RETAILING

6.53 MIX:
LOCATION
WHY IS STORE LOCATION SUCH AN IMPORTANT
DECISION FOR A RETAILER?
 ▪ Location is typically one of the most influential
considerations in a customer’s store choice.

▪ Location decisions have strategic importance because they

can be used to develop a sustainable competitive
advantage.

▪ Location decisions are risky. They either must make a

substantial investment to buy and develop the real estate or
must commit to a long-term lease with developers.

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TYPES OF RETAIL LOCATIONS
Many types of locations are available for retail stores, each with benefits and
limitations. The two basic types of location are unplanned (freestanding and
urban sites) and planned (shopping centers).

Unplanned locations do not have any centralized management that

determines what stores will be in a development, where the specific stores will
be located, or how they will be operated.

In planned locations, a shopping center developer and/or manager makes

and enforces policies that govern store operations, such as the hours that a store
must be open, special events to attract consumers, parking area, etc.
 When choosing a particular location type, retailers
evaluate a series of trade-offs involving the size of
the trade area, the occupancy cost of the location
(rent, maintenance, energy cost, etc.), the pedestrian
and vehicle customer traffic associated with the
location, the restrictions placed on store operations
by shopping center management, etc.

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 UNPLANNED LOCATION
(FREESTANDING SITES, URBAN LOCATIONS, AND MAIN STREET LOCATIONS)

ADVANTAGES:
FREESTANDING SITES
• their convenience for customers (easy access and parking);
Retail locations for an individual, isolated store
• high vehicular traffic and visibility to attract customers driving by;
unconnected to other stores. modest occupancy costs;
• fewer restrictions on signs, hours, or merchandise that might be
imposed by the managers of planned locations.

DISADVANTAGES:
• Their trade area might be limited if there are no other nearby
retailers to attract customers
• May have higher occupancy costs than shopping centers because
they do not have other retailers to share the common area
maintenance costs.
• If it have little pedestrian traffic, limiting the number of customers
who might drop in because they are walking by.
 UNPLANNED LOCATION
(FREESTANDING SITES, URBAN LOCATIONS, AND MAIN STREET LOCATIONS)

Central Business District

URBAN LOCATIONS
Urban areas offer three main types of locations:
the central business district, inner city, and
gentrified residential areas
is the traditional downtown financial and business area in a
city or town. Due to its daily activity, it draws many people
and employees into the area during business hours.
Inner City
is a low-income residential area within a large city.
Although income levels are lower in inner cities than in other
neighborhoods, inner-city retailers often achieve a higher
sales volume and higher margins, resulting in higher profits.

Gentrified Residential Areas

the renewal and rebuilding of offices, housing, and retailers in
deteriorating areas. Young professionals and retired are
moving into these areas to enjoy the convenience of shopping,
restaurants, and entertainment near where they live.
 UNPLANNED LOCATION
(FREESTANDING SITES, URBAN LOCATIONS, AND MAIN STREET LOCATIONS)

MAIN STREET
refers to the traditional downtown shopping
area in smaller towns and secondary shopping
areas in large cities and their suburbs.

To attract consumers and retailers, these Main

Street redevelopment efforts focus on providing
a better shopping experience.

For instance. instead of streets, they develop

pedestrian walkways. Next to major crosswalks,
pedestrian shelters equipped with benches
provide shady resting spots for shoppers.
OTHER LOCATION OPPORTUNITIES
Pop-Up Stores and Other Temporary Locations
Pop-up stores are stores in temporary locations that
focus on new products or a limited group of products.

These “stores” have been around for centuries as

individuals sold merchandise on city streets and at
festivals or concerts.

Store-within-a-Store
Store-within-a-store locations involve an agreement in
which a retailer rents a part of the retail space in a store
operated by another independent retailer.

The host retailer basically “sublets” the space to the store-

within retailer. The store-within retailer manages the
assortment, inventory, personnel, and systems and delivers
a percentage of the sales or profits to the host.
OTHER LOCATION OPPORTUNITIES
Merchandise Kiosks
Merchandise kiosks are small selling spaces, typically
located in the walkways of enclosed malls, airports, college
campuses, or office building lobbies.

Some are staffed and resemble a miniature store or cart

that could be easily move

Airports
A high-pedestrian area that has become popular with
national retail chains is airports. Passengers arrive earlier
for their flights than they did in the past, leaving them more
time to shop.

Sales per square foot at airport malls are often much higher
than at regular mall stores. However, rents are higher too.
LOCATION AND RETAIL STRATEGY
 The selection of a location type must reinforce the
retailer’s strategy.

Thus, the location-type decision needs to be

consistent with the shopping behavior and size of
the target market and the retailer’s positioning in
its target market.

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SHOPPING BEHAVIOR OF CONSUMERS IN RETAILER’S TARGET MARKET
A critical factor affecting the type of location that consumers select to visit is the shopping
situation in which they are involved.

Convenience Shopping: When consumers are engaged in convenience shopping

situations, they are primarily concerned with minimizing their effort to get the product
or service they want.

Comparison Shopping: Consumers involved in comparison shopping situations

have a general idea about the type of product or service they want but they
do not have a well-developed preference for a brand or model. However, the purchase
decisions are more important to them, so they seek information and are
willing to expend effort to compare alternatives.

Specialty Shopping: When consumers go specialty shopping , they know

what they want and will not accept a substitute. Examples of these shopping occasions
include buying organic vegetables. Thus, consumers engaged in specialty shopping are
willing to travel to an inconvenient location.
DENSITY TO TARGET MARKET

A good location has many people in the target market who are drawn to it.

So, a convenience store located in a CBD can be sustained by customers living or

working in fairly close proximity to the store.

Similarly, a comparison-shopping store located next to a tourism attraction is a

potentially good location because tourism attraction draws lots of customers from a
very large area.

However, it is not as important to have high customer density near a store that sells
specialty merchandise, because people are willing to search out this type of
merchandise.
UNIQUENESS OF RETAIL OFFERING

The convenience of their locations is less important for retailers with unique,
differentiated offerings than for retailers with an offering similar to other
retailers.

Customers will travel to wherever the store is located, and its location will
become a destination.
AN EXAMPLE OF AGRIBUSINESS RETAIL
LOCATION
Market Considerations of Nursery and Garden Retailer

Any business, including a nursery, should first determine who

its customer(s) will be, where its available markets are in
relation to its customer base and what products it might
produce for those markets.

It is best to first identify a market and then develop a nursery

plan (strategy) to produce and sell to that market, including the
location strategy.

Retail garden centers typically call for a more diverse group of

plant species and higher-quality, higher-priced products in a
greater selection of cultivars and sizes.

This market type usually involves many different customers in

various locations needing different products at different times.
Location of Nursery and Garden Retailer

Nursery crops assortments and markets often influence its store

location.

Placing nurseries near urban areas offers advantages of access to

highways and transportation (reducing shipping costs), located
near the end user or markets and modern communications
technology (allowing greater use of Internet, broadband, advanced
mobile devices, etc.).

Conversely, land costs and property taxes are typically much higher
in urban areas compared to rural areas. Urban counties also may
have more stringent regulations on use of land, water and
pesticides. Additionally, payroll costs are often much higher near
urban areas, where competition for unskilled labor is greater.

However, most nursery and garden retail are in unplanned

location. They develop or rent freestanding site which is
unconnected to other stores but located near the urban area or in
neighborhood strip centers.
 THANK YOU

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