types of retail location

Location Strategies

Presented by Shanu ShrivastavaPGDM IV AAssignment II

Types of Retail Location

• Various option are available to the retailer for choosing the location of store.

• The choice of the location of the store depends on the target audience and the kind of merchandise to be sold.

• A retailer has to choosing among alternate types of retail locations available . It may locate in an isolated place and pull the customer to the store on its own strength, such as a small grocery store or paan shop in a colony which attracts the customers staying close by

Typically a store location may be:

1. Freestanding /Isolated store.

2. Part of Business District/Centers (unplanned Business Districts).

3. Part of a Shopping Center (Planned Shopping Centers)

Step involved in choosing a Retail Location

• In order to arrive at the decision on where to locate the retail store a retailer needs to first on the region that he wants to locate the store.

• After identifying the region the following steps Have to be followed .

1. Identifying the market in which to locate the store.

2. Evaluate the demand and supply within that market. i.e. determine the market potential.

3. Identify the most attractive sites

4. Select the best site available

1. Market Identification: • The first step in arriving at a decision on retail

location is to identify the market attractiveness to a retailer.

• This is important that retail needs to understand the market well.

2. Determining the market Potential::• The retailer need to take into consideration

various elements as shown in format. (features of population)

• Demographic features of the population• The characteristics of the household in the area

(average household income)• Competition and compatibility (Need to know

compatibility & competition in market)• Laws & regulations:( good understanding of the

laws

Determining the market Potential

Demographics of population & area

Competition

Laws & Regulation

Trade area analysis

• Trade area analysis:• A trade area is the geographic area that

generates the majority of the customers for the store.

• Primary trade area: primary trading covers between 50-80% of the store’s customers.

• Secondary Trading Area: this area contains the additional 15- to 25% of the store’s customers.

• Tertiary trading area covers the balance customers

• These trading areas are dependent on distance and do not always have to be concentric in nature

Types of Trades areas.

Location, Location, Location!!!

•Importance of location decision:•Requires complex decision making•Costs lots of $$•Little flexibility once a location has been

chosen•Attributes of location have a strong

impact on the retailer’s strategy

Criteria to be considered:• Size & characteristics of

population• Level of competition• Access to transportation• Availability of parking• Attributes of nearby

stores

• Property costs• Length of agreement (if

lease)• Population trends• Legal restrictions

Site Evaluation

•Accessibility•Locational advantages•Terms of occupancy•Legal considerations (e.g. environmental

considerations, zoning restrictions, building codes, signs, licensing requirements)

Checklist for Site Evaluations

Local Demographics

• Population and/or household base• Population growth potential• Lifestyles of consumers• Income potential• Age makeup• Population of nearby special markets, that is, daytime workers, students, and tourists, if applicable• Occupation mix


Traffic Flow and Accessibility

• Number and type of vehicles passing location• Access of vehicles to location• Number and type of pedestrians passing location• Availability of mass transit, if applicable• Accessibility of major highway artery• Quality of access streets• Level of street congestion• Presence of physical barriers that affect trade area shape


Retail Competition

• Number and types of stores in area• Analysis of “key” players in general area• Competitiveness of other merchants• Number and location of direct competitors in area• Possibility of joint promotions with local merchants


Site Characteristic• Number of parking spaces available• Distance of parking areas• Ease of access for delivery• Visibility of site from street• History of the site• Compatibility of neighboring stores• Size and shape of lot• Condition of existing building• Ease of entrance and exit for traffic• Ease of access for handicapped customers• Restrictions on sign usage• Building safety code restrictions• Type of zoning


Cost Factors

• Terms of lease/rent agreement• Basic rent payments• Length of lease• Local taxes• Operations and maintenance cost• Restrictive clauses in lease• Membership in local merchants association required• Voluntary regulations by local merchants

Site Selection

•Trade area -- contiguous geographic area that accounts for the majority of a store’s sales and customers

•Primary trade zone -- Usually 3-5 mile radius; generates 60-65% of customers

•Secondary trade zone -- Usually 3-7 mile radius; generates 20% of customers

•Tertiary trade zone -- Usually 15 - 50 mile radius

Steps in selecting a site:

•Evaluate alternative geographic areas in terms of the characteristics of residents and existing retailers (trading-area analysis)

•Determine whether to locate as stand-alone, unplanned business district or planned shopping center

•Make a decision about location type•Analyze alternate sites

Environmental Issues

“Above-ground” risks - such as asbestos-containingmaterials or lead pipes used in construction.

Hazardous materials - e.g. dry cleaning chemicals,motor oil, that have been stored in the ground.

Retailers’ Protection

• Stipulate in the lease that the lessor is responsible for removal and disposal of this material if it’s found.

• Retailer can buy insurance that specifically protects it from these risks.

Other Legal Issues

Zoning and Building Codes • Zoning determines how a particular site can be

used.• Building codes determine the type of building, signs,

size, type of parking lot, etc. that can be used

Signs• Restrictions on the use of signs can also impact a

particular site’s desirability

Licensing Requirements• Some areas may restrict or require a license for

alcoholic beverages

THANK

YOU

types of retail location

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