rm lecture4

7/27/2019 Rm Lecture4

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www.bradford.ac.uk/management

Retail Location

Lecture 4

http://www.bradford.ac.uk/management

http://www.bradford.ac.uk/management



Lecture Objectives

• To ensure you appreciate the importance

of location within retail strategy

• To explain how retail location may be

classified

• To consider the location decision process



Importance of Location

“Location, location and location” Sir Charles Core

“at least 85% of store performance isdetermined ……by local and external

factors” Collins 1992



Importance of Location

• Store choice factors - Food and Grocery

– Brand choice

– Price

– Convenience

– Customer services

– Peripheral services



Location factors

• Traffic

• Distribution Intensity

• Proximity v destination

• Strength of proposition

• Back to marketing basics – understanding and deliveringcustomer needs better than competition



Location Classification

• Incremental v planned

• City Centre v out of town

• Pre-existing v Brownfield v Greenfield



How do retailers decide?

• Intuition and availability

• Paper based v computer based

• Complex due to saturation/planning laws

• Choose location to fit offer or flex offer tofit location??



How do retailers decide?

• Macro location evaluation

– Sequential Hurdle

– Multi-factor

• Micro location evaluation

• Site selection



Micro evaluation factors

• Population

• Infrastructure

• Retail outlets (number and type)

• Costs



Population

• Who are my customers?

• Are there enough of them?

• Do I need to/can I adapt my offer?



Defining a potential trade area

• Central Place Theory – Attractiveness of store

– Cost/benefit outcomes

• Land Value Theory – Sites go to highest bidder

– He who affords wins

• Minimum Differentiation

• Spatial Interaction• Concentric Zones

• Shopper mobility/time constraints



The principle of minimum

differentiation (PMD)

• PMD describes the intra-centre agglomeration of

similar retail outlets. It is found that many retailers

choose to locate near similar retailers orcomplementary activities, in order to attract a higher

flow of customers jointly.

• Assumptions: a retailer would be able to maximize

profits by locating or relocating closer to a

competitor in order to gain a larger market area.



Spatial Interaction

Gravitational model

(Reilly’s Law)

• How competing retail areas affect shoppers in intermediate residentialareas

• The selection of a primary trading location is based upon the idea that

consumers are attracted towards one location as opposed to anotherby its draw or poll effect.

• Assumptions:1) two competing area are equally accessible from amajor road 2) these retailers offers no additional competitiveadvantage and are equally effective 3)the areas are similar in terms ofethnic, civic and general architecture, facilities or parking

• More customers will be attracted to the larger city or community toshop due to the greater amount of store facilities and choice whichmake any extra traveling time worthwhile.



An Example of Reilly’s Law



Concentric Zones



Shopper Mobility/time Constraints

Matrix



The Davies & Clarke Model

(1994)



Infrastructure

• Pedestrian flow and entry routes

• Public transport

• Road networks• Parking

• Visibility

• Site Access



Retail Outlets

• Total stores

• Planning applications

• Likely disposals• Complementary stores

• Competing stores



Summary

• To make sales you need shoppers

• To get enough shoppers you need to be inthe right place for your customers

• Location decisions involve a complexprocess of data collection and analysis

rm lecture4

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