Retail Locations

Types of Locations
Shopping Centers
Other Location Opportunities
Location and Retail Strategy
Legal Considerations

Cansino, Jotham
Guitierrez, Nikko
Javier, Jan Michael
Parreno, Edgardo
Villacampa, Jonah
Retail Locations
Types of Locations

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o

Many different types of locations are available for retail stores

Each type with its own strengths and weaknesses
3 Basic Location Types
Freestanding
City or town business district
Shopping center
Non-traditional location type
Within airports or within another store

Evaluating Location Types

Look

at the trade-offs
Area
Occupancy cost of the location
Pedestrian and vehicle customer traffic generated in association with
the location
Restrictions placed on store operations by the property managers
Convenience of the location for the customers

Trade Area

Geographic area that encompasses most of the customers who would

patronize a specific retail site.
Types of Locations based on the trade-offs
Annual
Tradin
Size (sq.
Occupa Shoppin
Restrict
g
Vehicul
ft. in
ncy
g
Pedestria
ions on
Area
ar
thousands
Cost ($ Conveni
n Traffic
Operati
(Miles
Traffic
)
/ sq.
ence
ons
)
ft.)
UNPLANNED AREAS

Freestanding

Urban
Locations /
Central
Business
District
Neighborhoo
d and
Community
Shopping

Varies

Varies

30-350

3-7

Varies

3-6

Typical
Tenants

High

Limited

Convenienc
e, drug
stores,
category
specialist

High

Low

Limited
to
Mediu
m

Specialty
stores

SHOPPING CENTERS
8-20
High
Low

High

15-30

8-20

High

Low

Low

Mediu
m

Supermarke
ts, discount
stores

Centers
Power
Centers
Enclosed
Malls

250-600

5-10

10-20

Medium

Medium

Mediu
m

Limited

400-1000

5-25

10-70

Low

High

Low

High

Mediu
m to
High

Lifestyle
Centers

150-800

5-15

15-35

Medium

Medium

Mediu
m

Outlet
Centers

50-400

25-75

8-15

Low

High

High

Limited

Theme /
Festival
Centers

80-250

N/A

20-70

Low

High

Low

Highest

Category
specialists
Department
and
specialty
apparel
stores
Specialty
apparel
stores and
home
stores,
restaurants
Off-price
retailers and
factory
outlets
Specialty
stores and
restaurants

Freestanding Sites
Retail locations for an individual, isolated store unconnected to other
retailers; however, they might be near other freestanding retailers or a
shopping center.
Advantages
Convenience for customers (easy access and parking);
High vehicular traffic and visibility to attract customers driving by;
Modest occupancy costs;
Fewer restrictions on signs, hours, or merchandise
Disadvantages
Limited trade area since no other nearby retailers to attract
customers interested in shopping at multiple outlets in one trip.
Higher occupancy cost than strip centers since no other retailers
sharing the cost of outside lighting, parking lot maintenance, or
trash collection
Generally have little pedestrian traffic
Outparcel
Stores that are not connected to other stores in a shopping center
but are located on the premises, typically in a parking area.
These locations are popular for fast-food restaurants, such as
McDonalds or Dunkin Donuts, or banks.

Enables retailers to have a drive-through window, dedicated

parking, and clear visibility from the street.

City or Town Locations

o

o
o

In general, urban locations have lower occupancy costs than enclosed

malls, and locations in central business districts often have high pedestrian
traffic during the day, but not at night.
However, vehicular traffic is limited due to congestion in urban areas, and
parking problems reduce consumer convenience.
Unlike freestanding locations, store signage can be restricted in these
locations.
GENTRIFICATION the renewal and rebuilding of offices, housing, and
retailers in deteriorating areas coupled with an influx of more affluent (rich)
people that displaces the former, poorer residents. Young professionals and
retired empty-nesters (couples that live by themselves without their
children) are moving into these areas to enjoy the convenience of shopping,
restaurants, and entertainment near where they live.
TRIVIA
Most Expensive Retail Locations (in dollars per square foot annually)
1. 1500-2000 Fifth Ave., NYC
2. 1200 Causeway Bay, H.K.
3. 922 Avenue des Champes-Elysdes, Paris
4. 814 Bond St., London
5. 683 Ginza, Tokyo
Central Business District
Traditional downtown business area in a city or town.
Advantages
Draws many people and employees into the area during
business hours due to its daily activity.
Hub for public transportation, and there is a high level of
pedestrian traffic
Large number of residents living in the area.
Disadvantages
Limited parking and longer driving times can discourage
suburban shoppers from patronizing stores in a CBD.
Shopping flow in the evening and on weekends is slow in many
CBDs.
Shoplifting is a concern requiring increased security costs
and/or inventory losses.

