ABDT4104 Retail & Distribution Strategy Tutorial 8 Answer 20 December 2010

Question 3
1. Neighborhood and community centers
a. Advantage
i. Convenient locations
ii. Easy parking
iii. Low occupancy costs
b. Disadvantage
i. Limited trade area
ii. Lack of entertainment and restaurant
iii. No protection from weather
2. Power centers
a. Advantage
i. Low occupancy costs
ii. Convenient
iii. Large trade area
iv. Many located near enclosed mall
b. Disadvantage
i. Limited small specialty stores.
3. Shopping mall
a. Advantage
i. Have different type of stores
ii. Many different assortments
iii. Combine shopping with entertainment
iv. Large trade area
v. Enclose, no need worry about weather
vi. Comfortable
b. Disadvantage
i. Occupancy costs high
ii. Mall management control their operation
iii. Competition can be intense
4. Lifestyle centers
a. Advantage
i. Easy to parking
ii. Convenient
iii. Higher pedestrian traffic
iv. Occupancy costs lesser
b. Disadvantage
i. Open-air, no protection
ii. Smaller trade area
iii. Less retail space than enclosed malls
ABDT4104 Retail & Distribution Strategy Tutorial 8 Answer 20 December 2010

5. Fashion/ specialty centers

a. Advantage
i. Easy to parking
ii. Locate near higher income area
b. Disadvantage
i. Occupancy costs higher
ii. Limited market
6. Outlet centers
a. Advantage
i. Offered is mostly apparel, accessories and home furnishings with strong brand
names.
ii. Located close to popular tourist attractions
iii. High pedestrian traffic
b. Disadvantage
i. High rental
ii. Most management control their operation
7. Festival centers
a. Advantage
i. Attract tourist
ii. Easy to parking
iii. With many restaurants and entertainment
b. Disadvantage
i. Low human traffic
ii. Not stable sales
8. Omni centers
a. Advantage
i. Lower common area maintenances charge
ii. Higher pedestrian traffic
iii. Capture cross-shopping consumer
b. Disadvantage
i. Higher rental
9. Mix Use Developments
a. Advantage
i. Can attract a lot of different type of customer
ii. Able to have cross-shopping customer
iii. Able to have “one stop center”
iv. Fully use the space.
b. Disadvantage
i. High rental
ii. Restriction of business operation.
ABDT4104 Retail & Distribution Strategy Tutorial 8 Answer 20 December 2010

Question 4
As a consultant for both 7- 11 and Mercedes, I would say that the most important factor would be that
the location has to be consistent with shopping behavior of consumers. This is because by
understanding consumer behavior and preferences; they can adjust their offering to be more
attractive. For example: Ikea is located at the Curve, Mutiara Damansara. They may not be a specialty
luxury retailer but they receive a strong flow of consumers within and even far from their trade area. By
understanding that Malaysian consumers are now more concerned in their furnishing as well as
affordable price; Ikea has successfully positioned itself to match consumer shopping behavior.

Firstly, 7-11 is a specialty retailer who positions itself on convenience. They sell convenience goods,
small household products, beverages and snacks. According to Levy & Weitz, 7 th Edition; they should
understand that consumers are concerned with minimizing their effort to get the product/service they
want. Since consumers are not particular of the brands they are looking and are insensitive to price.
This would also mean that a consumer would not waste his/her time comparing going through 7-11, 99
Speedmart or KK Mart to compare prices. However, there is still competition. 7-11 can gain a
competitive advantage if it is strategically located at a location with easy traffic, wide & main roads,
work place areas and paths with high pedestrian traffic. An example would be the entrance of LRT
stations( Times Square & Pudu station ) or placing multiple outlets at strategic points (The Curve, Times
Square& Masjid Jamek). As long as 7-11 requires the least customer effort to get what they want, they
have a strong competitive advantage.

On the other hand, Mercedes is a luxury retailer that falls under specialty shopping. They do not have to
be very concerned with choosing a right location as customers are willing to travel distances to get it. It
may be another brand of car but Mercedes is an international icon of luxury, style & power with a strong
brand positioning. Consumers in this target market are not concerned with comparing prices and are
very clear with what they want. For example: A consumer who is set on purchasing a Mercedes
McLaren will not change his mind for a Porsche or Ferrari. In this case, as long as the brand is strongly
positioned; location will only play a small part in convenience.
ABDT4104 Retail & Distribution Strategy Tutorial 8 Answer 20 December 2010

Question 6
Neighborhood centers are typically are typically anchored by supermarket and designed for convenient
shopping.

While the regional shopping malls are enclosed, climate controlled lighted shopping centers with retail
stores on both side of an enclosed walkway. For example, MidValley, pyramid, times squares.

It caters to shoppers in the immediate neighborhood for convenience items/ services, such as
Laundromat. It offers customers convenient location which near to the housing area and easy parking as
well

Besides that, the shopping mall occupancy costs are higher than the neighborhood centers. The laundry
store generate low income and could not survive if operate at shopping mall. For example, laundry store
(shopping mall) generate low profit compare to the retail shop that selling fashionable apparel.
Furthermore, if the laundry store locates at the shopping malls, the people normally won’t carry a whole
bag of dirty and smelly clothes go inside the shopping malls.

