Process of selecting a site Retail growth strategies Types of retail locations Types of shopping centers Trade area & trade area analysis Methods to analyze trade areas
You own a single successful fresh juice outlet, especially popular during lunch & right after work. You want to add a 2nd location. What will you look for as you shop for a site? Where would you find the information you need?
Retail Location I 7.2
If Its In a Mall
You own a single successful fresh juice outlet, especially popular during lunch & right after work. You want to add a 2nd location. If you were to locate your site inside a mall, where would you want to be?
Location Analysis
Regional Analysis
Area Analysis
Site Analysis
Retail Location I 7.4
Old Product
Old Market New Market
Market Penetration
New Product
Product Development
Market Development
Product Diversification
Time
Retail Location I 7.7
Shopping Centers
A shopping center is a group of retail and other commercial establishments that is planned, developed, owned, and managed as a single property. Two main configurations: Strip centers have parking in front of the stores and do not have enclosed walkways linking the stores. Malls have a pedestrian focus; customers park in outlying areas and walk to the stores. Traditional malls are enclosed with walkways between two facing strips of stores.
Retail Location I 7.9
Neighborhood
Convenience 30,000 150,000
Community
General mdse, convenience
Power Center
Category-dominant anchors Usually not enclosed
One or more
Two or more
Discount store, supermarket, home improvement, warehouse store, etc.
Three or more
Discount store, supermarket, home improvement, warehouse store, etc.
Supermarket
~ 3 miles
3 7 miles
Regional Mall
General mdse, fashion Usually enclosed 400,000 800,000
Super Regional
Similar to regional but with greater variety & assortment
Outlet Mall
Mfrs outlet stores
na
Mfrs outlet stores, restaurants, entertainment
na
Name
Location
Mall of America Del Amo Fashion Center South Coast Plaza/Crystal Court Woodfield Mall SawGrass Mills
Accessibility
roads natural obstacles other barriers (e.g., crime areas)
proximity to competitors
Retail Location I 7.15
Resident data
Frequency of Shopping, Average Size of Purchase ($), Concentration of Customers by Geographic Area, Age Distribution, Avg Educational Level, % Home Ownership, Disposable & Per Capita Income, Occupational Distribution, Trends
Competitor data
No. & Size of Competitors, Sq Ft of Retail Space, Front Ft of Retail Space, Saturation of Area (people/retailer, avg store sales, sales/capita, sales/ft, sales/employee)
Site Characteristics
Number of parking spots available Distance of parking areas Visibility of site from street Size and shape of the lot Condition of existing building (if any) Ingress and egress quality
Retail Structure
Number of competitors in area Number and types of stores in area Complementarity of neighboring stores Proximity to commercial areas Joint promotion by local merchants
Source of data
Checklists
Customer Spotting
Trend Analysis
Survey Research
GIS Software
2ndary Research
Done among analog stores What would this yield? Why would you do this? How would you collect this information?
Source of data
Checklists
Customer Spotting
Trend Analysis
Survey Research
GIS Software
2ndary Research
Source of data
Checklists
Customer Spotting
Trend Analysis
Survey Research
GIS Software
2ndary Research
Source of data
Checklists
Customer Spotting
Trend Analysis
Survey Research
GIS Software
2ndary Research
Link: http://www.esri.com/industries/business/business/site_selection.html
Source of data
Checklists
Customer Spotting
Trend Analysis
Survey Research
GIS Software
2ndary Research
Census Data
Land Area Population Age distribution Gender Household size, type Marital status Owner-occupied housing
http://www.fedstats.gov/qf/states/49/49049.html
Rental status Persons in unit Race and ethnicity Country of origin Place of birth Language spoken at home School Enrollment
Educational Enrollment Fertility Departure time for work Occupation Class of worker Disability Income type Poverty status
Utah Statistics
Statistical Abstract
Dept of Census
What are the effects of proposed changes in retail sites on the revenues of new and existing stores?
Retail Location I 7.24
Access to consumers
Number Characteristics Growth Locations of other stores Cannibalization own stores Agglomeration Competition Complementarity
According to Wal-Marts Real Estate group, the difference between good and bad locations exceed $25 million in gross profit
Retail Location I 7.25
Geographic market Site within the geographic market If an opening or expansion, the format/size of
the store to be opened
Facilitates multi-purpose shopping, virtual one-stopshopping, and offers a wider variety of goods to choose from Recognizes thatshopping consumers may use multiple stores Examples: centers and shopping malls to meet their needs - shopping strategically!! Retail Location I 7.27
Price search
Our research incorporates price uncertainty, allowing
shoppers to terminate or continue a shopping trip (unplanned)
Retail Competition
Destination Effect
Specifically, how are retailer revenues affected by nearby supermarkets, drug stores, mass merchandisers and supercenters, dollar stores and warehouse clubs?
