Scarb eesbm6e ppt_14

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall

Choosing the Right Choosing the Right Location and LayoutLocation and Layout

Choosing the Right Choosing the Right Location and LayoutLocation and Layout

CHAPTER CHAPTER 1414

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 14 - 2Ch. 14: Location and Layout

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


Choosing the Region:Choosing the Region:Sources of InformationSources of Information

Census dataCensus data http://www.census.gov/ http://factfinder.census.gov

ZoomProspectorZoomProspector www.zoomprospector.com

Population Reference BureauPopulation Reference Bureau www.prb.org

STAT-USA STAT-USA http://www.statusa.gov



Demographics USADemographics USA

Lifestyle Market Analyst Lifestyle Market Analyst

Survey of Buying PowerSurvey of Buying Power

Editor and Publisher Market GuideEditor and Publisher Market Guide

The American Marketplace: The American Marketplace: Demographics and Spending PatternsDemographics and Spending Patterns



Commercial Atlas and Marketing GuideCommercial Atlas and Marketing Guide

Zip Code AtlasZip Code Atlas

Geographic Information Systems (GIS)Geographic Information Systems (GIS)

U.S. Census Department’s TIGER U.S. Census Department’s TIGER

(continued)


Geographic Information Geographic Information Systems (GIS)Systems (GIS)

Computerized programs combining Computerized programs combining map-drawing with database map-drawing with database management capability.management capability.

Search through virtually Search through virtually anyany database database and then plot the results on a map.and then plot the results on a map.

Visual display reveals Visual display reveals otherwise hidden trends.otherwise hidden trends.


Choosing the StateChoosing the State

Proximity to marketsProximity to markets Proximity to needed raw materialsProximity to needed raw materials Wage ratesWage rates Labor supply needsLabor supply needs Business climateBusiness climate Tax ratesTax rates Internet accessInternet access Total operating costsTotal operating costs

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice HallCh. 14: Location and Layout

State Evaluation MatrixState Evaluation MatrixState Weighted Score (Weight x Score)

Location Criterion WeightScore (Low = 1, High = 5) State 1 State 2 State 3

Quality of labor force

Wage rates

Union activity

Property/building costs

Utility costs

Transportation costs

Tax burden

Educational/training assistance

Start-up incentives

Raw material availability

Quality of life

Other:

Other

Total Score

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TABLE 14.1


Choosing the CityChoosing the City

Population trendsPopulation trends CompetitionCompetition ClusteringClustering Compatibility with communityCompatibility with community Local laws and regulationsLocal laws and regulations


Appropriate infrastructureAppropriate infrastructure Cost of utilities and public servicesCost of utilities and public services IncentivesIncentives Quality of lifeQuality of life

(continued)(continued)

Choosing the CityChoosing the City


Location Criteria for Location Criteria for Retail and Service Retail and Service

Trade area size – the region Trade area size – the region from which a business can from which a business can expect to draw customers expect to draw customers

Retail compatibilityRetail compatibility Degree of competitionDegree of competition Index of retail saturation (IRS) Index of retail saturation (IRS)


Index of Retail SaturationIndex of Retail Saturation

C x REC x RE RFRF

Where:Where:

C = C = Number of customers in the trading Number of customers in the trading areaarea

RE = Retail expenditures equals the average RE = Retail expenditures equals the average expenditure per person for the product expenditure per person for the product

in in the trading areathe trading area

RF = RF = Retail facilities = the total square feet of Retail facilities = the total square feet of selling space allocated to the product in selling space allocated to the product in the trading area the trading area

IRS = IRS =



Trade area size – the region Trade area size – the region from which a business can from which a business can expect to draw customers. expect to draw customers.

Retail compatibility.Retail compatibility. Degree of competition.Degree of competition. Index of retail saturation (IRS).Index of retail saturation (IRS). Reilly’s law of retail gravitation. Reilly’s law of retail gravitation.



Reilly’s Law of Retail GravitationReilly’s Law of Retail Gravitation

Where:Where:

BPBP = = Distance in miles from location A to the Distance in miles from location A to the break pointbreak point

d d = = Distance in miles between locations A and BDistance in miles between locations A and B

PPaa = = Population surrounding location APopulation surrounding location A

PPbb = = Population surrounding location B Population surrounding location B

a

bP

P1

dBP

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Transportation networkTransportation network Physical and psychological barriersPhysical and psychological barriers Customer trafficCustomer traffic Adequate parkingAdequate parking ReputationReputation VisibilityVisibility



Retail & Service Location OptionsRetail & Service Location Options

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


Shopping Centers and MallsShopping Centers and Malls

Neighborhood shopping centersNeighborhood shopping centers 3 to 12 Stores; anchor is supermarket or 3 to 12 Stores; anchor is supermarket or

drugstore; serves up to 40,000 people.drugstore; serves up to 40,000 people. Community shopping centersCommunity shopping centers

12 to 50 stores; anchor is department or variety 12 to 50 stores; anchor is department or variety store; serves 40,000 to 150,000 people.store; serves 40,000 to 150,000 people.

Power centersPower centers Combine drawing power of a mall with Combine drawing power of a mall with

convenience of neighborhood shopping center; convenience of neighborhood shopping center; anchor stores typically occupy 80% of space.anchor stores typically occupy 80% of space.


Shopping Centers and MallsShopping Centers and Malls Theme or festival centersTheme or festival centers

Employ a unifying theme, often involving Employ a unifying theme, often involving entertainment, to attract tourists. entertainment, to attract tourists.

Outlet centersOutlet centers Feature manufacturers’ and retailers’ outlet Feature manufacturers’ and retailers’ outlet

stores selling name-brand goods at discount stores selling name-brand goods at discount prices; usually follows “open air” design.prices; usually follows “open air” design.

