Retailing Management 9th Edition Michael Levy Solutions Manual

Retailing Management 9th Edition
Michael Levy Solutions Manual

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Chapter 07 - Retail Locations
CHAPTER 7
RETAIL LOCATIONS
ANNOTATED OUTLINE INSTRUCTOR NOTES
I. Types of Locations
See PPT 7-5
• Store location is often the most important
decision made by a retailer.
Discuss the importance of store location
• Location is typically the prime consideration based on students' shopping preferences. For
in a customer's store choice. the following types of products, how far
would they travel to reach a store:
• Location decisions have strategic 1. Eggs and milk
importance because they can be used to 2. Socks
develop a sustainable competitive 3. Running shoes
advantage. 4. Home theater system
• Location decisions are generally risky. They
are hard to change because retailers
frequently have to either make substantial Ask students to evaluate the best location in
investments to buy and develop real estate the area around the university. What are the
or commit to long-term leases with characteristics of the location that make it so
developers. attractive?
• Many types of locations are available for

retail stores – each with their own strengths
and weaknesses. Choosing a particular
location type involves evaluating a series of
trade-offs.
• These trade-offs generally concern the cost

of the location versus its value to customers. See PPT 7-8 and 7-9
• Trade area is the geographic area

encompassing most of the customers who
would patronize a specific site.
II. Unplanned Retail Locations

• Some retailers put their stores in unplanned
locations. In an unplanned location, there is
no centralized management to determine
where specific stores are and how they are
operated.
A. Freestanding Sites
• A freestanding site is a retail location that's

not connected to other retailers, although See PPT 7-11
many are located adjacent to malls.
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Copyright © 2014 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill
Education.
• Retailers with large space requirements,

such as warehouse clubs and hypermarkets,
are often freestanding. Have the students visited a retailer in a
freestanding site? What made them travel to such
• Outparcels, which are stores that are not a retailer? What retailers are best suited for a
connected to other stores in a shopping freestanding site?
center but are located on the premises,
typically in a parking area, are freestanding
locations that are popular for fast food
restaurants or banks.
• These locations enable retailers to have a

drive-through window, dedicated parking,
and clear visibility from the street.
• Advantages of freestanding locations are

greater visibility, lower rents, ample
parking, no direct competition, greater
convenience for customers, fewer
restrictions on signs, hours, or merchandise,
and ease of expansion.
• The most serious disadvantage is the lack of

synergy with other stores. A retailer in a
freestanding location must be a primary
destination point for customers. It must
offer customers something special in terms
of merchandise, price, promotion, or
services to get them into the store.
B. City or Town Locations See PPT 7-12

• Some retailers are finding urban locations
attractive, particularly in cities that are
redeveloping their downtowns and
surrounding urban areas.
• In general, urban areas have low occupancy

costs, and locations in the central business
districts often have high pedestrian traffic.
• Many urban areas are going through a

process of gentrification – the renewal and
rebuilding of offices, housing, and retailers
in deteriorating areas – coupled with an
influx of more affluent people that displaces
the former poorer residents.
• Redevelopment opportunities for retailers

are also emerging in so-called brownfields –
former industrial locations with a history of
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chemical pollutants, as developers and

investors give these areas serious
consideration for clean-up.
1. Central Business Districts

See PPT 7-13
• The central business district (CBD) is the
traditional downtown business area in a city
or town. Ask students whether they shop in the CBD of
the town/city in which they live. Ask them in
• Although CBD locations in the United which city(s) they love to shop in the CBD.
States declined in popularity among retailers Why? If they were going to open a shop,
and their customers for years, many are would they consider a CBD location? Why or
experiencing revival as they become why not?
gentrified, drawing in new residents and
retailers. We would expect cities like San Francisco,
New York, London, Paris to be mentioned as
• Because shoplifting can be common and great “shopping cities.”
parking is often limited, CBDs generally
require the retailers to hire security.
• Shopping flow in the CBD may be slow on

