Chapter 16 Location & Layout Copyright 2006 Prentice Hall Publishing Company 1 Location, Layout, and...

Copyright 2006 Prentice Hall Publishing CompanyCopyright 2006 Prentice Hall Publishing Company 11Chapter 16 Location & LayoutChapter 16 Location & Layout

Location, Layout, and

Physical Facilities


Choosing a LocationChoosing a Location

The right region of the countryThe right region of the country The right state in the regionThe right state in the region The right city in the stateThe right city in the state The right site in the cityThe right site in the city

Logic of Choosing a Location


Choosing the Region:Choosing the Region:Sources of Sources of InformationInformation

U.S. Census Bureau - U.S. Census Bureau - http://www.census.gov/http://www.census.gov/ American Community SurveyAmerican Community Survey Economic CensusEconomic Census

http://www.census.gov/


American DemographicsAmerican Demographics AmeriStatAmeriStat STAT-USASTAT-USA Demographics USADemographics USA Lifestyle Market Analyst Lifestyle Market Analyst Markets of the U.S. for Business Markets of the U.S. for Business

PlannersPlanners



Rand McNally's Commercial Atlas and Rand McNally's Commercial Atlas and Marketing Guide Marketing Guide

Sourcebook of County DemographicsSourcebook of County Demographics Sales and Marketing Management’s Sales and Marketing Management’s

Survey of Buying Power Survey of Buying Power Editor and Publisher Market GuideEditor and Publisher Market Guide Small Business Development CentersSmall Business Development Centers



Geographic Information Geographic Information Systems (GIS)Systems (GIS) Computerized programs combining map-Computerized programs combining map-

drawing with database management drawing with database management capability.capability.

Census Bureau’s TIGER file. Census Bureau’s TIGER file. Search through a database and then Search through a database and then

plot the results on a map.plot the results on a map. Visual display reveals otherwise hidden Visual display reveals otherwise hidden

trends.trends.


Selecting the StateSelecting the State

Factors to consider:Factors to consider: Proximity to marketsProximity to markets Proximity to needed raw materialsProximity to needed raw materials Labor supply needs Labor supply needs Wage ratesWage rates Business climateBusiness climate Tax ratesTax rates Internet accessInternet access

Sample State Evaluation MatrixSample State Evaluation Matrix

Location CriterionWeight10-high1-low

Score5-high1-low

Weighted Score (weight x score)

Total Score Florida Georgia South Carolina

Quality of labor forceWage ratesUnion activityEnergy costsTax burdenEducational/ Training AssistanceStart-up incentivesQuality of lifeAvailability of raw materialsOtherOther

Assign to each location criterion a weight that reflects its relative importance (10 high to 1 low). Then score each state on a scale of 1 (low) to 5 (high). Calculate the weighted score (weight x score) for each state. Finally, add up the total weighted score for each state. The state with the highest total weighted score is the best location for your business.

Assign to each location criterion a weight that reflects its relative importance (10 high to 1 low). Then score each state on a scale of 1 (low) to 5 (high). Calculate the weighted score (weight x score) for each state. Finally, add up the total weighted score for each state. The state with the highest total weighted score is the best location for your business.


Selecting the Selecting the CityCity Population trends and Population trends and

densitydensity CompetitionCompetition

ClusteringClustering Index of Retail Saturation (IRS)Index of Retail Saturation (IRS)


Index of Retail Index of Retail SaturationSaturation

A measure of the potential sales per square A measure of the potential sales per square foot of store space for a given product within foot of store space for a given product within a specific trading area. a specific trading area.

RF

RECIRS

wwhere C = Number of customers in the trading areahere C = Number of customers in the trading area RE = Average expenditure per person for the RE = Average expenditure per person for the productproduct RF = Total square feet of selling space allocated RF = Total square feet of selling space allocated to the to the product product


Selecting the Selecting the CityCity Population trends and densityPopulation trends and density CompetitionCompetition

ClusteringClustering Index of Retail Saturation (IRS)Index of Retail Saturation (IRS) Reilly’s Law of Retail Reilly’s Law of Retail

GravitationGravitation


Reilly’s Law of Retail Reilly’s Law of Retail GravitationGravitation

An estimate of a site’s ability to attract An estimate of a site’s ability to attract customers. customers.