Lifestyle centersLifestyle centers Located near affluent residential Located near affluent residential

neighborhoods; designed to look more like neighborhoods; designed to look more like a central business district than a shopping a central business district than a shopping center or mall.center or mall.



Shopping Centers and MallsShopping Centers and Malls Regional shopping mallsRegional shopping malls

50 to 100 stores; anchor is one or more major 50 to 100 stores; anchor is one or more major department stores; draws customers from a department stores; draws customers from a large trading area, often 5 to 15 miles or more. large trading area, often 5 to 15 miles or more.

Super-regional shopping mallsSuper-regional shopping malls Similar to a regional mall but bigger; trading Similar to a regional mall but bigger; trading

area is 25 miles or more in all directions.area is 25 miles or more in all directions. ExamplesExamples

Mall of America (Bloomington, MN), the Mall of America (Bloomington, MN), the largest mall in the U.S.largest mall in the U.S.

West Edmonton Mall (West Edmonton, West Edmonton Mall (West Edmonton, Canada), the largest mall in North America.Canada), the largest mall in North America.


FIGURE 14.1 Shopping Mall Patterns Source: International Council of Shopping Centers.

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Retail and Service Retail and Service Location OptionsLocation Options

Near competitorsNear competitors

Inside large retail storeInside large retail store

Outlying areasOutlying areas

Home-based businessesHome-based businesses

(continued(continued))


Location Decisions for Location Decisions for ManufacturersManufacturers

Foreign trade zonesForeign trade zones


FIGURE 14.2 How a Foreign Trade Zone (FTZ) Works

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Manufacturing LocationsManufacturing Locations

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.

More than 1,100 in operation across the More than 1,100 in operation across the U.S.U.S.

They work! They work! Companies that “graduate” from incubators Companies that “graduate” from incubators

have a success rate of 87%.have a success rate of 87%. 84% of graduates stay in the local community, 84% of graduates stay in the local community,

creating local job opportunities. creating local job opportunities.


FIGURE 14.3 Business Incubator Tenants by Industry Source: National Business Incubation Association.

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LayoutLayout

The logical arrangement of the physical The logical arrangement of the physical facilities of a business that contributes facilities of a business that contributes to efficient operations, increased to efficient operations, increased productivity, and higher sales. productivity, and higher sales.

Study: Study: Employees believe that the quality and Employees believe that the quality and quantity of their work would increase by quantity of their work would increase by an average of 25% with better workplace an average of 25% with better workplace design. design.


Layout: External FactorsLayout: External Factors

The size must be adequate to The size must be adequate to accommodate business needs.accommodate business needs.

The appearance must create the proper The appearance must create the proper image or “personality” for the business image or “personality” for the business in the customer’s eyes.in the customer’s eyes.

The entrance must The entrance must inviteinvite customers to come in.customers to come in.


Must comply with Americans with Must comply with Americans with Disabilities Act (ADA).Disabilities Act (ADA).

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


Layout: External FactorsLayout: External Factors


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. Contrasting colors and simple typeface. Contrasting colors and simple typeface. Should be visible, simple, and clear.Should be visible, simple, and clear. Should be legible both day and night.Should be legible both day and night. Must be maintained properly.Must be maintained properly. Must comply with Must comply with

local sign ordinances.local sign ordinances.


Building InteriorsBuilding Interiors

ErgonomicsErgonomics is an integral part of any design. is an integral part of any design. Proper layout and design pays off in higher Proper layout and design pays off in higher

productivity, efficiency, or sales.productivity, efficiency, or sales. Proper lighting is measured by what is ideal Proper lighting is measured by what is ideal

for the job being done – the ufor the job being done – the use of natural se of natural light can increase retail sales. light can increase retail sales.

Sound and scent should appeal to Sound and scent should appeal to allall customers and can boost sales. customers and can boost sales.

Environmental-friendly design for efficiency Environmental-friendly design for efficiency and appeal.and appeal.


Layout GuidelinesLayout Guidelines

Know your customers’ buying habits Know your customers’ buying habits and plan your layout accordingly.and plan your layout accordingly.

Display merchandise as attractively as Display merchandise as attractively as your budget will allow.your budget will allow.

Display complementary items together.Display complementary items together. Recognize the value of floor space; Recognize the value of floor space;

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

Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 14 - 33Ch. 6: Franchising and the Entrepreneur

FIGURE 14.4 Space Values for a Small Store Source: Retailing, 6e, 1997 Prentice Hall ©Dale M. Lewis


Three Retail Layout PatternsThree Retail Layout Patterns

GridGrid Rectangular with parallel aisles; Rectangular with parallel aisles;

formal; controls traffic flow; uses formal; controls traffic flow; uses selling space efficiently.selling space efficiently.

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

In addition to the text


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

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

Three Retail Layout PatternsThree Retail Layout PatternsIn addition to the text


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 Retail Layout PatternsThree Retail Layout PatternsIn addition to the text


Layout for ManufacturersLayout for Manufacturers

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

within the facilitywithin the facility


Manufacturing LayoutsManufacturing Layouts

Analyzing production layouts: Avoid Analyzing production layouts: Avoid the 7 forms of wastethe 7 forms of waste TransportationTransportation InventoryInventory MotionMotion WaitingWaiting OverproductionOverproduction ProcessingProcessing DefectsDefects


ConclusionConclusion

Location is an important decision for Location is an important decision for businesses in the areas of:businesses in the areas of:

Retail Retail ServiceService ManufacturingManufacturing

The criteria for site selection, layout, The criteria for site selection, layout, design, and ADA considerations design, and ADA considerations present challenges and opportunities present challenges and opportunities for entrepreneurs. for entrepreneurs.


All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of

the publisher. Printed in the United States of America.

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