evenings and weekends when area
businesses are closed as parking problems
and driving time discourage customers from
driving in from the suburbs.
2. Main Street Locations
• Main Street is the traditional shopping area Ask students if national retailers have started
in smaller towns, or a secondary business to invade the “Main Street” in their
district in a suburb or within a larger city. neighborhoods.
Their occupancy costs are lower than those
of the primary CBD. They do not draw as
many people and offer smaller overall See PPT 7-14 for a comparison of CBDs and
selection through fewer stores. Main Streets Main Street locations.
typically don't off the entertainment and
recreational activities available in the more
successful primary CBDs.
3. Inner-City Locations
What are the various ethical issues in retailers
• The inner city in the United States refers to
charging higher margins in inner cities? What
high density urban areas that have higher
are the reasons retailers remain successful even
unemployment and lower median incomes
than the surrounding metropolitan area. though their prices may be higher in inner cities?
Some retailers have avoided opening stores
See PPT 7-15
in the inner city because they believe it is
riskier and achieves lower returns than other
areas. As a result, inner city consumers often
have to travel to the suburbs to shop, even
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Education.
for food items.
• That said, retailing can play an important

role in inner city redevelopment activities by
bringing needed services and jobs to inner
city residents, as well as property taxes to
support redevelopment efforts.
III. Shopping Centers
• A shopping center is a group of retail and

other commercial establishments that is
See PPT 7-16
planned, developed, owned, and managed as
a single property.
• By combining many stores at one location,

the developer attracts more consumers to the
shopping center than if the stores were at
separate locations.
• Shopping center management maintains

common facilities (common area
maintenance, or CAM) such as the parking
area and restrooms, and is responsible for
security, outdoor signage and advertising for
the center.
• Most shopping centers have at least one or

two major retailers, referred to as anchors.
• In strip shopping centers, supermarkets are

typically the anchors, whereas department
stores traditionally anchor enclosed
shopping malls. Lifestyle centers may not
have anchors, while power centers are often
made of “anchors” exclusively.
A. Neighborhood and Community Shopping

Centers (Strip Centers) See PPT 7-18
• Strip centers are attached rows of stores
Ask students for examples of neighborhood and
managed as units, with onsite parking
community shopping centers in the campus area
usually located at the front of the stores.
and discuss. What are the pros and cons of these
• The primary advantages of these centers are locations?
that they offer customers convenient
locations and easy parking. They also offer
relatively low rents for retailers.
• The primary disadvantages are that there is

no protection from the weather. Strip
centers also offer less assortment and
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Education.
entertainment options for customers than

malls.
B. Power centers
• A power center is a shopping center that is

dominated by several large anchors,
See PPT 7-19
including discount stores, off-price stores,
warehouse clubs, or category specialists.
Why would a smaller retailer locate in a power
center anchored by discount stores and off-price
• Unlike traditional strip centers, power
stores? What types of merchandise would likely
centers often include several freestanding
be carried by the smaller retailer?
(unconnected) anchors and only a minimum
number of specialty tenants.
• Now many power centers are larger than

regional malls and have trade areas as large
as regional malls.
• Power centers offer low occupancy costs

and modest levels of consumer convenience
and vehicular and pedestrian traffic.
C. Shopping Malls
• Shopping malls are enclosed, climate See PPT 7-20, 7-21

controlled, lighted shopping centers with Ask students if they spend more/less time in
retail stores on one or both sides of an shopping malls than they did 5 years ago. [ It
enclosed walkway. will probably be less. Ask them why.]
• Shopping malls are classified as either
regional malls (less than 1 million square
feet) or super regional malls (more than 1 Do students notice some significant differences
million square feet). between one shopping mall and another? If so,
what are these? [Prompt students on differences
• Shopping malls have several advantages in types of stores, overall ambience and
over alternative locations. environment of the shopping mall, general levels
of service through the various stores in the
• First, because of the many different types of shopping mall, etc.]
stores, the merchandise assortments
available within those stores, and the
opportunity to combine shopping with
entertainment, shopping malls attract many
shoppers and have a large trade area.
• Second, retailers and their customers don’t

have to worry about the weather.
• Third, malls offer retailers a strong level of

homogeneous operations with the other
stores, such as uniform hours of operation.
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• Although shopping centers are an excellent

site option for many retailers, they have
some disadvantages.
• First, mall rents are higher than those of

