interest and abundant foot
traffic
High visibility, situated near main ground floor entrance.
Might attract tourist and downtown business customers
Modest monthly rental and lease ($20*900sq. ft 18,000), parking ,garage.

Minus:
vacant for past 15 years,
Locationwillnotbecompletedforanother6years
Requiresa threeyearcommitmentandcouldpotentiallytakeafull8percentofsales
revenueforrent
Competition may increase
Down town arcade area comprises of different segments. Risk of target segments.

Tenderloin Village
Plus:
Location of stores close to her home.
Lowest rent ($16.66*900sq. ft 15,000) no overage clause, short lease.
Traffic and nature of customers known.
Might afford opportunity for unusual visual merchandising and store
design.
Good visible location in retail area.

Minus:
Traffic limited to residents of the village
Limited retailing doesn't have a big draw for outside neighborhood
Competition from other three existing boutiques
Need to renovate on her own

Plus:

Apple tree mall

Traffic and nature of customer known.

Mall draws most people of locations considered.
Two doors down from local departmental store
Largest space as compared to other two sites, at 1200 sq. feet.
Mall sales growth are 12% ahead of last year.
Escape clause if sales dont reach $411,500 after 2 years.
Minus:
Very high annual rent at $28,800 ($24 per sq. feet).
Additional charge of 1% of sales for mall maintenance & promotion.
Longest minimum lease period (5 years).
Very high competition, 9 women clothing retailers already present.
New mall might draw traffic initially. But longer term it might not
Competitive stores getting ready by next 18 months close the mall
Long and narrow awkward shop space.

That down town arcade

Apple Tree mall

Tenderloin Village

City central business Dist.

8 year Suburban mall,

Retail centre ,Reginal
centre

Urban area , Trendy

enclave, near to
Stephanies house

3 levels with 68 shops,

several offices shops are
active

9 compitetors,3
departmental stores,100
small shops, near to high
way

3 compitetors,20 small
retailers, restaurants,
convention center

High visibility ,Parking,

Garage

Long and narrow 50X24*ft

Excellent visibility; old

building
Villages main street

Rent :$20*900sq. ft
18,000 annum(moderate)

Rent:$24*1200sq. ft
28,800 annum

Rent:$16.66*900sq. ft
15,000 annum

If Sales exceeds 225 K

8% (rent)

If Sales exceeds 411.5 K

8%
1% extra charge on
common

Sales exceeds 187.5 K

8%
No extra charge

What type of store would be most

appropriate for
each location?

Downtown ArcadeStore would have to cater to working women who

work downtown and/or tourists. Merchandise might be more traditional,
conservative with high service.
Tenderloin VillageMerchandise tailored to the fernds and rich
neighborhood. Could be more eclectic.
Appletree MallNeed to develop a merchandise assortment that would
be unique, but offer competitive values to other stores in the mall. Due
to the high rental charge, would have to be more concerned about
maintaining high sales volume and higher inventory turns to make a
profit.

If you were Stephanie which location would

you choose? Why?
The best location for Stephanie s Boutique will be the one in TENDERLOIN
VILLAGE.
It offers the maximum advantages & has the least drawbacks.
Some reasons why Tenderloin should be chosen are:
Stephanie lives here & hence, she can start her business & also spend more
time with her children, which she specifically wants.
The neighborhood is trendy with urban gentry. Thus, there will be a strong
target market for her womens boutique, which would sell fashionable
clothing.
Being located on the ground floor of a house, on the main street of the
neighborhood, it offers excellent visibility & would bring in more customers.

Reasons for choosing Tenderloin

Lowest rent $15,000 annually , no coverage clause or any other hidden
costs.
Landlord knows Stephanie. Thus, it allows flexibility in payments,
lease terms, etc & a cooperative relationship in case of any problems.
Minimum lease period is the shortest. i.e 2 years
Hence, if Stephanie has any problems, she can move out easily after
that period.
The presence of 20 small retailers & upscale restaurants can also help
Stephanie indirectly, through higher sales from people outside the
neighborhood, who visit these shops.
The Tenderloin Village has the lowest risk and probably the lowest profit
potential, but this would offer the greatest opportunity for Stephanie to
express her creativity.

Thus, this location is the best & should be chosen.

Thank you