CBDs tend to suffer from a lack of planning unlike shopping

centers.
Main Street (High Streets in the United Kingdom)
Traditional shopping area in smaller towns or to a secondary
business district in a suburb or within a larger city. Streets in
some of these areas have been converted into pedestrian
walkways.
Share most of the characteristics of CBDs but occupancy
costs are generally lower because they do not draw as many
people as the primary CBD because fewer people work in the
area and the fewer stores generally mean a smaller
overall selection.
Typically dont offer the range of entertainment and
recreational activities available in the more successful
primary CBDs
The planning organization for the town or redevelopment often
imposes some restrictions on Main Street store operations.
Inner City
High density urban area that has higher unemployment and
lower median income than the surrounding metropolitan area.

Shopping Center

A group of retail and other commercial establishments that are planned,

developed, owned, and managed as a single property.
Attracts more consumers by combining many stores in one location.
Shopping center management carefully select retailers that are
complementary to provide consumers with a comprehensive shopping
experience.

Common Area Maintenance (CAM) shopping center management maintains

the common facilities and services such as the parking area, security,
lighting, outdoor signage for the center, advertising and special events to
attract consumers. However, management typically require, as stipulated in
lease agreements, that retailers in the center pay a portion of the CAM costs
for the center according to the size of their stores space and/or sales volume.
Management can also place restrictions on the operating hours, signage, and
type of merchandise sold in stores.
Anchors major retailers that attract a significant number of customers that
consequently make the center more appealing for other retailers.
To acquire anchors, management give special deals, such as reduced
lease costs.
Strip Shopping Centers supermarkets are anchors

Enclosed Shopping Malls department stores are anchors

Lifestyle Centers may not have anchors
Power Centers consist primarily of multiple anchor stores.
Neighborhood and Community Shopping Centers (Strip Shopping
Centers)
Attached rows of nonenclosed stores, with on-site parking usually
located in front of the stores.
Layouts of Strip Shopping Centers
Linear common layout
L-shaped
Inverted U-shaped
Neighborhood Shopping Center smaller, supermarket as anchor
Community Shopping Center larger, discount department store as
anchor
Other retailers include off-price retailers, or a category specialist
(hardware, flowers, barber shops, dry cleaners, etc.)
Advantages
Offer customers convenient locations
Easy parking
Relatively low occupancy costs
Disadvantages
Smaller centers have a limited trade area
Lack entertainment and restaurants
No protection from weather
Fewer customers as compared to bigger enclosed malls
Power Centers
Shopping centers that consit primarily of collections of big-box retail
stores, such as full-line discount stores (Target US / Puregold PH),
off-price stores (Marshalls US), warehouse clubs (Costco US / S & R
PH), and category specialists.
Unlike traditional strip centers, power centers include several
freestanding anchors and only a minimum number of small specialty
store tenants.
Many power centers are located near an enclosed shopping mall.
Advantages
o Low occupancy costs
o Modest level of consumer convenience
o Modest level of vehicular and pedestrian traffic
Shopping Malls (Enclosed Malls)

