Retail Ch 7 Retaillocations

8/10/2019 Retail Ch 7 Retaillocations

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Chapter 7

Retail Locations

7-2

Ret ail L ocation sChapt er 7

Site Locations

Chapt er 8

Ret ail Strateg yChapt er 5

Financial Strategy

Chapt er 6

Hum an R esour ceManag ement

Chapt er 9

Custo mer

Relationship

Manag ement

Chapt er 11

Information and

Distribut ionSyst ems

Chapt er 10

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Questions

What types of locations are av ailable to

retailers?

What are the relative advantages of eachlocation type?

Why are some locations particularly well suited

to specific retail strategies?

Which types of locations are growing inpopularity with retailers?

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Elements in Retail Mix

Customer Service

Merchan dise

Asso rtme nt

Pric ingCommunication Mix

Store Display

And Des ign

Location Strategy


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7-5

What Are the

Three Most Important Things in Retailing?

EddieTan/Life File/Getty Images

Location! Location! Location!

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Facts on Retail Space

Per Capita Retail Space Compari son

US 46.6 square feet

UK 23.0 square feet

Canada 13.0 square feet

Australia 6.5 square f eet

India 2.0 square feet

Mexico 1.5 square feet

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Why is Store Location Important for a Retailer?

Location is t ypically prime consideration

in customers store choice.

Location decisions have strategicimportance because they can help todevelop sustainable competiti veadvantage.

Location decisions are risky: invest orlease?

F. Schussler/PhotoLink/GettyImages

Unplanned Business Distr icts and Isolated Locations


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Types of Retail Locations

Free Standing Sites

City or Town Locations

Inner City

Main Street

Shopping Centers

Strip S hopping Cent ers

Shopping Malls

Other Location Opportunities

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Selecting a particular location type

Involves ev aluating a series of trade-off s between

The size of the trade area (geographic areaencompassing most of the customers who wouldpatronize a specific retail site)

the occupancy cost of the location

The pedestrian and vehicle customer traffic

The restrictions placed on store operations by theproperty manager

The convenience of the location for customers

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Tradeoff Between Locations

Rent

Traffic

There are relative adv ant agesand disadvantages to consider

with each locat ion.

Corner Inf luence and Old Navy


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Types of Locations

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Unplanned Retail Locations

Freestanding Sites locat ion f or individual store

unconnected to other retailer

Adv antages: Convenienc e

High traffic and v isibi lity

Modest occupancy cost

Separati on from comp etiti on

Few restr ictions

Disadvantages: No foot traffic

No drawing powerTheMcGraw-Hill Companies, Inc./AndrewResek,photograp her

JCPenney, Sears, Walgree ns are shifting to stand alone locations


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Unplanned Retail Locations

Merchandise Kiosks small temporary selling

stations located in walkway s of enclosed malls,

airports, train stations or off ice building lobbies.

KentKnudson/PhotoLink/Getty Images

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City or Town Locations

Gentr ification is bringing pop ulation back to the cit ies.

TheMcGraw-Hill Companies, Inc./AndrewResek,photograp her

Advantage to Retailers:

Affluenc e retur ned

Young prof essionalsRetu rned empty-n esters

Incentives to mo ve provided by cit ies

Jobs!Low occu pancy costs

High pe destr ian traffic

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Central Business Di strict (CBD)

Draws people into areas during bus iness hours

Hub for public tr ans portation

Pedestrian traffic

Residents

High s ecurity requ ired Shoplifting

Park ing is poor

Evenings and week ends are s low

Advantages

Disadvantages

Spike Mafford/ Getty Images

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Main Streets vs. CBDs

Occupancy costs lowerthan CBDs

They dont attract as

many people

There are not as manystores

Smaller selections offered

Not as muchentertainment

Some planners restrictstore operations


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Inner City: refers to a high d ensi ty urban area that has h igherun emplo yment & lower median in come th an the surround ingmetropo litan area.

Inner city retailers achieve high sales volume,higher margins and higher prof its

Unm et dem and tops25% in many i nner city

markets

Inner city customer wants brande d merch andise

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Shopping Centers

Shopping Center Management Controls:

ParkingSecurity

Parking lot lig htingOutdoor signageAdvertisingSpecial events for customers


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Types of Shopping Centers

Neighborhood and Community Centers (Strip

Centers)

Power Centers

Enclosed Malls

Lif esty le Centers

Fashion Specialty Centers

Outlet Centers

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Neighborhood and Community Centers

Attached row of stores

Managed as a unit

Onsite parking

TheM

cGraw-HillCom

panies,Inc./AndrewResek,p

hotographer

Advanta ges

Convenie nt loc ations

Easy parkin g

Low occu pancy c osts

Dis advanta ges

Lim ited trade areaLack of enterta inm ent

No protectio n from weather


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Power Centers

Shopping centers that c onsist primarily of c ollections of big-box retailstores such as discount stores (Target), off-price stores (Marshall s),warehouse clubs (Costco), and category specialists (Lowes, BestBuy, Dicks)

Open air set up

Free-standing anchors

Limited small specialty

stores

Many located near

enclose d malls

Low occ upancy costs

Convenient

Modest vehicular &

pedestrian traffic

Large trade a reasPhotoLink/GettyIm

ages

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Shopping Malls

Regional shopping

malls (less than 1million square feet)

Super regional malls(more than 1 million

square feet)

The South China Mall in Dongguan, China

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Planned Shopping Centers

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Advantages and Disadvantages of

Shopping Malls

Advanta ges:Many different types of storesMany different assortments available

Attracts many shoppersMain Street for todays shoppersNever worry about the weatherComfortable surrounding to shopUniform hours of operation

Dis advanta ges:Occupancy costs are highTenants may not like mall management control of operationsCompetition can be intense

PhotoLink/GettyIm

ages


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Challenge to Malls

Time pressured society makes it impractical to wander malls

Fashion apparel sold in malls experiencing l imited growth

Malls are getting old and rundown unappealing to shop

Anchor tenants are decreasing due to retail consolidation

Strategies?

