Retail Chapter 3

• Retail location


  One of the most important elements in retail marketing strategy, because it is a long-term decision associated with long-term capital commitment
• Retail location decisions


  • They are highly complex with a large number of factors to consider
  • The costs associated with opening new stores can be very high
  • Site selection is a long-term decision that implies long-term capital commitment
  • Once a retail site has been chosen, there is little flexibility as it usually cannot be easily changed without incurring significant losses
• Unlike other elements of the retail marketing mix, location cannot be changed in the short term due to its fixed nature
• Main types of retail location decisions


  • Opening new stores
  • Extending the floor space of existing stores
  • Relocating or moving a store from one place to a better site
  • Rationalising decisions, e.g. closing individual stores
  • Repositioning locations, e.g. altering a store's image
  • Refurbishing, e.g. improving or updating an existing outlet's physical environment
• Solitary sites


  Single freestanding outlets isolated from other retailers
• Unplanned shopping areas


  Retail locations with several outlets in close proximity to each other that have evolved over time, without centralised management
• Types of unplanned shopping areas


  • Central business districts (CBDs)
  • Secondary business districts (SBD)
  • Neighbourhood business districts (NBD)
  • Strip or string locations ("strip mall")
• Planned shopping districts/shopping centres


  Retail locations that have been architecturally planned to provide a unified theme for a number of outlets, with large anchor stores and smaller retailers
• Types of planned shopping areas


  • Retail parks
  • Shopping centres (enclosed malls, lifestyle centres, fashion/specialty centres, outlet centres, theme/festival centres, omni-centres)
• Retail location decision process


  1. Market selection

  2. Area analysis

  3. Site evaluation
• Catchment area


  The geographic area that contains the customers for a particular site or region, determining the potential demand and influencing potential sales and profitability
• Parts of a catchment area


  • Primary trading area (50-80% of customers)
  • Secondary trading area (15-25% of customers)
  • Fringe or tertiary trading area (remaining occasional customers)
• Duration


  Length of time
• Decision


  Choice made
• Approve area


  Area that is approved
• Reject area


  Area that is rejected
• Number and size of competitors


  Quantity and scale of rival businesses
• Square metres of retail space


  Total area of retail premises
• Front metres of retail space


  Total frontage of retail premises
• Saturation of area


  Degree to which an area is filled with retail outlets
• Persons per retail establishment


  Average number of people per retail business
• Average sales per store


  Typical revenue per retail outlet
• Store sales per capita


  Revenue per person in the area
• Sales per square metre


  Revenue per unit of retail space
• Sales per employee


  Revenue per retail worker
• Total size


  Overall scale
• Age distribution


  Breakdown of population by age
• Average educational level


  Typical level of education in the area
• Percent of residents owning homes

  Proportion of people who own their homes
• Total disposable and per capita income


  Overall and average discretionary income
• Occupation distribution


  Breakdown of population by occupation
• Trends


  Patterns of change over time
• Sources of market research data


  • Survey of Buying Power
  • Market Research Data
  • Regional planning boards
  • Public utilities
  • Chambers of Commerce
  • Renting agents
  • GIS software
• Primary Trading Area


  Main area from which customers are drawn
• Secondary Trading Area


  Additional area from which some customers are drawn
• Tertiary Trading Area


  Further area from which occasional customers are drawn
• Frequency of shopping


  How often customers visit the store
• Average size of purchase


  Typical amount spent per visit
• Concentration of customers


  Degree to which customers are clustered in certain geographic areas
• These parts of a catchment area are often described in terms of the distance between customers' homes or workplaces and the area or site. They are usually delineated by measuring linear distance (e. g., concentric circles drawn around a site), travel distance (by car or public transport) or time distance (by car or public transport). Mapping techniques are used to forecast or survey and map such store trading areas (McGoldrick 2002, p. 247).