strip centers, freestanding sites, and most
central business districts.
• Second, some tenants may not like mall

management’s control of their operations.
Managers can, for instance, dictate store
hours and window displays.
• Third, competition within shopping centers

can be intense.
• Shopping malls are facing several

challenges, leading to declining mall traffic
and sales.
• First, many people simply do not have time

to stroll through a mall. Strip centers,
freestanding locations, and power centers
are more convenient as they offer
convenient parking and easy access.
• Second, most retailers in shopping malls sell

fashionable apparel, a merchandise category
that has seen limited growth due to more
casual lifestyles.
• Third, many malls are getting old and have

not been subject to any significant
remodeling, making them somewhat
rundown and less appealing to customers
than they once were.
• Fourth, the consolidation in retailing,

particularly in the department store segment,
has decreased the number of potential
anchor tenants, leaving some malls with
diminished drawing power.
D. Lifestyle Centers See PPTs 7-23
• Lifestyle centers, the fastest growing type of

retail development, are shopping centers
with an open-air configuration of specialty
stores, entertainment and restaurants with
design ambience and amenities such as
fountains and street furniture.
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Education.
• Lifestyle centers resemble the main streets

in small towns, where people stroll from
store to store, have lunch, sit for a while on a
park bench talking to friends. Thus, they
cater to the “lifestyles” of consumers in their
trade areas.
• Due to the ease of parking, lifestyle centers

are very convenient for shoppers. But they
typically have less retail space than enclosed
malls and thus smaller trade areas, attracting
fewer customers than enclosed malls. Many
are located near higher income areas so the
higher purchases per visit compensate for
the fewer number of shoppers.
E. Mixed-Use Developments
• Mixed-use developments (MXDs) combine See PPT 7- 24
several different uses in one complex,
including shopping centers, office towers,
hotels, residential complexes, civic centers,
and convention centers.
F. Outlet Centers See PPT 7-25
• Outlet centers are shopping centers that

consist mostly of manufacturers’ outlets.
Ask students if they have been to an outlet center.
• Outlet centers have progressed from no-frills What types of products have they purchased from
warehouses to well-designed buildings with such centers? Was the visit an everyday shopping
landscaping, gardens, and food courts that trip or part of a vacation?
make them hard to distinguish from more
traditional shopping and lifestyle centers.
• Outlet centers are larger in size today than

they were a decade ago, with some outlets
having more the one million square feet.
• In the U.S. only two or three new outlet

centers open each year, yet outlet centers are
becoming very popular outside the U.S.
• Tourism is an important factor in generating

traffic for many outlet centers. Thus, many
are located in with convenient interstate
access and close to popular tourist
attractions.
G. Theme / Festival Centers See PPT 7-26
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Education.
• Theme/festival centers are shopping

centers that typically employ a unifying
theme that is carried out by the individual
shops in their architectural design, and to an
extent, in their merchandise. The biggest
appeal of these centers is to tourists.
• These centers typically contain tenants

similar to specialty centers, except there
usually are no large specialty stores or
department stores.
H. Larger, Multiformat Developments - See PPT 7-27

Omnicenters
• New shopping center developments are

combining enclosed malls, lifestyle centers,
and power centers. Although centers of this
type do not have an official name, they may
be referred to as omnicenters.
• Omnicenters represent a response to several

trends in retailing, including the desire of
tenants to lower common area maintenance
charges by spreading the costs among more
tenants and function inside larger
developments that generate more pedestrian
traffic and longer shopping trips.
• In addition these centers reflect the growing

tendency of consumers to cross-shop, as
well as the desire for time-scarce consumers
to participate in one-stop shopping.
IV. Other Location Opportunities See PPT 7-28
• Airports, resorts, stores within a store, and

temporary stores are interesting location
alternatives for many retailers.
A. Temporary Stores See PPT 7-29
• Retailers and manufacturers sometimes open

temporary or pop-up stores to a focus on a
new product or a limited group of products.
These temporary stores introduce and
remind consumers of a brand or store, but
they are not designed primarily to sell the
product.
B. Store within a Store See PPT 7-30
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Education.
• Another nontraditional location for retailers