a

b

PP

dBP

1

wwhere BP = Distance in miles from location A to break here BP = Distance in miles from location A to break pointpoint d = Distance in miles between locations A and B d = Distance in miles between locations A and B P Paa = Population surrounding location A = Population surrounding location A

P Pbb = Population surrounding location B = Population surrounding location B


Selecting the Selecting the CityCity Population trends and densityPopulation trends and density CompetitionCompetition

ClusteringClustering Index of Retail Saturation (IRS)Index of Retail Saturation (IRS) Reilly’s Law of Retail GravitationReilly’s Law of Retail Gravitation

CostsCosts Local laws and regulationsLocal laws and regulations Compatibility with communityCompatibility with community


Selecting the CitySelecting the City

Quality of lifeQuality of life Transportation networksTransportation networks Police and fire protectionPolice and fire protection Public servicesPublic services Location’s reputationLocation’s reputation


Retail and Service Retail and Service Location Location ConsiderationsConsiderations

Trade area sizeTrade area size Retail compatibilityRetail compatibility Degree of competitionDegree of competition Transportation networkTransportation network Physical, cultural, or Physical, cultural, or

emotional barriersemotional barriers Political barriersPolitical barriers


Retail and Service Retail and Service Location Location ConsiderationsConsiderations

Customer trafficCustomer traffic Adequate parkingAdequate parking Room for expansionRoom for expansion VisibilityVisibility

continuedcontinued


Retail and Service Retail and Service Location OptionsLocation Options

Central Business Districts (CBDs)Central Business Districts (CBDs) Neighborhood locationsNeighborhood locations Shopping centers and mallsShopping centers and malls

Neighborhood shopping centersNeighborhood shopping centers Community shopping centersCommunity shopping centers Regional shopping centersRegional shopping centers Power centersPower centers


Shopping Centers and Shopping Centers and MallsMalls

Neighborhood Shopping CentersNeighborhood Shopping Centers 3 to 12 Stores; anchor is supermarket or 3 to 12 Stores; anchor is supermarket or

drugstoredrugstore Community Shopping CentersCommunity Shopping Centers

12 to 50 stores; anchor is department or 12 to 50 stores; anchor is department or variety storevariety store

Regional Shopping MallsRegional Shopping Malls 50 to 100 stores; anchor is one or more 50 to 100 stores; anchor is one or more

major department storesmajor department stores Power CentersPower Centers

Combines drawing power of a mall with Combines drawing power of a mall with convenience of neighborhood shopping convenience of neighborhood shopping centercenter


Retail and Service Retail and Service Location OptionsLocation Options

Near competitorsNear competitors Outlying areasOutlying areas Home-based businessesHome-based businesses

continuedcontinued


Manufacturing Manufacturing LocationsLocations Foreign trade zonesForeign trade zones

Figure 16.2. How a Foreign Trade Zone (FTZ) Figure 16.2. How a Foreign Trade Zone (FTZ) Works. Works.

Without FTZ

Imported Parts Imported Parts and Materialsand Materials

Store

Assemble

Package

Manufacture

Process

Mix

With FTZ

DutyDutyPaidPaid

NoNoDutyDutyPaidPaid

U.S.U.S.SalesSales

ExportsExports

U.S.U.S.SalesSales

ExportsExports

Small Company

No Duty Paid

No Duty Paid

Duty Paid

Duty Paid

Duty PaidDuty Paid

No Duty Paid

No Duty Paid


Manufacturing Manufacturing LocationsLocations Foreign trade zonesForeign trade zones Empowerment zonesEmpowerment zones Business incubatorsBusiness incubators


Business IncubatorsBusiness Incubators

Organizations that combine low-cost, Organizations that combine low-cost, flexible rental space with a multitude of flexible rental space with a multitude of support services for their small business support services for their small business residents.residents.

Have spawned more than 20,000 Have spawned more than 20,000 successful businesses across four decades.successful businesses across four decades.

More than 950 in operation across the More than 950 in operation across the U.S., and a new one opening, on average, U.S., and a new one opening, on average, every week.every week.

They work!! Firms that “graduate” from They work!! Firms that “graduate” from incubators have a success rate of 87%.incubators have a success rate of 87%.

Business Incubator Tenants by Industry

Mixed Use 47%

Technology 37%

Manufacturing 7%

Service 6% Other 4%

Source: National Business Incubation Association


Layout:Layout:External FactorsExternal Factors Adequate size to accommodate Adequate size to accommodate

business needs.business needs. Create the proper image or Create the proper image or

“personality” for the business in “personality” for the business in the customer's eyes.the customer's eyes.

