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McGraw-Hill/Irwin PPT 8-1 Levy/Weitz: Retailing Management, 5/e

Copyright 2004 by The McGraw-Hill Companies, Inc. All rights reserved.

Three Levels of Analysis

PPT 8-2

Trade Area Issues

Which Trade Areas Are Most Attractive for Locating Retail Outlets?
How Many Outlets to Locate in a Trade Area?
More Stores Increases Economies of Scale and Reduces Costs
More Stores also Results in More Cannibalization and Less Sales per Store

PPT 8-3

Convenience of Going to Site Accessibility

Road pattern and condition

Natural and artificial barriers Visibility

Traffic flow
Parking Congestion

PPT 8-4

Location Within a Center

In High Traffic Areas Near Anchor

Center of Shopping Area

Near Stores Selling Complementary Merchandise Clustering Specialty Stores Appealing to Teenagers

Better locations cost more

PPT 8-5

Trade Area

Primary zone - 60 to 65 percent of its customers Secondary zone - 20 percent of a stores sales

Tertiary zone - customers who occasionally shop at the store or shopping center

PPT 8-6

Factors Defining Trade Areas

Accessibility

Natural & Physical Barriers

Type of Shopping Area Type of Store Competition Parasite Stores
PPT 8-7

Identifying a Target Market

Market segment should be measurable.

Market should be accessible.

Market should be substantial enough to be
profitable.

PPT 8-8

Location of Store-Based Retailers

Anchor Stores are the stores in a shopping center that are the most dominant and are expected to draw customers to the shopping center.

Free-Standing Retailer generally locates along major traffic arteries and does not have any adjacent retailers to share traffic with.
PPT 8-9

Uses of GIS
Market selection.

Site analysis.
Trade area definition. New store cannibalization. Advertising management. Merchandise management. Evaluation of store managers.
PPT 8-10

Process for Selecting a Retail Location

LO 3: Exhibit 7.5

Identify the most attractive markets in which to operate

Identify the most attractive sites that are available within each market

Select the best site(s) available

PPT 8-11

Checklist for Site Evaluations

Local Demographics Population and/or household base Population growth potential Lifestyles of consumers Income potential Age makeup Population of nearby special markets, that is,
daytime workers, students, and tourists, if applicable Occupation mix
PPT 8-12

Checklist for Site Evaluations

Traffic Flow and Accessibility Number and type of vehicles passing location Access of vehicles to location Number and type of pedestrians passing location Availability of mass transit, if applicable Accessibility of major highway artery Quality of access streets Level of street congestion Presence of physical barriers that affect trade area
shape
PPT 8-13

Checklist for Site Evaluations

Cost Factors Terms of lease/rent agreement Basic rent payments Length of lease Local taxes Operations and maintenance cost Restrictive clauses in lease Membership in local merchants association required Voluntary regulations by local merchants
PPT 8-14