is within other, larger stores. Retailers,
particularly department stores, have
traditionally leased space to other retailers
such as sellers of fine jewelry or furs.
• Grocery stores have been experimenting

with the store-within-a-store concept for
years with service providers like banks, film
processors, and video outlets.
C. Merchandise Kiosks See PPT 7-31
• Merchandise kiosks are small, temporary

selling spaces typically located in the
Ask students which categories of merchandise are
walkways of enclosed malls, airports, train
best suited for sale in merchandise kiosks. Discuss
stations, or office building lobbies.
some of the merchandise kiosks that students most
• They usually have short-term leases and are frequently see in the mall.
often operated seasonally.
• Some are staffed and represent a miniature

store or cart that could be easily moved.
Others are twenty-first century versions of a
vending machine.
• For mall operators, kiosks are an

opportunity to generate rental income in
otherwise vacant space and to offer a broad
assortment of merchandise for visitors. They
also can generate excitement leading to
additional sales for the entire mall.
D. Airports See PPT 7-32

Are airports good places to buy products? Why
• One important high-pedestrian area that has
or why not? Which products have students
become popular with national retail chains is
purchased from an airport retailer?
airports.
• Sales per square foot at airport malls are

often three to four times as high as at regular
mall stores. However, rents are higher too.
Also, costs can be higher – hours are longer,
and since the location is often inconvenient
for workers, businesses have to pay higher
wages.
• The best airport locations tend to be ones

where there are many layovers and
international flights.
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Education.
V. Location and Retail Strategy

PPT 7-33 illustrates the need to match the
retailer’s strategy with its location type.
• Location type decisions need to be
consistent with the shopping behavior and
size of the retailer’s target market and its
positioning.
See PPT 7-34

A. Shopping Behavior of Consumers in
Retailer’s Target Market
• A critical factor affecting the location Ask students how the nature of the consumer’s
consumers select to visit is the shopping shopping behavior will affect their preferred store
situation in which they are involved. location.
• Three shopping situations are: (1)

convenience shopping, (2) comparison
shopping, and (3) specialty shopping.
See PPT 7-35

1. Convenience Shopping
• When consumers are engaged in
convenience shopping situations, they are Ask students where they are most likely to
primarily concerned with minimizing their purchase convenience items such as soda, gum
effort to get the product or service they and milk. Why do they select those particular
want. locations?
• Stores selling primarily convenience goods

usually locate their stores close to where
their customers are and make it easy for
them to park, find what they want, and go
about their other business.
2. Comparison Shopping See PPT 7-36
• Consumers involved in comparison Ask students to discuss product categories

shopping situations have a general idea they often comparison shop for. Where do
about the type of product or service they they go to compare? Describe the types of
want, but they do not have a strong retailers they patronize for comparison
preference for a brand, model or specific shopping situations.
retailer to patronize.
• Enclosed malls or shopping districts devoted

to one type of merchandise attract
consumers by facilitating their comparison
shopping activities.
• Category specialists offer the same benefit

of comparison shopping as a collection of
co-located specialty stores because
consumers can see almost all of the brands
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Education.
and models in a particular product category.
• This comparison shopping makes category

killers destination stores, places where
consumers will go even if it is inconvenient.
3. Specialty Shopping
• When consumers go specialty shopping, Discuss specialty stores students have been to.
they know what they want and will not Would those stores improve their business by
accept a substitute. being more conveniently located? Why or why
not?
• The retailer becomes a destination store.
Thus, consumers are willing to travel to an See PPT 7-37
inconvenient location.
VI. Legal Considerations

• The legal issues that affect site decision
include environmental issues, zoning,
building codes, signs, and licensing
requirements.
A. Environmental Issues See PPT 7-38 for a review of these issues.
• Two environmental issues have received

particular attention in recent years. First is
“above-ground risks” such as asbestos-
containing materials or lead pipes used in
construction. The second issue is hazardous
materials that have been stored in the
ground. This issue may be of particular
importance to a dry cleaner or an auto repair
shop.
• Retailers may protect themselves against

