Location Strategies

Presented by
Shanu Shrivastava
PGDM IV A
Assignment II
Types of Retail Location

• Various option are available to the retailer for choosing the

location of store.

• The choice of the location of the store depends on the target

audience and the kind of merchandise to be sold.

• A retailer has to choosing among alternate types of retail

locations available . It may locate in an isolated place and pull
the customer to the store on its own strength, such as a small
grocery store or paan shop in a colony which attracts the
customers staying close by
Typically a store location may be:

1. Freestanding /Isolated store.

2. Part of Business District/Centers (unplanned

Business Districts).

3. Part of a Shopping Center (Planned Shopping

Centers)
Step involved in choosing a Retail Location

• In order to arrive at the decision on where to locate the retail

store a retailer needs to first on the region that he wants to
locate the store.
• After identifying the region the following steps Have to be
followed .
1. Identifying the market in which to locate the store.

2. Evaluate the demand and supply within that market. i.e.

determine the market potential.

3. Identify the most attractive sites

4. Select the best site available

1. Market Identification:
• The first step in arriving at a decision on retail location is to
identify the market attractiveness to a retailer.
• This is important that retail needs to understand the market
well.
2. Determining the market Potential::
• The retailer need to take into consideration various elements
as shown in format. (features of population)
• Demographic features of the population
• The characteristics of the household in the area (average
household income)
• Competition and compatibility (Need to know compatibility
& competition in market)
• Laws & regulations:( good understanding of the laws
Determining the market Potential

Demographics of Competition
population & area

Trade area
Laws & Regulation
analysis
• Trade area analysis:
• A trade area is the geographic area that generates the majority
of the customers for the store.

• Primary trade area: primary trading covers between 50-80%

of the store’s customers.

• Secondary Trading Area: this area contains the additional

15- to 25% of the store’s customers.

• Tertiary trading area covers the balance customers

• These trading areas are dependent on distance and do not
always have to be concentric in nature
Types of Trades areas.
Location, Location, Location!!!
• Importance of location decision:
• Requires complex decision making
• Costs lots of $$
• Little flexibility once a location has been chosen
• Attributes of location have a strong impact on
the retailer’s strategy
Criteria to be considered:
• Size & characteristics of • Property costs
population • Length of agreement (if lease)
• Level of competition • Population trends
• Access to transportation • Legal restrictions
• Availability of parking
• Attributes of nearby stores
Site Evaluation
• Accessibility
• Locational advantages
• Terms of occupancy
• Legal considerations (e.g. environmental
considerations, zoning restrictions, building
codes, signs, licensing requirements)
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
 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
Checklist for Site Evaluations

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
Checklist for Site Evaluations

Site Characteristic
• Number of parking spaces available
• Distance of parking areas
• Ease of access for delivery
• Visibility of site from street
• History of the site
• Compatibility of neighboring stores
• Size and shape of lot
• Condition of existing building
• Ease of entrance and exit for traffic
• Ease of access for handicapped customers
• Restrictions on sign usage
• Building safety code restrictions
• Type of zoning
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
Site Selection
• Trade area -- contiguous geographic area that
accounts for the majority of a store’s sales and
customers
• Primary trade zone -- Usually 3-5 mile radius;
generates 60-65% of customers
• Secondary trade zone -- Usually 3-7 mile radius;
generates 20% of customers
• Tertiary trade zone -- Usually 15 - 50 mile radius
Steps in selecting a site:
• Evaluate alternative geographic areas in terms of
the characteristics of residents and existing
retailers (trading-area analysis)
• Determine whether to locate as stand-alone,
unplanned business district or planned shopping
center
• Make a decision about location type
• Analyze alternate sites
 Environmental Issues

“Above-ground” risks - such as asbestos-containing

materials or lead pipes used in construction.

Hazardous materials - e.g. dry cleaning chemicals,

motor oil, that have been stored in the ground.

Retailers’ Protection
• Stipulate in the lease that the lessor is responsible
for removal and disposal of this material if it’s found.
• Retailer can buy insurance that specifically protects
it from these risks.
 Other Legal Issues

Zoning and Building Codes

• Zoning determines how a particular site can be
used.
• Building codes determine the type of building, signs,
size, type of parking lot, etc. that can be used
Signs
• Restrictions on the use of signs can also impact a
particular site’s desirability
Licensing Requirements
• Some areas may restrict or require a license for
alcoholic beverages
THAN
K YOU