Presentation by Shaina Lacher, Milton Law, and Matthew Sullivan

CHAPTER 7: RETAIL

LOCATIONS

Section 3:

Other Locations,Location and RetailStrategy, and LegalConsiderations

Matthew Sullivan

Retail Locations: Chapter 7

*What types of locations are available to retailers?

*What are the relative advantages of each location type?

*Why are some locations particularly well suited to specific retail strategies?

*Which types of locations are growing in popularity with retailers?

Questions:

The Importance of Store Location

- Store location is most often the first consideration in a store choice

- Having a good location increases chances of developing a strong sustainable competitive advantage

- Location decisions can be risky and should be well-thought out

Process of Choosing Particular Locations

- Size of the trade area- Occupancy cost of the location- Pedestrian and vehicle customer traffic location- Restrictions on operations by property

managers- Convenience of location for customers

Trade area: the geographic area that encompasses most of the customers who would patronize a specific retail site

Section 1

- Types of locations

-Unplanned retail locations

Milton Law

Types of Retail Locations

- Freestanding Sites such as outparcels and merchandise kiosks

- City or Town Locations such as central business districts, main streets, and inner city locations

Advantages

- Convenience for customers

- High vehicular traffic and visibility

- Modest occupancy costs

- Separation from competition

Disadvantages

- Limited trade area when not around nearby retailers

- Higher Occupancy costs that strip centers

- Usually located where there is little pedestrian traffic

Advantages and Disadvantagesof Freestanding Locations

Freestanding Sites

Retail locations for an individual, isolated store unconnected to other retailers

Outparcels Merchandise Kiosks

Merchandise kiosksSmall selling spaces, typically located in the walkways of

enclosed malls, airports, train stations, or office building lobbies.

Market Analysis Model

Advantages

- Lower occupancy costs

- Higher pedestrian traffic

Disadvantages

- Traffic is limited due to congestion

- Parking problems reduce consumer convenience

City or Town Locations

Central Business Districts

(CBD)

Advantages

- Draws people during business hours

- Heavy public transportation

- Pedestrian traffic

- Residential area as well

Disadvantages

- High security required

- Shoplifting

- Parking is poor

- Evenings and weekends are slow

Main Streets vs. CBD’s

- Occupancy costs are generally lower than CBD’s

- Fewer people are employed- Smaller selection due to fewer stores- Range of entertainment is usually smaller- City planning sometimes restrict store

operations

Inner City

- Retailers here achieve higher sales volume and higher margins, thus producing higher profits

- Redevelopments in inner cities can cause increased traffic and parking difficulties, causing them to be controversial

High density urban areas with higher unemployment and lower median incomes than surrounding areas

Section 2

- Shopping centers

Shaina Lacher

Advantages

- Convenient locations

- Easy parking

- Low occupancy costs

Disadvantages

- Limited trade area

- Lack of entertainment

- No protection from weather

Examples

- Target

- Costco

- Lowe’s

- Sports Authority

- Toys “R” Us

Power CentersConsist primarily of collections of big box retail stores

Regional Malls

Less than 1 million square feet

Super Regional Malls

More than 1 million square feet

Shopping Malls

Advantages

- Wide variety of stores

- Wide assortment of merchandise

- Shopping and entertainment

- No inclement weather

- Uniform hours of operation

- Attracts many shoppers

Disadvantages

- Occupancy costs are generally higher

- Mall control over business operations

- Competition can be intense

Shopping Malls

Mall managers try to make malls more of an enjoyable experience in an effort to keep people shopping as long as possible

- Common areas

- Family lounges

- Great food

- Playgrounds

- Entertainment

Enhancing the Mall Experience

CORPUS CHRISTI, TX – La Palmera Mall

Redevelopment

Mall renovations and redevelopment

Advantages

- Ease of parking

- Relaxed open-air environment

- Pedestrian traffic tends to be higher

- Occupancy costs and operating restrictions are less

Disadvantages

- Less retail space

- Smaller trade areas

- Attract fewer customers

Lifestyle CentersShopping centers with an open-air configuration of specialty stores, entertainment, and restaurants

with design ambience and amenities

Composed mainly of upscale apparel shops, boutiques, and gift shops carrying selected fashions or unique merchandise of high quality and price