environmental hazards with protective lease
clauses in their leases, and/or by purchasing
environmental protection insurance policies.
B. Zoning and Building Codes See PPT 7-39 for a review of other legal
issues retailers must consider.
• Zoning determines how a particular site can
be used. Building codes are similar legal
restrictions that can determine the type of
building, signs, size and type of parking lot,
etc. that can be used at a particular location.
C. Signs
• Restrictions on the use of signs can impact a

particular site's desirability. Size and style
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Education.
may be restricted by building codes, zoning

ordinances, or even the shopping center
management.
D. Licensing Requirements
• Licensing requirements may vary in

different parts of a region. For instance,
some Dallas neighborhoods are "dry,"
meaning no alcoholic beverages can be sold;
and in other areas, only wine and beer can
be sold.
VI Summary
• Location decisions are particularly important

because of their high-cost, long-term
commitment and impact on customer
patronage.
• Choosing a particular location type involves

evaluating a series of trade-offs including
the occupancy costs of the location, the
pedestrian and vehicle traffic associated
with the location, the restrictions placed on
store operations by the property
management, and the convenience of the
location for customers.
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Education.
ANSWERS TO “GET OUT AND DO ITS”
2. INTERNET EXERCISE Go to the web page for Faneuil Hall Marketplace at:
www.faneuilhallmarketplace.com and the online site for CocoWalk at: http://www.cocowalk.net.
What kinds of centers are these? List their similarities and differences. Who is the target market
for each of these retail locations?
Faneuil Hall Marketplace – “It's the seat of American history and the site of one of America's
most famous shopping and dining experiences, Faneuil Hall Marketplace. For over 250
years, the marketplace has played an integral role in the life of Boston's residents.”
Restaurants, shopping, history (close to the Freedom Trail) events and entertainment. This
urban market place is located in Boston, Massachusetts and it attracts both locals and tourist
of all ages.
CocoWalk – “Miami’s ultimate destination for shopping, dining & entertainment. As the first
lifestyle center in Florida, CocoWalks’ unique grounds and buildings were carefully
designed to blend seamlessly into the surroundings of Coconut Grove, a bayside boating
village known for being eclectic, sometimes eccentric and always exciting”.
Shops, boutiques, a movie theater, restaurants, cafes, bars and live entertainment. This center
caters to Miami residents and international visitors with upscale shops and sophisticated
restaurants.
3. GO SHOPPING Go to your favorite shopping center, and analyze the tenant mx. Do the
tenants appear to complement one another? What changes would you make in the tenant mix to
increase the overall performance of the center?
Students’ answers will vary. Typically, in most shopping centers, the tenant mix is
complementary. Many retailers want to open locations close to their competitors, especially for
comparison shopping purposes. Ask students if there is a retailer that they would like to see in
their favorite shopping center that isn’t currently there now. What stores would they remove
from the shopping center to improve the overall quality of the shopping experience at the
shopping center?
4. GO SHOPPING Visit a lifestyle center. What tenants are found in this location? Describe
the population characteristics around this center? How far would people drive to shop at this
lifestyle center? What other types of retail locations does this lifestyle center compete with?
Students’ answers will vary. In most lifestyle centers, the tenants are going to be a mix of
higher-end specialty stores with a few smaller format department stores. Stores like Williams-
Sonoma and Pottery Barn tend to locate in lifestyle centers. When describing the population
surrounding the center, it will likely be in a more affluent part of town versus other shopping
centers. Lifestyle centers typically compete with other lifestyle centers or regional shopping
malls, and in some instances, power centers.
5. INTERNET EXERCISE Go to the home page for Simon Property Group,

