Site Selection

Overview
 Step 1: investigate alternative trading
areas (As discussed in Chapter 9)
 Step 2: determine what type of location
is desirable
 Step 3: select the general location
 Step 4: evaluate alternative specific
store sites

2
Three Types of Locations

Planned
Isolated
Shopping
Store
Center

Unplanned
Business
District

3
Isolated Stores

Advantages Disadvantages
* No competition * Difficulty in attracting
* Low rental costs customers
* Flexibility * Travel distance
* Good for * Lack of variety for
convenience stores customers
* Better visibility * High advertising
* Adaptable facilities expenses
* Easy parking * No cost sharing
* Restrictive zoning laws

4
Examples of Isolated Stores

 Large-store
formats
 Wal-Mart
 Costco
 Convenience
stores
 7-Eleven
Site Selection and Starbucks

6
Unplanned Business Districts

Secondary
Central Business Business
District District

Neighborhood
Business String
District

7
A Revitalized Central Business District
Unplanned Business Districts and Isolated
Locations
Planned Shopping Centers

Advantages Disadvantages
* Well-rounded * Limited flexibility
assortments * Higher rent
* Strong suburban * Restricted
population offerings
* Competition
* One-stop, family
shopping * Requirements for
association
* Cost sharing memberships
* Transportation * Too many malls
access * Domination by
* Pedestrian traffic anchor stores
Characteristics of Centers

Features Regional Center

Total site area 30-100+
Total sq. ft. leased 400,001-2,000,000+
Principal tenant 1+ department stores
Number of stores 50-150 or more
Minimum # of people in 100,000+
trading area
Driving time of trading area Up to 30 minutes
Location Outside central city on
highway
Characteristics of Centers

Features Community Center

Total site area 10-40+
Total sq. ft. leased 100,001-400,000
Principal tenant Supermarket or drug store
Number of stores 5-15
Minimum # of people 3,000-50,000
in trading area
Driving time of trading Fewer than 15 minutes
area
Location In a single residential
area
Characteristics of Centers

Features Neighborhood Center

Total site area 3-15+
Total sq. ft. leased 300,000-100,000
Principal tenant Branch department store
Number of stores 15-25 or more
Minimum # of people 20,000-100,000
in trading area
Driving time of trading Up to 20 minutes
area
Location Close to a populated
residential area
Festival Walk, Hong Kong
Location and Site Evaluation

One-Hundred The
Percent optimum site
for a
Location particular store
Location/Site
Evaluation
Checklist
Pedestrian Traffic
 The most crucial measures of a location/site’s
value are the number and type of people passing
by.
 Proper pedestrian traffic count should include:
 age and gender (exclude very young children)
 count by time of day
 pedestrian interviews
 spot analysis of shopping trips
Vehicular Traffic

 Important for
 convenience stores
 outlets in regional shopping centers
 car washes
 suburban areas with limited pedestrian
traffic
Parking Considerations
 Number and quality of spots
 Distance of spots from stores
 Availability of employee parking
 Price to charge customers for
parking
Corner Influence and Hershey’s
Terms of Occupancy Considerations

 Ownership versus leasing

 Type of lease
 Operations and maintenance costs
 Taxes
 Zoning restrictions
 Voluntary regulations
Types of Leases

Straight

Maintenance-
Percentage Increase
Recoupment

Graduated Net