Question 7
The shopping mall that I personally most frequently visited is Berjaya Times Square. Berjaya Times
Square is currently the Malaysia largest shopping mall. With 7.5 million square feet of built up floor area,
Berjaya Times Square Kuala Lumpur contains a huge shopping mall as well as two five star hotels. This
gigantic shopping mall is located in the centre of Kuala Lumpur city, located along Jalan Imbi. For your
information Berjaya Times Square is accessible by monorail. This shopping mall contains 13 floors of
retail space offering shopping goods, foods and entertainment. It consists of 700 specialty retail stores,
65 food outlets of different varieties and many unique entertainment outlets. A lot of branded tenants
included Metrojaya, Cold Storage, MNG, Esprit, Bossini, Giordano, Levi ‘s Jeans and exclusive brand
labels such as Tag Heuer and Dior. The 3rd and 4th floors are dedicated to food, food and more food
which including Fun Hei Tei, Marrybrown, Ah Duck Gor Restaurant, Secret Recipe, and Starbucks. At the
same time, people around the mall do not have to worry about the weather outside since the whole
building was indoors and provides air-conditioner all the time. One of the main attractions of Berjaya
Times Square is the entertainment that it offers. Asia largest indoor theme park and IMAX 2D and 3D
can be found here. Cosmo World Theme Park is open to both adults and children. You can go for the
thrill rides roller coaster indoor which you will not able to try at any other place besides here. The IMAX
2D and 3D Theatre can be only found in Times Square in whole Malaysia and movie lovers are given the
ABDT4104 Retail & Distribution Strategy Tutorial 8 Answer 20 December 2010

opportunity to experience movies in a larger-than-life sort of way. With all these facilities, services and
attractions, it is why Berjaya Times Square is the most frequent shopping mall that I visited.
ABDT4104 Retail & Distribution Strategy Tutorial 8 Answer 20 December 2010

Question 10
A retailer selects a location type to fit his retail strategy through three (3) factors. Under the first factor,
he has to select a location that can be consistent with the shopping behavior of consumers. If he
intends to open a convenience store such as 7-11, KK Mart or 99 Speedmart; he will have to minimize
consumer effort to get the product/service they want. This is known as (i) convenience shopping.
Consumers are insensitive to price or brand and seek out the closest solution. The location would be
neighborhood strip centers, freestanding spots, cities and towns. An example would be setting up near
housing estates in Cheras and Bangsar, or at high pedestrian traffic areas in the city ( Masjid Jamek, KL
Sentral or the former Pudu Raya). Therefore, location is very important.

Next, (ii) the retailer has to adjust comparison shopping. If the retailer sells furniture, apparel,
electronics, hand tools or cameras; he will have to attract customers to his shop. However, these
customers know what they want but do not have a strong preference for brand, model or retailer. The
fact they they are not brand or store loyal provides opportunity to all retailers. These consumers will
seek out information and spend effort to plan and make purchase decisions. This can put retailers at a
price war or make they provides promotions in order to attract the customers. For example: At Low Yat
Plaza, various shops are located next to each other selling nearly the same type of product. A customer
would go to the first floor if he was looking to buy a new hand phone where various hand phone
retailers are located near to each other. By locating competing retailers together this facilitates
comparison shopping and thus attracts customers to the particular location.

Third, if the retailer sells a luxury or specialty product; he will not have to worry too much on
comparison pricing or location. In (iii) specialty shopping consumers in this area know what they want
and are willing to travel to get it. They may be brand loyal and are willing to pay a premium price. An
example would be the Harley Davison motorbikes. Consumers have to travel to Naza Auto World just to
take a look. Although it may be located along the highway and not near any business district, it still
generates a strong flow of visitors.

The second factor would be the size of target market. This is because every geographic location of target
consumers has a trade area that customers will patronize. By choosing the right location, the retailer
has a higher chance of a getting more customers. For an example: Setting up a Jaya Jusco store in a
factory area and far from suburbs will fail because there is no convenience or sufficient customer
ABDT4104 Retail & Distribution Strategy Tutorial 8 Answer 20 December 2010

density. On the other hand, a Porsche dealer does not have to worry too much as he is selling a specialty
good. Consumers will travel to his location just to get or see the product.

Lastly, we view the third factor which is the uniqueness of retail offering. If the retailer possess a unique
product that cannot be obtained elsewhere, the convenience of location is less important. Consumers
who want it will be willing to travel as it is 1 of a kind. Although there are few monopoly retailer goods, a
brief example would be goods produced under retailers name such as Jusco Selection that can only be
bought at Jusco outlets or Giant that sells brands First choice & Giant that are only available at its stores.
Amway is the sole retailer of its goods and consumers cannot get it from other retailers.