www.simon.com/about_simon/our_business/default.aspx, and read about the business that
Simon is in. What is the difference between their businesses?
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Simon Malls is a property management group specializing in three different types of properties:
malls, premium outlets, and The Mills. The malls of Simon are “premier malls that provide an
unparalleled retail and dining experience for guests.” While, the premium outlets provide guests
with outlet shopping experiences for designer and name brands like Coach, Gap, Nike, and Polo
Ralph Lauren. The Mills are totally unique to Simon. Simon operates 15 of The Mills facilities.
The Mills offers outlet shopping, value retail, dining, and entertainment in 12 states.
6. INTERNET EXERCISE Go to the homepage of your favorite enclosed mall and describe it
in terms of the following characteristics: number of anchor stores, number and categories of
specialty stores, number of sit-down and quick service restaurants, and types of entertainment
offered. What are the strengths and weaknesses of this assortment of retailers? What are the
unique features of this particular mall?
Student answers will vary depending on the mall selected. Students should be able to
categorize the different retailers (anchor stores versus specialty stores, etc.). How much
entertainment does the mall provide? Does that appeal to students? Do students visit the
malls because of the stores or because of the supplementary services like dining and
entertainment?
7. GO SHOPPING Visit a power center that contains a Target, Staples, Sports Authority, Home
Depot, or other category specialists. What other retailers are in the same location? How is this
mix of stores beneficial to both shoppers and retailers?
Other retailers in this type of shopping center may include a food store, clothing stores such
as Old Navy, a book store, craft store, and possibly some quick service and family
restaurants. Students should consider how the retailers prefer low occupancy costs, high
traffic levels and are trying to reach the same target customers. Shoppers enjoy the
convenience of easy parking and many retailers located together.
8. INTERNET EXERCISE Go to www.pbs.org/itvs/storewars/ . This site contains information
about the Ashland’s town council’s decision to allow Walmart to open a store in Ashland,
Virginia. Summarize the pros and cons of allowing Walmart to open a store in town. Were you
surprised by the town council’s decision? Why or why not?
The people of Ashland that were in favor of the new Walmart said that they liked it because of
the convenience of one-stop shopping, the creation of new jobs, improvement in the roads and
infrastructure of the town, and a larger selection of products at better prices. The residents that
were against the new Walmart said that it would increase traffic, decrease city revenue, and
destroy the unique character of downtown Ashland. Eventually, the town council approved the
building of Walmart. Students should discuss if they were surprised or not by this decision.
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Education.
ANSWERS TO DISCUSSION QUESTIONS AND PROBLEMS
1. Why is store location such an important decision for retailers?
Location decisions are particularly important because of their high-cost, long-term

commitment and impact on customer patronage. Location is typically one of the most
influential considerations in a consumer’s store choice decision. Further, location decisions
have strategic importance because they can be used to develop a sustainable competitive
advantage.
2. Pick your favorite store. Describe the advantages and disadvantages of its current
location, given its target market.
Students store choices will likely vary considerably. The store’s target market must be clearly
defined. And then the location should give the store a competitive advantage with the target
market they have defined.
Store: Urban Outfitters
The target market for this store can be defined as young men and women from ages 16 to 25
that live in the city or want the urban look. The best location for this store would be in a
central business district. This is a traditional downtown business area in a city or a town.
The store will draw from the business activity of the downtown area. There is an inflow of
people from public transportation and a high level of pedestrian traffic.
Store: The GAP
The primary target market segments for this store are men and women ranging from as young
as 15 to 40 years old looking for value in basic clothing. The best location for this store
would be in a shopping center, particularly a mall. A shopping center consists of a group of
retail and other commercial establishments that is planned, developed, owned, and managed
as a single property. A mall focuses on pedestrians and gains its advantage because it can
have a set of stores that carry similar merchandise assortments. The target market looking
for basics, can shop at the GAP and also shop at complementary stores nearby. This allows
the target market to have a one stop shopping experience.
Store: Verizon
The target market segments of Verizon are men and women ages 18 and up looking for a
cellular phone for convenience and safety. A great location for Verizon would be a kiosk. A
kiosk is located in mall common areas, is stationary, and has many conveniences of a store
such as telephones, electricity, and moveable shelves. Advantages of these selling spaces are
the prime mall locations, the relative inexpensiveness, and the short-term leases available,
which reduce owner’s risk. This is a perfect location for a Verizon store because the items
are very small and require little shelf space. A customer looking to get a phone, does not
need a lot of frills, but instead wants the information and the phone at a convenience. Also
this location will appeal to their target market. As they walk down the mall they may be
induced to purchase without previous planning.
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Education.
3. Home Depot typically locates in either a power center or a freestanding site. What are
the strengths of each location for this home improvement retailer?
The tenant mix of a power center lends itself to attracting customers who would want to shop
at Home Depot. Home Depot will also benefit from this location due to increased traffic flow
of customers who will shop at a power center.
Home Depot will benefit from a free-standing location due to probable lower rent, abundant
parking, lack of direct competition, and the ability to design and operate the store with few or
no restrictions.
4. As a consultant to 7-Eleven convenience stores, American Eagle Outfitters, and Porsche

