Retail Location Analysis

Location Planning in Retailing

• The occupancy cost of a location is a crucial factor in retail location planning.
• Factors to consider when evaluating a location include:
  • Pedestrian and vehicle customer traffic
  • Restrictions placed on store operations by the property manager
  • Convenience of the location for customers
  • Cost vs. customer value

Unplanned Retail Locations

• Freestanding sites:
  • Advantages: greater visibility, lower rents, ample parking, no direct competition, greater convenience for customers, fewer restrictions on signs, hours, or merchandise, and ease of expansion
  • Disadvantages: lack of synergy with other stores
• Urban locations:
  • Central business district (CBD):
    • Advantages: hub for public transportation, pedestrian traffic, residents
    • Disadvantages: high security required, shoplifting, parking is poor, evenings and weekends are slow
  • Inner city:
    • Characteristics: high-density urban areas, higher unemployment, lower median incomes than surrounding metropolitan areas
• Main streets vs. CBDs:
  • Main streets:
    • Advantages: lower occupancy costs than CBDs
    • Disadvantages: fewer people, fewer stores, smaller selections, less entertainment, restrictions on store operations

Planned Retail Locations - Shopping Centers

• Shopping centers:
  • Definition: a group of retail and other commercial establishments planned, developed, owned, and managed as a single property
  • Management responsibilities: common facilities, security, outdoor signage, and advertising
  • Anchors: one or two major retailers
• Types of shopping centers:
  • Neighborhood and community shopping centers (strip centers)
  • Power centers: dominated by large anchors
  • Shopping malls: enclosed, climate-controlled, lighted shopping centers with retail stores
  • Lifestyle centers: open-air, specialty stores, entertainment, and restaurants with design ambience and amenities
  • Outlet centers: mostly manufacturers' outlets
  • Theme/festival centers: shopping centers with a unifying theme, architectural design, and merchandise
  • Omnicenters: responses to trends in retailing, including lower common area maintenance charges and more pedestrian traffic

Nontraditional Locations

• Pop-up stores and other temporary locations:
  • Purpose: focus on a new product or limited group of products
  • Characteristics: temporary, not designed primarily to sell products
• Store within a store:
  • Retailers leasing space to other retailers
• Merchandise kiosks:
  • Small, temporary selling spaces, usually located in walkways of enclosed malls, airports, college campuses, or office building lobbies
  • Characteristics: short-term leases, often operated seasonally

Matching Location to Retail Strategy

• The selection of a location type must reinforce the retailer's strategy and be consistent with:
  • Shopping behavior
  • Size of the target market
  • The retailer's position in its target market

Evaluating Specific Areas for Locations

• Factors to consider:
  • Strategic fit with target market
  • Economic conditions
  • Competition
  • Cost of operating stores
• The best areas for locating stores are those that generate the highest long-term profits for a retailer

Site Characteristics

• Traffic flow and accessibility
• Location characteristics:
  • Parking facilities
  • Congestion
  • Visibility
  • Adjacent retailers
• Restrictions and costs