Retail Locations

What are the three most important things in retailing?

LocationLocationLocation

Importance

• Location- prime consideration in customers store choice decision Eg car garage, supermarket

• location- strategic decision- competitive advantage

• risky decision- retailer needs to put substantial investment to buy and develop the real estate

• India- less space and costly

TYPES OF LOCATIONS

Three basic types

• Free standing• City/town business district• Shopping centre• non traditional forms: airport/within another

store

Evaluation criteria for a location

• Size of trade area• occupancy cost of location• pedestrian and vehicular traffic• restrictions placed on store by property

managers• convenience for customers

Types of locations

Unplanned areas

•Free standing• Urban locations/CBD

Shopping centres

• Neighbourhood and community shopping centres• Power centres•Enclosed malls• Lifestyle centres• Fashion/specialty counters•Outlet centres• Theme/festival centres

Unplanned retail locations

Free standing sites

• individual isolated store unconnected to other retailers• Might be near to other free standing retailers, a shopping centre.•Adv: convenience (easy access and parking),high vehicular traffic and customer visibility, modest occupancy costs, fewer restrictions on signs, merchandise. •Disadv: limited trade area, no multiple retailers to attract customers ,high maintenance costs – no other retailers for sharing.• Eg :Kohl- off mall store

Merchandise kiosks

• Small, temporary selling spaces typically located in the walkways of enclosed malls, airports,train stations, or office building lobbies• 40-500 sq feet, operate seasonally, short term leases.•For mall operators-kiosks generate rental income in vacant space and offer broad assortment of merchandise for visitors.• careful to avoid kiosks that block any store fronts, create an incompatible image, or compete directly with permanent tenants by selling similar merchandise• Eg Café coffee day, ferns and petals ,perfumes etc

City or Town locations

Central Business District -CBD

• Traditional downtown business area in a city or town.• Has large no people in that area during business hours• Hub for public transportation, high level of pedestrian traffic.• Large no of residents living in that area•Disadv: high security, limited parking, evening and weekends slow, lack of planning. Eg Church gate and Colaba, Fifth Avenue- NY

Main street• Traditional shopping area of smaller towns, or secondary business district in a suburb or a larger district.• Occupancy costs are lower, fewer people in the area, fewer stores-low selection• Fewer entertainment and recreation options

Inner city• High density urban area consisting of apartment buildings populated by primarily lower income consumers• inner city customers desire to buy merchandise from nationally recognized retailers in the neighborhood where they live• Higher sales volume-higher margins, resulting in higher profits

Shopping centers• A group of retail and other commercial establishments that is planned,

developed, owned and managed as a single property.• Usually developer and shopping center management carefully select a set of

retailers that are complementary to provide consumers with one stop shopping experience with well balanced assortment of merchandise

• SC mgt maintains the common facilities – parking, security, lighting, outdoor signage for the centre, advt and special events to attract consumers

• Stores within the centre pay a negotiated annual fee based on size to cover maintenance costs.

• SC mgt may place restrictions on operating hours, signage and type of merchandise stored

• Every SC has one or two major retailers known as Anchors. Anchors are wooed by the developer because they attract a significant no of consumers and are appealing to consumers and other retailers.

• Anchors get special deals in terms of rent

Shopping centres

Neighborhood and community shopping

centres• Attached row of stores managed as a unit, with onsite parking in front• Common areas – not enclosed- open air centres• common layout: linear, L shaped, inverted U shaped.• Smaller centres- neighbourhood centres- anchored by supermarket/ drugstores• Larger centres- community centres – addl anchors- discount stores, off price stores,category specialists.• Adv: lower costs, customer convenience • Disadv: limited trade area,lack entertainment and recreation ,no protection from weather

Power centres• Shopping centres that consist of primarily of collections of big box retail stores such as discount, off price, category specialists• Open air,include several other free standing anchors and other specialties

Shopping centres

Shopping malls

•Enclosed ,climate controlled, lighted shopping centres with retail stores on one or both sides of enclosed walkway.• Adv: broad merchandise, large customer traffic, large trade area, entertainment option, hangout options for teens. Weather protection, maintenance taken care of.• Disadv: high occupancy costs, mall management issues, intense competition within retailers.• Challenges: window shopping, time pressures- limited time for shopping, mall losing appeal

Lifestyle centres

• Shopping centres with open air configuration of upscale specialty stores, entertainment and restaurants•Located near affluent neighbourhoods and cater to lifestyle of consumers in their trade area • Eg Palladium

Shopping centres

Fashion/Speciality centres

•Composed of upscale apparel shops,boutiques and gift shops carrying fashion or unique merchandise of high quality and price.• Upscale dept stores, gourmet restaurants ,theatres can function as anchors.•Elegant rich décor and high quality landscaping.• Found in high trade areas with high income levels,in tourist areas,or in some CBDs• Trade areas and occupancy costs are high.•Eg Phipps Plaza- Atlanta – tiffany, Gucci Max Mara etc

Outlet centres• Shopping centers that contain mostly mfg and retailers outlet stores including off price stores• Well designed buildings with landscaping, gardens food courts. entertainment .• located at some distance away from shopping centres so that mfg brands sold at discount prices will not compete.• Located in tourist areas.•Eg 1.2 million sq foot Factory Outlet Mega mall in Niagra falls – 15 million tourists

Other types

• Theme/festival centres: unifying theme carried by the individual shops in design and merchandise

• Mixed use development : combine several uses in one complex incl shopping centres, office towers, hotels,residential complexes,convention and civic centres.

• Airports:high pedestrian area, bookstore ,gift store, costs are higher, workers inconvenienced, high wages.

• Hospitals• Store within store

LOCATION AND RETAIL STRATEGY

Location and Retail Strategy

• Type of location must reinforce the retail strategy

• Location type decision- consistent with size of target market, shopping behavior, and retailers positioning in the target market.

Shopping behavior – target market

• A critical factor- how consumers select a particular shopping location depends upon the shopping situation

• Convenience shopping• Comparison shopping• Specialty shopping

Convenience shopping

• Concern – to minimize the effort required to get the product/service they want

• Indifferent towards: Retailer, brand and price• Eg:Coffee during work break• Don’t spend time in brand evaluation• Retailers – locate stores close to customers,

offer easy parking, access and location• Located in the neighborhood

Comparison shopping

• Have a general idea about the product/service they want, but no strong preference for a brand,retailer or a model.

• Not brand/store loyal• Seek info, spend effort ,take time in making a

purchase decision.• Competing shops present close to each other

to increase consumer traffic• Eg Furniture,appliances,apparel

Specialty shopping

• Consumers know what they want and don’t accept a substitute

• Brand, retailer loyal and pay a premium /spend extra effort

• Eg designer perfumes, clothing.• will travel extra to obtain that item• thus location- not important for retailers

selling unique merchandise

Density of target market

• Good location- close to target market• For eg convenience store- close to target

customers- living /working• Not applicable for a premium retailer

Uniqueness of retail offering

• Unique differentiated offering .• Customers will travel wherever the store is

located and the location - destination

Legal considerations

• Environmental issues: storage of hazardous material: Eg car garage – disposal of used motor oil and battery fluid

• Signs: restrictions on use of signs can also affect location.

• Licensing requirements: for alcohol