of America, what would you say is the single most important factor in choosing a site
for these three very different types of stores?
The most important criterion that is common to all types of stores is a location that attracts
the right segment of consumers. However, since the segments targeted are different and the
merchandise/services offered are also different, these differences would also affect the
location decision for each of the retailers. For 7-Eleven, consumers who are shopping for
convenience products – food as well as non food items – are the primary target. Since these
consumers do not wish to travel far and are willing to pay a slightly higher price as compared
to grocery stores, the best locations for 7-Eleven stores are smaller, neighborhood strip
centers. For American Eagle Outfitters, the CBDs, Main Street or regional and super
regional shopping centers may attract their target consumers, while for Porsche of America,
upscale commercial neighborhoods – typically a commercial avenue further away from
downtown – will likely appeal to their target customers.
5. Retailers are locating in shopping centers and free-standing locations in central

business districts that have suffered decay. As a result, these areas are rejuvenating, a
process known as gentrification. Some people have questioned the ethical and social
ramifications of this process. Discuss the benefits and detriments of gentrification.
The benefits of gentrification include the redevelopment of urban areas that are in a state of
decay. Usually, these areas would continue to decay if it weren’t for the interested retailers.
Some retail developers argue that gentrification projects have positive effects on fighting
crime and drugs. Gentrification also allows retailers to develop buildings that would be
financially impossible to duplicate in today’s market. These structures often have significant
historical value. Finally, retail gentrification promotes the development of projects such as
housing and offices. This allows whole neighborhoods to make a comeback.
Gentrification may negatively impact the historical and/or cultural makeup of an area. In
addition, gentrification may be so successful that neighboring properties may increase in
value to the point that existing tenants may not be able to afford the higher rents and/or taxes.
This is especially controversial in terms of displacement of lower income individuals and
families. Gentrification projects are often highly speculative due to the expensive financing
and high risks usually associated with projects of this kind. When financing is a problem, a
project may have to be temporarily stopped or abandoned before completion, which results in
7-16
Education.
further accelerating decay of empty buildings and an uncertain future for existing businesses
and people.
6. Staples, OfficeMax and Office Depot all have strong multichannel strategies. How do
competition and the Internet affect their strategies for locating stores?
Since all three stores sell mostly standardized and easily specified office supplies, the
products stocked by them can be conveniently and easily sold through the Internet. The
primary target markets for this type of retail outlets are small office/home office businesses.
The Internet enables these firms to target medium and large firms as well. At the same time,
the Internet is also an opportunity to target customers far removed from their primary
concentration areas (Southeast for Office Depot and Northeast for Staples) without incurring
the additional costs of each store location in markets where consumers may be sparse. While
it does cost a tremendous amount of capital to set up and successfully operate an Internet site,
the costs of the site are spread to a wider target market and trading area as compared to the
costs of setting up individual stores in multiple locations. So the Internet enables these firms
to optimize on marketing efforts to various target markets as well as the costs of setting up
new stores in locations that may not generate sufficient traffic. Since these three competitors
offer similar merchandise it is import to offer some type of rewards program to build store
loyalty. Another way to differentiate in this industry is to offer unique customer services such
as delivery, printing and computer support.
7. In many malls, quick service food retailers are located together in an area known as a
food court. What are the advantages and disadvantages of this location for the food
retailers? What is the new trend for food retailers in the shopping environment?
Mall food courts allow customers to find the fast-food retailers in the center of the shopping
mall. Since food courts usually have public seating in one area within the food court, each
fast-food retailer does not have to provide separate seating room for customers. The common
area charges associated with these kinds of arrangements are significantly less than if each
fast-food retailer provided a separate seating area. This arrangement enables the fast-food
retailers to lease a smaller amount of expensive space. Finally, food courts provide a variety
of alternatives therefore creating a synergy that attracts a larger group of potential customers.
Groups of potential customers, such as families, can patronize a variety of fast-food retailers
at one time.
In terms of disadvantages, food courts require the fast-food retailers to be located next to
each other, thus making the immediate environment extremely competitive. In addition, since
malls with food courts usually insist that the fast-food retailers locate within the food court,
there is no opportunity to try to locate to a better position within the mall. Also, food courts
tend to have limited space, therefore creating less flexibility in store design and expansion.
7-17
Education.
The new trend for food retail in malls is providing a more upscale, sit-down dining
experience in sit down restaurants. Mall developers have learned that good food options can
be a powerful attractor of customer traffic.
8. Why would a Payless ShoeSource store locate in a neighborhood shopping center