Enclosed, climate-controlled, lighted shopping centers with retail

stores on one or both sides of an enclosed walkway.
Parking is usually provided around the perimeter of the mall, may
sometimes be located underground.
Classified as either
regional malls (less than 800,000 square feet)
superregional malls (more than 800,000 square feet)
Advantages
Attract many shoppers and have a large trade area
o Provides inexpensive form of entertainment
o Oldies get exercise by walking the malls; teenagers
hang out and meet friends
o (Generate significant traffic inside the mall)
Weather? No worries enclosed space protects customers
from the external weather
Management ensures a level of consistency that benefits
all the tenants (example: uniform hours of operation
mall hours)
Disadvantages
Occupancy costs are higher than strip centers,
freestanding sites, and most central business districts
(due to higher rent, CAM, taxes)
Retailers may not like mall managements control of their
operations (such as strict rules governing window displays
and signage)
Competition Intense (retailers offer similar merchandise
and in close proximity)
Freestanding locations, strip centers, lifestyle centers, and
power centers are more convenient because customers
can park in front of a store
Shopping malls need to be enhanced in order to avoid a decline in mall
traffic and sales, and to enhance the mall shopping experience of
customers. To do this, mall management, renovate and/or redevelop
existing malls, place different attractions, create events, etc.
Trivia

SM Megamall

Mandaluyong

506,435 m or 5,451,221 sq. ft.

1991

900+

SM Seaside City Cebu

Cebu City

472,400 m or 5,084,871 sq. ft.

2015

1000+

SM City North EDSA

Quezon City

470,490 m or 5,064,312 sq. ft.

1985

1000+

SM Mall of Asia

Pasay

406,962 m or 4,380,503 sq. ft.

2006

600+

SM City Cebu

Cebu City

268,611 m or 2,891,305 sq. ft.

1993

500+

Lifestyle Centers
Shopping centers that have an open-air configuration of specialty
stores, entertainment, and restaurants, with design ambience and
amenities such as fountains and street furniture.
They resemble the main streets in small towns, where people stroll
from store to store, have lunch, and sit for a while on a park bench
talking to friends.
They cater to the lifestyles of consumers in their trade areas.
Particularly attractive to specialty retailers.
Some are anchored by department stores and some are anchored by
category specialists.
Advantages
Tailored to consumers lifestyles
Easy to stroll from one store to another
Convenient for customers (parking, can be dropped off in front
of a store)
Appealing because of outdoor attractions and ambience
Occupancy costs are considerably lower than enclosed malls
Higher purchases per visit (due to higher-income shoppers)
Disadvantages
Weather (open-air configuration)
Less retail space than enclosed malls
Less pedestrian traffic than enclosed malls
Mixed-Use Developments
Combine several different uses into one complex including retail,
office, residential, hotel, recreation, or other functions
Pedestrian-oriented facilitate a live, work, play environment
Outlet Centers
Shopping centers that contain mostly manufacturers and retailers
outlet stores.
On average, outlet center rent rates are lower than those at shopping
malls.
Sales per square foot are comparable
Some outlet centers have strong entertainment component, including
movie theaters and restaurants to keep customers on the premises
longer
Theme/Festival Centers

Shopping centers that typically employ a unifying theme carried by the

individual shops in their architectural design and, to an extent, in their
merchandise.
The biggest appeal of these centers is to tourists.
More on specialty stores; usually no large department stores
Can be anchored by restaurants and entertainment facilities.
Might be located in a place of historical interest, it may attempt to
replicate a historical place, or create a unique shopping environment.

Larger, Multiformat Developments Omnicenters

Combining enclosed malls, lifestyle centers, and power centers.
Spreading costs among more tenants(retailers)
Functions inside larger developments generates more pedestrian
traffic; longer shopping trips

Other Location Opportunities

Pop-up stores
Stores within a store
Kiosk
Airports

Some other location

alternatives for many retailers

Pop-Up Stores / Temporary

Locations

Stores in temporary locations

that
focus on new products or a
limited group of products
Before
Major investment for retailers due to high start-up cost over a short
lease and high lease costs
Now
Retailers and manufacturers use these spaces to create buzz, test new
concepts, or even evaluate a new neighborhood or city.
To take advantage of the holiday season / get visibility and additional
sales at festivals or concerts / weekend crafts fairs, or farmers markets
Accepted by cities because they generate excitement and more
income to the area
Local retailers arent happy because of divided market share

Store within a Store

Retailers, particularly department stores and supermarkets, have

traditionally leased space to other retailers, such as sellers of fine
jewelry, furs, high-end designer brands, coffee bars, banks, film
processors, medical clinics, and snack bars.