Entrances must Entrances must inviteinvite customers to come in.customers to come in.


Layout:Layout:External FactorsExternal Factors

Create effective window Create effective window displays and change them displays and change them often; they can be powerful often; they can be powerful sales tools.sales tools.

Must comply with Americans Must comply with Americans with Disabilities Act.with Disabilities Act.

Pay attention to the business Pay attention to the business sign, the most direct method of sign, the most direct method of reaching potential customers.reaching potential customers.

continuedcontinued


A Business SignA Business Sign

Tells potential customers who you are Tells potential customers who you are and what you're selling.and what you're selling.

Must comply with local sign ordinances.Must comply with local sign ordinances. Should be visible, simple, and clear.Should be visible, simple, and clear. Should be changed periodically to avoid Should be changed periodically to avoid

becoming part of the background.becoming part of the background. Should be legible both day and night.Should be legible both day and night. Must be maintained properly.Must be maintained properly.


Building InteriorsBuilding Interiors

ErgonomicsErgonomics is an integral part of any is an integral part of any design.design.

Proper layout and design pays off in Proper layout and design pays off in higher productivity, efficiency, or sales.higher productivity, efficiency, or sales.

Careful selection of colors can create Careful selection of colors can create the desired impressions among the desired impressions among customers and employees.customers and employees.

Proper lighting is measured by what is Proper lighting is measured by what is ideal for the job being done.ideal for the job being done.


Layout for RetailersLayout for Retailers

The arrangement of merchandise The arrangement of merchandise and fixtures. and fixtures.

““The stage on which a retail The stage on which a retail company functions” – Paco company functions” – Paco Underhill.Underhill.

Well-designed layout takes Well-designed layout takes customers past plenty of displays customers past plenty of displays of items they may buy on impulse.of items they may buy on impulse. 65% to 70% of purchase decisions are 65% to 70% of purchase decisions are

made after a customer enters a store.made after a customer enters a store.


Three Layout Three Layout PatternsPatterns GridGrid

Rectangular with parallel aisles; Rectangular with parallel aisles; formal; controls traffic flow; formal; controls traffic flow; uses selling space efficiently.uses selling space efficiently.

Supermarkets and self-service Supermarkets and self-service discount stores.discount stores.

Grid LayoutGrid Layout


Free-FormFree-Form Free-flowing; informal; creates Free-flowing; informal; creates

“friendly” environment; flexible.“friendly” environment; flexible. Small specialty shops.Small specialty shops.

Three Layout Three Layout PatternsPatterns

Free-form Free-form LayoutLayout


BoutiqueBoutique Divides store into a series of Divides store into a series of

individual shopping areas, each individual shopping areas, each with its own theme; unique with its own theme; unique shopping environment.shopping environment.

Small department stores.Small department stores.

Three Layout Three Layout PatternsPatterns

Boutique Boutique LayoutLayout


Layout Layout GuidelinesGuidelines Know your customers buying habits Know your customers buying habits

and plan your layout accordingly.and plan your layout accordingly. Display merchandise as attractively Display merchandise as attractively

as your budget will allow.as your budget will allow. Display complementary items Display complementary items

together.together. Use music to set the mood. Use music to set the mood. Recognize the value of floor space; Recognize the value of floor space;

never waste valuable selling space never waste valuable selling space with non-selling functions.with non-selling functions.

Rent and Sales Allocation by FloorRent and Sales Allocation by Floor

Rent Allocated by Traffic AisleRent Allocated by Traffic Aisle

Space Values for a Small StoreSpace Values for a Small Store


Factors to Consider in Factors to Consider in Manufacturing LayoutsManufacturing Layouts

Type of productType of product Type of production processType of production process Ergonomic considerationsErgonomic considerations Economic considerationsEconomic considerations Space availability within the Space availability within the

facilityfacility


Manufacturing Manufacturing LayoutsLayouts

Product layoutProduct layout

Product LayoutProduct Layout



Product layoutProduct layout Process layoutProcess layout

Process LayoutProcess Layout



Product layoutProduct layout Process layoutProcess layout Fixed position layoutFixed position layout Functional layoutFunctional layout

Chapter 16 Location & Layout Copyright 2006 Prentice Hall Publishing Company 1 Location, Layout, and...

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