Retail Business Location: Market Selection And Trade Area Analysis PDF

EEC 311 MODULE 3 RETAIL BUSINESS LOCATION: MARKET SELECTION AND TRADE AREA ANALYSIS Karlo Dacanay CONTENTS 01 RETAIL LOCATION SELECTION 02 TRADE AREA ANALYSIS  01 RETAIL LOCATION SELECTION OLD PHOT...

EEC 311 MODULE 3 RETAIL BUSINESS LOCATION: MARKET SELECTION AND TRADE AREA ANALYSIS Karlo Dacanay CONTENTS 01 RETAIL LOCATION SELECTION 02 TRADE AREA ANALYSIS  01 RETAIL LOCATION SELECTION OLD PHOTOS OF BAGUIO CITY OLD PHOTOS OF BAGUIO CITY OLD PHOTOS OF BAGUIO CITY 1960 BAGUIO CITY  BONIFACIO GLOBAL CITY FORMERLY FORT MCKINLEY 1923 PHOTO  BONIFACIO GLOBAL CITY 2003  BONIFACIO GLOBAL CITY RETAIL LOCATION Location is the most important ingredient for any business that relies on customers. Location decisions can be complex, costs can be quite high, there is often little flexibility once a location has been chosen and the attribute of location have a strong importance on retailers overall strategy  Business location is a unique factor which the competitors cannot imitate. Hence, it can give a strong competitive advantage. Selection of retail location is a long-term decision. It requires long-term capital investment. Good location is the key element for attracting customers to the outlet. A well-located store makes supply and distribution easier. Locations can help to change customers’ buying habits. TYPES OF RETAIL LOCATION Unplanned Locations Planned Locations UNPLANNED LOCATIONS Do not have centralized management that determines what stores will be in a development, where the specific stores will be located, and how will they be operated. FREE STANDING LOCATION BUSINESS DISTRICT DOWNTOWN AREA OFFICE BUILDING HOME BASED FREE STANDING LOCATION any stand-alone building or store. can be tucked away in a neighborhood location or right off a busy highway. Depending on the landlord, there are generally no restrictions on how a retailer should operate his business. BUSINESS DISTRICT Central Business Districts (CBD) Usually consists of an unplanned shopping area around the geographic point at which all public transportation systems converge; it is usually in the center of the city and often where the city originated historically.  AYALA AVENUE, MAKATI BONIFACIO GLOBAL CITY, TAGUIG ORTIGAS CITY BUSINESS DISTRICT Secondary Business District (SBD) A shopping area that is smaller than the CBD and that revolves around at least one department or variety store at a major street intersection. Neighborhood Business District (NBD) A shopping area that evolves to satisfy the convenience- oriented shopping needs of a neighborhood, generally contains several small stores (with the major retailer being a supermarket or a variety store), and its located on a major artery of a residential area. BF HOMES PARANAQUE MAGINHAWA STREET DOWNTOWN AREA may be another premium choice. However, there may be more freedom and fewer rules for the business owner. Many communities are hard at work to revitalize their downtown areas and retailers can greatly benefit from this effort. lack of parking is generally a big issue for downtown retailers. OFFICE BUILDING The business park or office building may be another option for a retailer, especially when they cater to other businesses. Tenants share maintenance costs and the image of the building is usually upscale and professional. HOME-BASED More and more retail businesses are getting a start at home. Some may eventually move to a commercial store location, while many remain in the business owner's spare room. This type of location is an inexpensive option, but growth may be limited. PLANNED LOCATIONS architecturally well-planned to provide a number of outlets preferably under a theme have large, key retail brand stores (also called “anchor stores”) and a few small stores to add diversity and elevate customers’ interest. neighborhood or strip/community centers, malls, lifestyle centers, specialty centers, outlet centers. SHOPPING CENTER a centrally owned or managed shopping district that is planned, has balanced tenancy (the stores complement each other in merchandise offerings), and is surrounded by parking facilities to provide consumers with a comprehensive shopping experience at one, convenient location managed by A SHOPPING CENTER PROPERTY MANAGEMENT FIRM SHOPPING CENTER ANCHORS Most shopping centers have at least one or two major retailers called ANCHORS. These retailers are courted by the center’s developer because they attract a significant number of consumers and consequently make the store more appealing for other retailers. Special deals/ reduced least cost TYPES OF SHOPPING CENTER Convenience and Neighborhood Shopping Centers Attached rows of open-air stores, with onsite parking, usually located in front of the stores. 