- Tiffany

- Gucci

- Max Mara

- Giorgio Armani

- Tommy Bahama’s

Stores in Phipps Plaza

Fashion/Specialty Centers

Shopping centers that contain mostly manufacturers’ outlets

Las Vegas Outlet Center

Outlet Centers

- Strong entertainment component- Becoming more popular outside

the United States- Tourism is important for outlet

centers

Shopping centers that typically employ a unifying theme reflected in the individual shops, design, and to some extent their merchandise

- Located in places of historic interests or for tourists

- Anchored by restaurants and entertainment facilities

- Generally targeted at tourists, they may also attract local customers

- A common element of these centers is entertainment, although some rely solely on the shopping experience

Theme/Festival centers

Combines enclosed malls, lifestyle centers, and power centers

Omnicenters are becoming more popular in the U.S. partly from the desire of tenants for lower common-area maintenance charges and the growing tendency of consumers to cross-shop.

St. John’s Town Center,

Jacksonville, FL

Omnicenters

- Offer an all-inclusive environment so that consumers can work, live, and play in a proximal area

- Combine several different uses into one complex, including shopping centers, office towers, hotels, residential complexes, civic centers, and convention centers

Mizner Park, Boca Raton, FL

Mixed Use Developments

Section 3

- Other Locations- Location and Retail

Strategy- Legal

Considerations

Matthew Sullivan

- Airports

- Temporary or pop-up stores

- Resorts

- Store within a store

Other Location Opportunities

- High pedestrian traffic

- Sales per square foot are higher than mall stores

- Rent is higher

- Hours are longer

- Inconvenient location for workers means higher wages

Airport Apple store

Airports

- Good for businesses trying to create a little hype

- Good introduction for new stores or products

- Provide visibility for a business

- Provide additional sales during holidays and special events

Target pop-up store

Temporary Locations (pop-up stores)

- Captive audiences

- Wealthy customers

- People with time on their hands

St. Regis Aspen Resort, CD

Resorts

- This concept benefits both companies to attract more customers

- Helps fill holes in product offerings

Occurs when a manufacturer has its own store and salespeople inside a retailer store

Store within a store

Social Networking GameBusinesses take

advantage of locations where customers are, like the internet and online games, and provide them with alternative ways to spend money

Farmville

- Shopping behavior of consumers

- Size of Target Market

- Uniqueness of Retail Offering

Factors that affect location choice

Location and Retail Strategy

3 Shopping Behaviors

- Convenience shopping

- Comparison shopping

- Specialty shopping

Shopping Situations

Shopper Mentality

- Wants to exert little effort to acquire product or service

- Wants convenient location

- Less concerned with price

- No hassles

Convenience Shopping

Shopper Mentality

- General idea about product or service

- No strong brand preference

- No strong retailer preference

Comparison Shopping

Shopper Mentality

- Knows what they want

- Accepts no substitute

- Strong loyalty to product or brand

Specialty Shopping

Estimates to determine size of

target market

- Estimate max # of customers eligible to purchase product or service

- Estimate percentage of potential customers

- Estimate # times customers could purchase the product or service in a year

- Estimate highest density of target market

Size of Target Market

For most retailers, the size of the target market and the location of the highest density of their target market will help determine where their business should be located.

Consumer mentality

- Location doesn’t matter as much because the product is that important or unique

Uniqueness of Retail Offering

Environmental Issues

- Above ground risks

- Hazardous materials

Zoning and Building Codes

- Sign restrictions

- Licensing requirements

Legal Considerations

Above-Ground Waste

Hazardous Materials

Environmental Issues

Signs Licensing

Zoning and Building Codes