Unit 3
Retail Store & Location
Types of Retail Location, Importance of location
decision, Types of Locations, Factors affecting
location, Step involved in choosing a Retail Location,
Selection of shopping center, Retail location
theories, location assessment procedure
Introduction
Define Store:
“A store is place , real or virtual , where the shoppers
comes to buy goods & services. The sales transaction
occurs at this junction.”
• The location of retail store has for along time been considered
the most important ‘P’ in retailing.
• Locating the retail store in the right place was considered to be
adequate for success.
Importance of retail Location Decisions
 Location becomes a critical decision for a retailer for several
reasons. As like;
 Location is generally one of the most important factors
customers consider while choosing a store.
 A bad location may cause a retailer to fail even if its strategic mix
is excellent.. On the other hand , a good location may help a
retailer succeed even if its strategic mix is mediocre.
 Store location is least flexible element of retailer’s strategic mix
due to its fixed nature, the amount of investment, and the length
of lease agreements
• Change in location gives three potential problems
– Loss of loyal customers and employers
– New location may not have the same characteristics of old location
– Store fixtures cannot be moved to new location
• Location affects a store’s long run strategies
• In short run, it affects specific elements of retail mix
Factors affecting location
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Size and characteristics of market (population)
Level of competition
Access to transportation
Parking space availability
Attributes of nearby stores
Property costs
Length of agreement
Population trends
Legal restrictions
Other factors
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)
1.
Freestanding /Isolated store
• Where there are no other outlets in the vicinity of the store and
therefore store depends on its own pulling power and promotion
to attracts customers.
• A biggest advantages for freestanding stores is that there is no
competition around.
• This type of location has several advantages including no
competition, low rent, often better visibility from the road, easy
parking and lower property .
• Neighborhood Stores; colony shops serves small locality.
• Highway Stores :Ebony store in Ludhiana .
How far the customer is willing to travel?
Apparel
2.5Km
Cosmetics –
4.05 km
Music –
2.54 km
Books –
2.74km
1km 2km 3km 4km 5km
Jwellery –
1.5 km
Source : KSA – Technopack
consumer outlook, 2004
Grocery – 4 km
Business Associated Location: These are location where a
group of retail outlets offering a variety of merchandise work
together to attract customers to their retail area, but also
compete against each other for the same customers.two types
includes in ;
1.
Part of Business District/Centers (unplanned
Business Districts).
2.
Part of a Shopping Center (Planned Shopping
Centers)
2.
Part of Business District/Centers
(unplanned Business Districts).
• A retail store can also be located as a part of a business district. Or
we can refer this as unplanned business centers
• A business district is place of commerce in a city which developed
historically as the center of trade and commerce in the city or town.
• A business districts can be a central, secondary or a Neighborhood
business district.
• A Central business District CBD is the main center of commerce
and trade in the city. (high land rates , intense development)
• A CBD is the hub of retailing activity in a city.
• CBD served different sections of population for Examples of
Cannaught place in Delhi, Colaba in Mumbai, Commercial Street
and in Bangalore are up market CBD’s.
• CBD’s serving the upper and upper middle class customers
across these cities like, chandani chowk in Delhi, KalbadeviBhuleswar in Mumbai, Chickpet in Bangalore.
• Secondary Business District are composed of unplanned cluster
of store often located on a major intersection of city they a
customers from a large part of the city
3.
Part of a Shopping Center (Planned
Shopping Centers)
• A shopping center has been defined as “ a group of retail and
other commercial establishments that is planned , developed,
owned and managed as a single property”
• The basic configuration of a shopping centre is a “Mall ” or Strip
centre.
• A mall is typically enclosed and climate controlled. A walkway is
provided in front of the stores.
• A strip centre is a row of stores with parking provided in the
front of the stores.
• In India we can planned shopping centre can categorize in two
category
Regional shopping centers or Mall: Regional shopping centers
or mall are the largest planned shopping centers..
• Often they are anchored by two or more major department
stores have enclosed mall serve a large trading area and have high
rents. (ansal plaza,spencers plaza crossroads, DLF city in
Gurgaon)
• Neighborhood/community/shopping centers:
Neighborhood /community centers usually have a balanced mix
of stores including a few grocery stores , a chemist, a verity store
and a few other stores selling convenience goods to the residents
of the neighborhood.
India to have mother of all malls
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Gurgaon is set to get the mother of all malls — a humungous 40-lakh sq ft sprawling property
that is being touted by its developer DLF Universal as the biggest mall of the world.
The average size of malls here is 2.5 lakh sq ft; this will be 16 times bigger.
The mall —- christened Mall of India -— will be spread over 32 acres and will have parking
space for 10,000 cars.
These ambitious plans have been drawn up at a time when footfalls are down at Gurgaon malls
and rental rates have virtually halved.
But DLF is unfazed. It says Gurgaon with so many malls will soon develop as a mega shopping
district in the NCR region.
What's the basis of the claim that this will be the biggest in the world?