Retail Location I 7.30
Location information of stores and consumer panelists, along with demographics, trends and seasonality, are used to analyze consumer spending across retail chains to assess the revenue impact of potential store sites
Panel Data
Store Location Block-Group Demo and Size Data and Pop Data
Panel data
Including demographics Currently available in 21 major markets Sources are IRI and AC Nielsen Store and shopper locations We can use straight-line distances, road distances, or
RFRS Model
For every household in the panel, our models predict: (1) Number of visits quarterly (2) Spending per visit Predictors (1) Travel times/distances (2) Store sizes (3) Retail agglomeration
RFRS Forecasting
RFRS An Example
RFRS An Example
Montgomery Wards store locations and sample of shoppers providing expenditure data
RFRS An Example
Wal-Mart Other
Kmart
RFRS An Example
RFRS An Example
RFRS An Example
Retail Locations
Section 3: Other Locations, Location and Retail Strategy, and Legal Considerations Matthew Sullivan
Questions:
What types of locations are available to retailers? What are the relative advantages of each location type? Why are some locations particularly well suited to specific retail strategies? Which types of locations are growing in popularity with retailers?
Having a good location increases chances of developing a strong sustainable competitive advantage
Section 1
Milton Law
City or Town Locations such as central business districts, main streets, and inner city locations
- Convenience for
customers visibility
Limited trade area when not around nearby retailers Higher Occupancy costs that strip centers Usually located where there is little pedestrian traffic
Freestanding Sites
Retail locations for an individual, isolated store unconnected to other retailers
Outparcels
Merchandise Kiosks
Merchandise kiosks
Small selling spaces, typically located in the walkways of enclosed malls, airports, train stations, or office building lobbies.
Advantages
Disadvantages
Advantages - Draws people during business hours - Heavy public transportation - Pedestrian traffic Retail Location I 7.53 - Residential area as
Disadvantages - High security required - Shoplifting - Parking is poor - Evenings and weekends are slow
lower than CBDs Fewer people are employed Smaller selection due to fewer stores
Inner City
High density urban areas with higher unemployment and lower median incomes than surrounding areas
Retailers here achieve higher sales volume and higher margins, thus producing higher profits Redevelopments in inner cities can cause increased traffic and parking difficulties, causing them to be controversial
Section 2
- Shopping centers
Shaina Lacher
Advantages
Disadvantages
Power Centers
Consist primarily of collections of big box retail stores Examples
Shopping Malls
Shopping Malls
Advantages
Wide variety of stores Wide assortment of merchandise - Shopping and entertainment - No inclement weather - Uniform hours of Retail Location operation I 7.60
Disadvantages
Occupancy costs are generally higher Mall control over business operations Competition can be intense
- Common
areas Family lounges Great food Playgrounds Entertainme nt
Lifestyle Centers
Shopping centers with an open-air configuration of specialty stores, entertainment, and restaurants with design ambience and amenities
Advantages
Disadvantages
- Ease of parking - Relaxed open-air environment Pedestrian traffic tends to be higher Occupancy costs and operating restrictions are less
Fashion/Specialty Centers
Composed mainly of upscale apparel shops, boutiques, and gift shops carrying selected fashions or unique merchandise of high quality and price
Outlet Centers
Shopping centers that contain mostly manufacturers outlets
Theme/Festival centers
Shopping centers that typically employ a unifying theme reflected in the individual shops, design, and to some extent their merchandise
- Located in places of -
historic interests or for tourists Anchored by restaurants and entertainment facilities Generally targeted at tourists, they may also attract local customers A common element of these centers is entertainment, although some rely solely on the shopping experience
Omnicenters
Combines enclosed malls, lifestyle centers, and power centers
Omnicenters are becoming more popular in the U.S. partly from the desire of tenants for lower common-area maintenance charges and the growing tendency of consumers to crossRetail Location I 7.67 shop.
Offer an all-inclusive environment so that consumers can work, live, and play in a proximal area Combine several different uses into one complex, including shopping centers, office towers, hotels, residential complexes, civic centers, and convention centers
Section 3
Airports
High pedestrian traffic Sales per square foot are higher than mall stores Rent is higher Hours are longer Inconvenient location for workers means higher wages
Good for businesses trying to create a little hype Good introduction for new stores or products Provide visibility for a business Provide additional sales during holidays and special events
Resorts
- Captive audiences
Wealthy customers People with time on their hands
Farmville
Businesses take advantage of locations where customers are, like the internet and online games, and provide them with alternative ways to spend money
- Uniqueness of
Retail Offering
Retail Location I 7.76
Shopping Situations
3 Shopping Behaviors
Convenience Shopping
Shopper Mentality
Comparison Shopping
Shopper Mentality
General idea about product or service No strong brand preference No strong retailer preference
Specialty Shopping
Shopper Mentality
Knows what they want Accepts no substitute Strong loyalty to product or brand
eligible to purchase product or service Estimate percentage of potential customers Estimate # times customers could purchase the product or service in a year Estimate highest density of target market
Consumer mentality
Location doesnt matter as much because the product is that important or unique
Legal Considerations
Zoning and Building Codes
Environmental Issues
- Sign restrictions
Licensing requirements
Environmental Issues
Above-Ground Waste
Hazardous Materials
Signs
Licensing