Merchandise Kiosks

Small selling spaces, typically located in the walkways of enclosed

malls, airports, college campuses, or office building lobbies.
Some are staffed and resemble a miniature store or cart that could
easily be moved.
Vending machines
Mall operators like kiosks because they generate rent income in spaces
not normally utilized and they can be changed quickly to match
seasonal demand
Mall operators avoid placing kiosks that block storefronts, create an
incompatible image, or actually directly compete with permanent
tenants in order to protect other retailers interests

Airports

A high pedestrian area

Passengers arrive earlier for their flights leaving them more time to
shop
Cutback in airline food service made people buy food in airports
Rents are higher than at regular mall stores because of higher sales
per square foot at airport malls
Retailers spend more because of the work hours of workers, and
location

Location and Retail Strategy

The selection of a location type must reinforce the retailers strategy.

The location type decision needs to be consistent with the shopping behavior
and size of the target market and the retailers positioning in its target
market

Shopping Behavior of Consumers in Retailers Target Market

3 Types of Shopping Situations
Convenience Shopping
o Consumers are primarily concerned about minimizing their
effort to get the product or service they want
o Price insensitive
o Indifferent about which brands to buy
o No need to evaluate different brands or retailers
o Make purchase as quickly and easily as possible
Comparison Shopping
o Consumers have a general idea about the type of product
or service they want

o Do not have a well-developed preference for a brand or

model
o Purchase decisions are more important
o They seek information
o Gives more effort to compare alternatives
Specialty Shopping
o Consumers know what they want and will not accept a
substitute
o Brand/retailer loyal
o Pay a premium or expend extra effort to get exactly what
they want

Density of Target Market

Density of target market in relation to the location
A good location has many people in the target market who
are drawn to it
Stores that sell specialty merchandise do not need high
customer density because customers are willing to search
out the merchandise.
Uniqueness of Retail Offering
Convenience of a location is less important for retailers
with unique, differentiated offerings than for retailers with
an offering similar to other retailers
Customers will travel to wherever the store is located, and
its location will become a destination.

Legal Considerations

Need to be examined when evaluating different location types.

Legal issues can discourage a retailer from pursuing a particular
site.
Legal issues are not permanent and they can always change
because of lobbying efforts and court battles. These issues may
be removed or more issues may arise.
Legal issues that affect the location decision:
o Environmental and sustainability issues
o Zoning
o Building codes
o Signs
o Licensing requirements

Environmental and Sustainability Issues

Issues
Above-ground risks, such as asbestos-containing materials
or lead pipes used in construction materials can be
removed relatively easily
Underground risks, such as hazardous materials stored in
the ground
Cleaning and disposing of chemicals properly
Expensive several thousand to many millions of
dollars per site
Environmental impact statement on the property
Using old public filings of buried tanks and other
potential hazards can be unreliable and does not
provide protection in court
Energy efficiency
Retailers to protect themselves:
Stipulate in the lease that the lessor is responsible for the
removal and disposal of any such material if it is found
Buy insurance that specifically protects them from the risks
Use energy-efficient building materials, heating and cooling
systems, water-efficient landscaping, and natural lighting
Zoning and Building Codes
Zoning determines how a particular site can be used.
o Some parts of a city are zoned for residential use
only, others are zoned for light industrial and retail
uses

Signs

Building codes are similar legal restrictions

o Specify the type of building, signs, size and type of
parking lot, and so forth, that can be used at a
particular location

Restrictions on the use of signs can affect a particular

locations desirability
Sizes and styles may be restricted by building codes, zoning
ordinances or even the shopping center management

Licensing Requirements
Licensing requirements may vary in different parts of a region
Restrictions may be in effect in a particular area while in
another area it is not.
o A theme/festival shopping center that restricts the
use of alcoholic beverages may find limited
customers at night.