10000 to 60,000 square feet and are typically anchored by a supermarket. Typically have 10-15 small retailers Community Shopping Centers/Malls 25,000-50,000 sq feet and are anchored by at least one big-box store. 15-50 retail stores Power Centers Huge unenclosed shopping centers consisting a collection of freestanding anchor stores and only a minimum of number of smaller specialty store tenants GREENHILLS SHOPPING CENTER SAN JUAN TYPES OF SHOPPING CENTER Lifestyle Center Open-air configuration of specialty stores, entertainment, hotel, and restaurants, with design ambience and amenities such as fountains, playgrounds and street furniture Caters to the “lifestyle” of consumers. Attractive to specialty retailers Hybrid Lifestyle Power Center/ Mixed Used Developments Combined hominess and community of an old time village square with the cachet of fashionable urban stores; the smell and feel of a neighborhood park with the brute convenience of a trip center Includes office hotel, condos, strips of free standing anchor stores, dining establishment, non retail activities VISTA EVIA LIFESTYLE CENTER LAS PINAS SHOPPING MALLS Are enclosed, climate controlled, lighted shopping centers with retail stores on one or both sides of an enclosed walkway Parking areas are usually provided around the perimeter of the mall Advantages Attract many shoppers and have a large trade area because of the number of stores combining shopping and inexpensive form of entertainment Generate pedestrian traffic inside the mall and have sales per square foot Weather condition Mall management ensures a level of consistency that benefits all the tenants- uniform hours of operation Disadvantages Higher occupancy cost/lease mall management rules like window display and signage Intense competition Old malls need renovation Department stores act as anchor reducing anchor tenants TYPES OF SHOPPING MALLS SUPER REGIONAL SHOPPING MALLS MORE THAN 800,000 SQ FT Have over a hundred local and international stores Anchored with Department stores and supermarket and other specialty stores Features attractions such as movie theaters, rides, skating rink, bowling, and other recreational activities considered as tourist attraction REGIONAL SHOPPING MALLS LESS THAN 800,000 SQ FT Located mostly in suburban residential areas of the metropolis, typically catering to the needs of the area residents TYPES OF SHOPPING MALLS LIFESTYLE MALLS Located in upscale business district or affluent residential areas/ shopping center or mxd Super regional/ regional POWERPLANT MALL, SHANGRI LA PLAZA COMMUNITY MALLS Smaller than regional malls Citymall, csi mall Selection Of A Particular Shopping Centre/Mall: 1. Merchants‘ Association: can strengthen business and save money through group advertising, insurance plans and collective security measures. 1. Responsiveness of the landlord: Prospective retailers expect landlord‘s acknowledgement on the following issues: placement and size of signs, maintenance and repairs, and the adjacent retail space. 1. Zoning and planning: mapping of the retail location and surrounding area under consideration. Are there restrictions that will limit operation; - will construction or changes in city traffic or new highways present barriers. 1. Leases: Before entering into any lease agreement, retailers should collect information on future zoning plans and decide how long it will be viable to run business at a particular location. 