DLF spokerperson Kajal Aijaz said the biggest now is Mall of America in Minneapolis which has
a covered area of 38 lakh sq ft, followed by a mall in Shanghai which is 30 lakh sq ft.
Mall of India would be bigger than these, she said.
The DLF mall — located on the Delhi-Jaipur highway — has been designed by Jerde Partnership
which also designed the mega malls in Minneapolis and Shanghai.
The costs are not known but property consultants said it could be in the region of Rs 1,500
crore.
Selection of Shopping centre / market
• Shopping centers are distinctly different from the other two
major locations -- that is, downtown and local business strips.
The shopping center building is pre-planned as a merchandising
unit for interplay among tenants. Its site is deliberately selected
by the developer for easy access to pull customers from a trade
area. It has on-site parking as a common feature of the layout.
The amount of parking space is directly related to the retail area.
• Customers like the shopping center's convenience. They drive in,
park, and walk to their destination in relative safety and speed.
Some shopping centers also provide weather protection and
most provide an atmosphere created for shopping comfort. For
the customer, the shopping center has great appeal.
What Are your Chances
• Developers and owners of shopping centers look for successful
retailers.
• Then, the developer selects other types of stores that will
complement each other.
• To finance a center, the developer needs major leases from
companies with strong credit ratings.
• Your problem is to convince the developer that the new store
has a reasonable chance of success and will help the "tenant
mix."
What a shopping centre can offer ?
• Neighbor hood shopping centre – 3 to 10acres, minimum
trading population – 2500 to 40000
• Community shopping centre -10 -30 acres, minimum trading
population 40,000 to 1,50,000
• Regional shopping centre – 30 to 50 acres, minimum trading
population 1,50,000 and more
Selecting a shopping centre
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Trade area and its growth
General income level of the trade area
No of households
Demographics of trade area
Market analysis
Location of store in the centre
Space
Rent & lease
Fittings
Other services by developers
Types of shopping centers
• Neighborhood shopping centers
• Community shopping centers
• Regional shopping centers
– Enclosed malls
• Specialty theme shopping centers
Regional Shopping Centre
Secondary business centers
Neighborhood
shopping centre
Isolated
Location
Secondary Business
District
Central Business
District
Factors to be considered in selecting a
shopping center
• Traffic Count : the qualitative information gathered about the
passing traffic should include counting the individuals who seem
to possess the characteristics appropriate to the desired clientele,
judging their reasons for using that route, and calculating their
ability to buy.
• Pedestrian Traffic Count : In making a pedestrian count you
must decide: who is to be counted; where the count should take
place; and when the count should be made. In considering who
is to be counted, determine what types of people should be
included.
• Estimate Of Store Sales :Data from a pedestrian traffic survey
can give you information on whether or not the site would
generate a profitable volume for your store.
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Automobile Traffic Count ;A growing number of retail firms
depend on drive-in traffic for their sales. Both the quantity and
quality of automotive traffic can be analyzed in the same way as
pedestrian traffic.
Free standing / isolated location
• Advantages
– No competition
– Low costs
– Flexibility
• No group rules
• Larger space
• Location by choice
– Better road and visibility
– Customization
– easy parking
• Disadvantages
– Initial Difficulty in attracting costumers
– Most people like variety in shopping
– Travel time
– Advertising costs
– Operating cost are not shared
– Built than renting
– Unplanned and planned business
centers are preferred by costumers
Unplanned Business Districts
• Advantages
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Excellent goods/service assortment
Variety of store types
Wide range of prices
Variety of customer services
High level of pedestrian traffic
Nearness to commercial or social facilities
• Disadvantages
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Inadequate parking
Traffic congestion
Travel time for sub urban customers
Aging retail facilities
Decline condition of central cities
High rent and taxes
Movement of popular stores to suburbs
Discontinuity of offering
Planned Business districts
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Excellent goods/service assortment for long term plan
strong sub urban population
One stop shopping preferred by customers
Co-operative planning and sharing of common costs
Creation of unified, distinctive shopping center image
Maximization of pedestrian traffic
Access to high ways and parking spaces
More appealing than city shopping centers
Reasonable rent ( excluding enclosed malls)
Lower theft rates
Popularity of malls
Growth of new types of malls
• Disadvantages
– Reduced operating flexibility
– Higher rents
– Restriction on goods and services sold by
stores
– Competitive environment within malls
– Membership in associations – which may of
little use
– Too many malls in an area
– Domination by large anchor stores
Step involved in choosing a Retail
Location / site selection
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1.
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 .
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
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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.
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
Trade area
analysis
Competition
Laws & Regulation
• 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 15to 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.
2 miles
2 miles
2 miles
1 mile 1 mile
2 miles
2 miles
Store
location A
2 miles
1 mile
Proposed
store
location
Trade Area Analysis
3&
4 Identify Alternate sites and select the site:
After taking decision on the location and market potential the
retailer has to select the site to locate the store based on these
• Traffic
• Accessibility of the market is also a key factor
• The total number of stores and the type of store that exist in the
area
• Amenities
• To buy or to lease
• The product mix to be offered by the retailer