Retail Locations

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Retail Locations:

Section 3: Other Locations, Location and Retail Strategy, and Legal Considerations Matthew Sullivan 3/26/13

Questions:
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* 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?

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The Importance of Store Location

Store location is most often the first consideration in a store choice Having a good location increases chances of developing a strong sustainable competitive advantage Location decisions can be risky and should be well-thought out

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Process of Choosing Particular Locations

- Size of the trade area - Occupancy cost of the location - Pedestrian and vehicle customer traffic
location - Restrictions on operations by property managers - Convenience of location for customers

Trade area: the geographic area that encompasses most

of the customers who would patronize a specific retail site

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Section 1
- Types of locations - Unplanned retail locations

Milton Law

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Types of Retail Locations

-

Freestanding Sites such as outparcels and merchandise kiosks

City or Town Locations such as central business districts, main streets, and inner city locations

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Advantages and Disadvantages of Freestanding Locations

*Advantages - Convenience for
customers

* Disadvantages - Limited trade area

when not around nearby retailers

- High vehicular traffic

and visibility

- Higher Occupancy

costs that strip centers

- Modest occupancy
costs

- Usually located where

there is little pedestrian traffic
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- Separation from
competition

Freestanding Sites
Retail locations for an individual, isolated store unconnected to other retailers

Outparcels

Merchandise Kiosks

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Merchandise kiosks
Small selling spaces, typically located in the walkways of enclosed malls, airports, train stations, or office building lobbies.

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Market Analysis Model

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City or Town Locations

* Advantages - Lower occupancy costs - Higher pedestrian

traffic

* Disadvantages - Traffic is limited due

to congestion - Parking problems reduce consumer convenience 3/26/13

Central Business Districts (CBD)

* Advantages
- Draws people during business hours - Heavy public transportation - Pedestrian traffic - Residential area as

* Disadvantages
- High security required - Shoplifting - Parking is poor - Evenings and weekends are slow 3/26/13

Main Streets vs. CBDs

- Occupancy costs are generally lower than CBDs - Fewer people are employed - Smaller selection due to fewer stores - Range of entertainment is usually smaller - City planning sometimes restrict store operations
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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
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Section 2
- Shopping centers

Shaina Lacher

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* Advantages - Convenient locations - Easy parking - Low occupancy costs

* Disadvantages - Limited trade area - Lack of

entertainment - No protection from weather

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Power Centers
Consist primarily of collections of big box retail stores

* Examples - Target - Costco - Lowes - Sports

Authority - Toys R Us
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Shopping Malls
* Regional Malls
Less than 1 million square feet

* Super Regional Malls

More than 1 million square feet

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Shopping Malls
* Advantages - Wide variety of stores - Wide assortment of * Disadvantages - Occupancy costs are
generally higher - Mall control over business operations - Competition can be intense
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merchandise - Shopping and entertainment - No inclement weather - Uniform hours of operation Attracts many

Enhancing the Mall Experience

* Mall managers try to make malls more of an enjoyable experience in an effort to
keep people shopping as long as possible

- Common

areas - Family lounges - Great food - Playgrounds - Entertainmen t

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Mall renovations and redevelopment

* CORPUS CHRISTI, TX La

Palmera Mall Redevelopment

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Lifestyle Centers
Shopping centers with an open-air configuration of specialty stores, entertainment, and restaurants with design ambience and amenities

* Advantages - Ease of parking - Relaxed open-air

* Disadvantages - Less retail space - Smaller trade areas - Attract fewer

customers

environment - Pedestrian traffic tends to be higher - Occupancy costs and operating restrictions are less

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Fashion/Specialty Centers
*
Composed mainly of upscale apparel shops, boutiques, and gift shops carrying selected fashions or unique merchandise of high quality and price

* Stores in Phipps Plaza - Tiffany - Gucci - Max Mara - Giorgio Armani - Tommy
Bahamas
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Outlet Centers
*
Shopping centers that contain mostly manufacturers outlets
-

Strong entertainment component Becoming more popular outside the United States Tourism is important for outlet centers

* Las Vegas Outlet

Center

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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

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Omnicenters
*
Combines enclosed malls, lifestyle centers, and power centers

* St. Johns Town

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 crossshop.

Center, Jacksonville, FL

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Mixed Use Developments

- Offer an all-inclusive * Mizner Park, Boca
Raton, FL

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

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Section 3
- Other Locations
Strategy - Legal Considerations

- Location and Retail

Matthew Sullivan
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Other Location Opportunities

- Airports - Temporary or pop-up
stores - Resorts - Store within a store

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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

* Airport Apple store

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Temporary Locations (pop-up stores)

* Target pop-up store

- 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
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Resorts
* St. Regis Aspen Resort,
CD

- Captive audiences - Wealthy customers - People with time on

their hands

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Store within a store

*
Occurs when a manufacturer has its own store and salespeople inside a retailer store

- This concept benefits

both companies to attract more customers - Helps fill holes in product offerings

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Farmville

Businesses take advantage of locations where customers are, like the internet and online games, and provide them with alternative ways to spend money

* Social Networking Game

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Location and Retail Strategy

* Factors that affect
location choice

- Shopping behavior of
consumers

- Size of Target Market - Uniqueness of Retail

Offering
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Shopping Situations
* 3 Shopping Behaviors - Convenience
shopping

- Comparison
shopping

- Specialty shopping
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Convenience Shopping
* Shopper Mentality - Wants to exert little
effort to acquire product or service

- Wants convenient
location

- Less concerned with

price

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Comparison Shopping
* Shopper Mentality

- General idea about

product or service

- No strong brand
preference

- No strong retailer
preference
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Specialty Shopping
* Shopper Mentality - Knows what they want - Accepts no substitute - Strong loyalty to
product or brand
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Size of Target Market

For most retailers, the size of the target market and the location of the highest density of their target market will help determine where their business should be located.

* Estimates to determine
size of target market

- Estimate max # of customers

eligible to purchase product or service - Estimate percentage of potential customers - Estimate # times customers could purchase the product or service in a year

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Uniqueness of Retail Offering

* Consumer mentality - Location doesnt

matter as much because the product is that important or unique

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Legal Considerations
* Environmental Issues * Zoning and Building
Codes

- Above ground risks - Hazardous materials

- Sign restrictions - Licensing requirements

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Environmental Issues
* Above-Ground Waste * Hazardous Materials

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Zoning and Building Codes

* Signs * Licensing

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*THANK YOU
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