instead of a regional shopping mall?
A Payless Shoe Source might locate in a strip shopping center because these centers offer
customers convenient locations and easy parking, and offer retailers relatively lower rents
than regional shopping centers. This may enable Payless to offer lower prices than a store
offering comparable merchandise at the mall, and may also serve to offset the opportunity
cost of being located in a lower traffic location.
9. How does the mall near you home or university combine the shopping and
entertainment experience?
Answers here will vary widely. Students may describe efforts at traditional shopping centers,
such as special promotions, food courts, holiday events or music/video offerings. Others may
respond with entertainment features typically found at lifestyle centers, including concerts
and events, more restaurants and clubs, and recreation centers.
10. Consider a big city that has invested in an urban renaissance. What components of the
gentrification project attract both local residents and visiting tourists to spend time
shopping, eating and sightseeing in this location?
Local residents will likely be attracted to the convenience of retailers located in or nearby
their neighborhoods, along with the needed services, jobs, enhanced safety, visibility and
choices among retailers that would accompany the gentrification project. Visiting tourists
may be more attracted to the historical significance and unique entertainment elements built
into the project.
7-18
Education.

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• Many types of locations are available for

• These trade-offs generally concern the cost

• Trade area is the geographic area

II. Unplanned Retail Locations

• A freestanding site is a retail location that's

• Retailers with large space requirements,

• These locations enable retailers to have a

• Advantages of freestanding locations are

• The most serious disadvantage is the lack of

B. City or Town Locations See PPT 7-12

• In general, urban areas have low occupancy

• Many urban areas are going through a

• Redevelopment opportunities for retailers

chemical pollutants, as developers and

1. Central Business Districts

• Shopping flow in the CBD may be slow on

2. Main Street Locations

for food items.

• That said, retailing can play an important

III. Shopping Centers

• A shopping center is a group of retail and

• By combining many stores at one location,

• Shopping center management maintains

• Most shopping centers have at least one or

• In strip shopping centers, supermarkets are

A. Neighborhood and Community Shopping

• The primary disadvantages are that there is

entertainment options for customers than

• A power center is a shopping center that is

• Now many power centers are larger than

• Power centers offer low occupancy costs

• Shopping malls are enclosed, climate See PPT 7-20, 7-21

• Second, retailers and their customers don’t

• Third, malls offer retailers a strong level of

• Although shopping centers are an excellent

• First, mall rents are higher than those of

• Second, some tenants may not like mall

• Third, competition within shopping centers

• Shopping malls are facing several

• First, many people simply do not have time

• Second, most retailers in shopping malls sell

• Third, many malls are getting old and have

• Fourth, the consolidation in retailing,

D. Lifestyle Centers See PPTs 7-23

• Lifestyle centers, the fastest growing type of

• Lifestyle centers resemble the main streets

• Due to the ease of parking, lifestyle centers

F. Outlet Centers See PPT 7-25

• Outlet centers are shopping centers that

• Outlet centers are larger in size today than

• In the U.S. only two or three new outlet

• Tourism is an important factor in generating

G. Theme / Festival Centers See PPT 7-26

• Theme/festival centers are shopping

• These centers typically contain tenants

H. Larger, Multiformat Developments - See PPT 7-27

• New shopping center developments are

• Omnicenters represent a response to several

• In addition these centers reflect the growing

IV. Other Location Opportunities See PPT 7-28

• Airports, resorts, stores within a store, and

A. Temporary Stores See PPT 7-29