STEPS IN SELECTING A

BUSINESS
LOCATION FOR
RETAILERS
 Viable community is one that has the capacity to provide
an adequate and profitable sales volume for the small
business.

 Three general factors used to determine the best

geographic area or city for the business
1. Economics
2. Population
3. Competition
Selecting Trading Area
The trading area is the geographic area from which a
business draws its customer. In choosing a business
location, several trading areas must be considered and
evaluated.
 TRADING AREA ANALYSIS
 1. Demographic and socioeconomic characteristics of consumers.
 2. Focus of promotional activities;
 3. Determination of whether the proposed location will service
new customers or take away business from existing competitors.
 4. Determination of the number of outlets that can be operated;
the geographic weaknesses of the proposed trading area.
 5.Other factors like competition, availability of financial firms,
availability of labor, location of supplies, legal restrictions, and
the like.
 COMPOSITION OF TRADING AREA

1. Primary trading area is where 50 to 60 percent of the retailer’s

customers come from. I t is closest to the retailing firm is located
and possesses the highest density of customers.
2. Secondary trading area is where 20 to 25 percent of the firm’s
customers come from.
3. Fringe trading area is where the remaining customers of the
firm come from.
 Types of location

Locations are various types and it is to the best interest of

the retailer to determine which type is best suited for his or
her product or service offerings.
Location may be classified as follows:
1. Central business district
2. Shopping center
3. Free-standing retailer
 CENTRAL BUSINESS DISTRICT

 The central business district (CBD) is the public market

which is surrounded by bus and jeepney stations.
Adjacent to these stations are the traditional department
stores, grocery stores, minimarts, and some specially
shops.
 The Advantages of (CBD)

1. Easy access to public transportations

2. Wide product assortment
3. Variety in images, prices, and services
4. Proximity to commercial activities
 Disadvantages of (CBD)

1. Inadequate
2. Older stores
3. High rents and taxes
4. Traffic and delivery congestion
5. Potentially crime rate
6. The generally decaying conditions of CBD in
many cities.
Apart from CBD, larger cities have developed
secondary business districts (SBDs) and neighborhood
business districts (NBDs). An SBD is a shopping area
smaller than a CBD and which revolves around at
least one department or variety stores at a major
street intersection. An SBD is a shopping area that
evolves to satisfy the convenience-oriented shopping
needs of a neighborhood.
 The shopping center offers the following advantages to the
retailers:

 1. Heavy customer traffic resulting from the wide range of

product offerings.
 2. nearness to population
 3. cooperative planning and sharing of common cost.
 4. access to highway and availability of parking.
 5. Lower crime rate.
 6. clean, neat environment.
 7. more than adequate parking space.
 The disadvantages of the shopping center are the following:

 1. Inflexible store
 2. high rents
 3. restrictions as to the merchandise the retailer may carry
 4. inflexible store hours
 5. possibility of too much competitions
 6. dominance of smaller stores by the lead (or anchor) store.
 The following advantages are inherent to free-standing
retailers:

 1. Lack of direct competition;

 2. Generally lower rents;
 3. Freedom in operation and hours;
 4. facilities that can be adapted to individual needs of retailers;
 5. inexpensive parking.
 Evaluating the specific site
After determining the trading area where the small retail
business will be located, the specific site must be pinpointed.

This will be followed by evaluation of the listed sites

considering the following:
1. Pedestrian traffic
2. Vehicular traffic
3. Parking facilities
4. Transportation
5. Store composition
6. Internal characteristics of the specific sites and terms
occupancy.

The internal characteristics of the proposed site must be

evaluated.
1. Visibility of the site
2. Placement in the location
3. Size and shape of the lot
4. Size and shape of the building
5. Condition of the lot of building
 The terms of occupancy of the site must also be evaluated.
The following must be scrutinized:

1. Ownership and lease options

2. Operations and maintenance cost
3. taxes
4. Zoning restrictions
5. Voluntary restrictions like uniform store hours and
cooperative security forces.