Site Selection

Overview

Step 1: investigate alternative trading

areas (As discussed in Chapter 9)

Step 2: determine what type of location

is desirable

Step 3: select the general location

Step 4: evaluate alternative specific

store sites

2

Three Types of Locations

Isolated

Store

Planned

Shopping

Center

Unplanned

Business

District

3

Isolated Stores

Advantages* No competition

* Low rental costs

* Flexibility

* Good for convenience stores

* Better visibility

* Adaptable facilities

* Easy parking

Disadvantages* Difficulty in attracting

customers

* Travel distance

* Lack of variety for customers

* High advertising expenses

* No cost sharing

* Restrictive zoning laws

4

Examples of Isolated Stores

Large-store

formats Wal-Mart

Costco

Convenience

stores 7-Eleven

Site Selection and Starbucks

6

Unplanned Business Districts

Central Business

District

Secondary

Business

District

Neighborhood

Business

District

String

7

A Revitalized Central Business District

Unplanned Business Districts and Isolated

Locations

Planned Shopping Centers

Advantages* Well-rounded

assortments

* Strong suburban population

* One-stop, family shopping

* Cost sharing

* Transportation access

* Pedestrian traffic

Disadvantages* Limited flexibility* Higher rent* Restricted

offerings* Competition* Requirements for

association memberships

* Too many malls* Domination by

anchor stores

Characteristics of Centers

Features Regional Center Total site area 30-100+

Total sq. ft. leased 400,001-2,000,000+

Principal tenant 1+ department stores

Number of stores 50-150 or more

Minimum # of people in trading area

100,000+

Driving time of trading area Up to 30 minutes

Location Outside central city on highway

Characteristics of Centers

Features Community Center

Total site area 10-40+

Total sq. ft. leased 100,001-400,000

Principal tenant Supermarket or drug store

Number of stores 5-15

Minimum # of people in trading area

3,000-50,000

Driving time of trading area

Fewer than 15 minutes

Location In a single residential area

Characteristics of Centers

Features Neighborhood Center

Total site area 3-15+

Total sq. ft. leased 300,000-100,000

Principal tenant Branch department store

Number of stores 15-25 or more

Minimum # of people in trading area

20,000-100,000

Driving time of trading area

Up to 20 minutes

Location Close to a populated residential area

Festival Walk, Hong Kong

Location and Site Evaluation

One-Hundred

Percent

Location

The

optimum site

for a

particular store

Location/Site Evaluation Checklist

Pedestrian Traffic

The most crucial measures of a location/site’s

value are the number and type of people passing

by.

Proper pedestrian traffic count should include:

age and gender (exclude very young children)

count by time of day

pedestrian interviews

spot analysis of shopping trips

Vehicular Traffic

Important for

convenience stores

outlets in regional shopping centers

car washes

suburban areas with limited pedestrian

traffic

Parking Considerations

Number and quality of spots

Distance of spots from stores

Availability of employee parking

Price to charge customers for

parking

Corner Influence and Hershey’s

Terms of Occupancy Considerations

Ownership versus leasing

Type of lease

Operations and maintenance costs

Taxes

Zoning restrictions

Voluntary regulations

Types of Leases

Percentage

Straight

Maintenance-

Increase

Recoupment

Graduated Net