1. Building Layout: Age and condition of the building, adequacy of all mechanical system, remodeling needs, storage availability, security needs, restrictions on alterations and improvements to the property. TRADE AREA/ SITE ANALYSIS 02 TRADE AREA ANALYSIS TRADE AREA A trade area is a contiguous geographic area from which a retailer draws customers that account for the majority of a store‘s sales. A trade area may a part of a city, or it can extend beyond the city‘s boundaries. IMPORTANT LOCATION FACTORS WHEN OPENING A STORE Before choosing a retail store location, define how you see your business, both now and in the future. What do your customers look like? Can you visualize your building? Do you know what you want to sell and what you want your business to be known for? Have you determined how much retail space, storage area, or the size of the office you need? 100 PERCENT LOCATION When there is no better use for a site than the retail store that is being planned for that site. The Perfect Location SITE SELECTION ANALYSIS A retailer has to consider the following factors while selecting a site. 1. Kind of Product Sold 2. Cost Factors 3. Pedestrian/ foot Traffic 4. Demographic 5. Transportation and Accessibility 6. Visibility SITE SELECTION ANALYSIS KIND OF PRODUCT SOLD Would your store be considered a convenience store? specialty shop? shopping store? SITE SELECTION ANALYSIS 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 SITE SELECTION ANALYSIS Pedestrian/ Foot Traffic Number and type of people passing by a proper pedestrian traffic count 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 SITE SELECTION ANALYSIS Transportation and Accessibility Availability of mass transit Access from major high ways Access of vehicles to location Ease of deliveries Vehicular Traffic Timing and congestion Number and type of vehicles passing location positive and negative (before bgh flyover) LRT-MRT Common Station to be Built Between SM NORTH EDSA And TRINOMA MALLS SHANGRI LA PLAZA CONNECTED TO SHAW BLVD MRT STATION TRINOMA CONNECTED TO NORTH AVENUE MRT STATION BGC BUS SM NORTH EDSA TRANSPORT TERMINAL UNDERGROUND PARKING TYPICAL FRONTPARKING CARS ROOF PARKING MOTORCYCLE PARKING  BICYCLE PARK SURFACE PARK AUTOMATED PARKING/ MECHANICAL PARKING MULTI LEVEL PARK SITE SELECTION ANALYSIS Retail Competition Number and types of stores in area Analysis of “key” players in general area Competitiveness of other merchants Number and location of direct competitors in area Possibility of joint promotions with local merchants spillover SITE SELECTION ANALYSIS Store Composition And Proximity To Other Businesses And Services Number and size of stores Compatibility with adjacent or nearby stores Store Compatibility Exists when two similar retail businesses locate next to or nearby each other and they realize a sales volume greater than what they would have achieved if they were located apart from each other. SITE SELECTION ANALYSIS The Image And History Of The Site A good history of successful businesses in a spot might be amazing! But what if the space you have chosen has had 5 different restaurants in as many years? Was it the location? The food? Poor management? It could have been ANY of these things, and you should delve deep to find out Yellowcab location at SM SITE SELECTION ANALYSIS Ordinances A great location, isn’t great if you can’t do the things you need due to regulations, licensing and permit issues! The Condition Of The Building Or The Area Make sure the building will fit to your need. Infrastructure, water, electricity, climate and weather condition SITE SELECTION ANALYSIS Terms of Purchase or Lease Length of lease Exclusivity clause Guaranteed traffic rate Anchor clause Expected Profitability Net profit margin Asset turnover Return on assets Steps to Choose the Right Retail Location Step 1 - Analyze the market in terms of industry, product, and competitors How old is the company in this business? How many similar businesses are there in this location? What the new location is supposed to provide: new products or new market? How far is the competitor’s location from the company’s prospective location? Steps to Choose the Right Retail Location Step 2 – Understand the Demographics Literacy of customers in the prospective location, age groups, profession, income groups, lifestyles, religion. Step 3 – Evaluate the Market Potential Density of population in the prospective location, anticipation of competition impact, estimation of product demand, knowledge of laws and regulations in operations. Steps to Choose the Right Retail Location Step 4 - Identify Alternative Locations Is there any other potential location? What is its cost of occupancy? Which factors can be compromised if there is a better location around? Step 5 – Finalize the best and most suitable Location for the retail outlet. Thank you!