Make shopping mor e enjoya ble (e. g., sofas, childrens play ing ar eas)

Great fo od destinat ion (fast fo od and f ull-ser vice rest aur ants)

Tailor make its offerin g to cater to changing de mographics ( e.g.,

reposit ioning older shopping centers for Hispanic mark ets)

Mall renovati on and redevelo pment

Oct 10, 2011

7-30

RS 22,000 CRORE.. .

THE AMOUNT OF MONEY SU NKINTO BUIL DING INDIAS 25 5

MALLS.

MORE WIL L BE SPENT AS MORE

MALLS CO ME UP

Ernst & Young say that 80 % ofIndi as 255 malls are aili ng

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Lifestyle Centers

PhotoprovidedbyI CSCandused withpermissionof Aspen GroveLifestyle Center

Attractiv e to sp ecialty r etaile rs


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Lifestyle Centers

Usually locat ed in affl uent

residential neighborhoods

Includ es 50K sq. ft. of upsca le

chain speci alty stor es

Open-air configurati on

Des ign ambience andamenit ies

Ups cale stores

Restaur ants and ofte n a

cinema or ot her ente rtainment

Small department store format

may be there

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Fashion Specialty Centers

Upscale apparel shops

Tourist areas/central businessdistricts

Need not to be anchored

Dcor is elegant High occupancy costs

Large trade area

TheM

cGraw-HillCom

panies,Inc./LarsA.N

iki,p

hotographer

7-35

Outlet Centers

These shopping c enters contain mostly manufacturers an d retail outlet stores

Courtesyof Beal ls, Inc.

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Theme/Festival Centers

Located in places of

historic interests or fortourists

Anchored by

restaurants and

entertainment facilit ies

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Larger, Multi-format Developments:

Omnicenters

Combines enclosed malls, lif estyle center, and

power centers

Larger developments are targeted to generate more pedestrian traffic and longer

shopping trips

To capture cross-shopping consumers

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Mixed Use Developments (MXDs)

Combine severaldifferent uses into onecomplex, includingshopping centers, officetours, hotels, residentialcomplexes, civic centers,and convention centers.

Offer an all-inclusiveenvironment so thatconsumers can work,live, and play in a

proximal area

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Other Location Opportunities

Airports

Resorts

Store within a Store

Temporary or pop-up stores


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Alternative Locat ionsAirp orts

Airports: Why wait with nothing to do?

Rents ar e 20% higher than malls

Sales/s quare ft are 3-4 times higher th an m allsBest a irports ar e ones with ma ny connectin g flights

Kim

Steele/Getty

Imag

es

7-54

Alternative Locat ionsResorts

Captive audience

Well-to-do customerCustomers have time to shop

Royalty-Free/CORBIS7-56

Located within other, larger stores

Examples:

Grocery store with service providers (coffee bars,

banks, clinics, video outlets) Sephora in JCPenney

Alternative LocationsStore withi n a Store


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Alternative Locat ionsHospital s

Patients cannot leaveGifts are available

Royalty-Free/CORBIS

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Matching Location to Retail Strategy

The selection of a location type must reinforce the retailers

strategy

be consistent with

the shopping behavior

size of the tar get m arket The ret ailers position in its target market

Department Stores Regional Mall

Specialty A pparel Central Business District, Regionalmalls

Category Specialists Power Centers, Free Standing

Grocery Stores Strip Shopping Centers

Drug Stores Stand Alone

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Shopping Behavior of Consumers

in Retailers Target Market

Factors affecting the locat ion choice Consumer Shopping Situations

Convenience shopping

Comparison shopping

Specialty shopping

Density of Target Market

Ex. Convenience stores in CBD; comparisonshopping stores next to Wal-Mart

Uniqueness of Retailing Offering

Convenience of locations is less important Ex. Bass Pro Shop

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Convenience Shopping

Minimize th e cust omers eff ort to get

the pr oduct or service by l ocat ing

store c los e to where c ustom ers areloc ated

TheM

cGraw-HillCom

panies,Inc./AndrewResek,p

hotographer


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Comparison Shopping

Customers have agood idea of whattype of product theywant, but donthave a strongpreference for

brand, model orretailer.

RyanMcVay/Get ty Images

Typic al for f urnitur e,appliances, apparel,

cons umer e lectronics,

hand tools and

cameras.

Com peting ret ailers locate

Near one another

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Category Specialists

Offer the benefits of comparison shopping

Consumers can see almost al l br ands & mod els in one store

Dest ination stores


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Specialty Shopping

Cust omers know what t hey wantDesigner labelsConvenient location matters less


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Virtual Shopping


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Environmental Issues

Abov e-ground risks - such as asbestos-containingmaterials or lead pipes used in construction .

Hazardous materials - e.g. d ry cleaning chemicals,mot or oi l, that have been sto red in the ground.

Retailers Protection

Stipulate in t he lease that the lessor is responsibl efor removal and dispo sal of this material if itsfound.

Retailer can buy insur ance that specificall yprot ects it from these risks.

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Other Legal Issues

Zoning and Building Codes

Zoning determines how a particular site can beused.

Building codes determine the t ype of building,

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

Signs

Restrictions on the use of signs can also impact aparticular sites desirability

Licensing Requirements

Some areas may restrict or require a license foralcoholic beverages

Documents

Retail Ch 7 Retaillocations