Retail location Strategy

Many retailers feel the 3 keys to success are Location, location, and location While a good retail location does not ensure success, a bad retail location does ensure problems

Importance of retail location

Cost factor:

Involves large capital investment Affects transportation costs Affects human resources costs Amount of customer traffic Volume of business

Revenue factor:

Cont..

What is the difference between retail location and retail site? Location is a broader concept, which denotes the store and its trading area from where a majority of its customers originate, while site refers to specific building or part where the store is located.

Levels of location decision and its affecting factors

Level of location decision

Selection of city

Selection of area within the city

Identification of specific site

Selection of city

Size of the citys trading area What is a trading area? Trade area is a contiguous geographic area from which a retailer draws customers, that account for the majority of a stores sales. It may be a part of city or extend beyond city limits Population or population growth in the trading area Total purchasing power and its distribution Total retail potential for different lines of trade: Mysore silks Number, size and quality of competition Developmental cost: Mumbai vs Bangalore

Selection of area within the city

Customer attraction power of a district or a particular store: Chandani Chowk Quantitative and qualitative nature of competitive stores: Availability of access routes: M G road Nature of zoning regulations: developmental projects Direction of the spread of the city: Navi Mumbai

Selection of specific site

Adequacy of potential of traffic passing the site: Both pedestrian and vehicle Ability of the site to intercept the traffic flowing past the site: target segment traffic Complimentary nature of adjacent stores: jewelers and wedding sarees

Types of retail locations

Free standing location: no other outlets in the vicinity Neighborhood stores: residential neighborhood Highway stores: dhabas Business association location: group of retail outlets work together, to attract customers to their retail area.

Unplanned business districts/centers: Planned shopping centers

Unplanned business districts/centers:

Type of retail location where two or more stores locate together on individual considerations not on long range collective planning. Central business district: commercial street Secondary business district: koramangala Neighborhood business districts: Suburban business district:

Planned shopping centers

Regional shopping malls or centers Neighborhood community shopping centers Specialized markets Periodic markets

Types of consumer goods and location decisions

Convenience goods Shopping goods Specialty goods

More traffic Quality traffic Isolated with adjacent complimentary stores

Trading area.

Can be divided into two or three zones depending upon Size Location Nature of merchandise

10%-15% 20%-30%

60%-70%

Trading area analysis

Market potential Customer profile Competition Merchandising plan Promotional activities

Site selection Analysis

Kind of products sold Cost factor Competitors location Ease of traffic flow and accessibility Parking Market trends Visibility

Retail location theories

Central place theory Spatial interaction theory Land value theory

Central place theory

Established by Christaller and Losch

Threshold Range

Spatial interaction theory

Flow of goods, people or information among places, in response to localized supply and demand. Deficit in one place and surplus in another Transferability possible if the market is ready to bear the cost the likelihood that a city will attract shoppers from hinterland increases with the size of the city and decreases with the distance from the city

Land value theory

Also known as bid rent theory or urban rent theory Competition for supply of land ensures that in long run all urban sites will be occupied by the activity capable of paying the highest rent.