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Types of Retail Locations

Isolated store/Free standing sites


Central Business District
Secondary Business District
Strip Shopping Center(String)
Neighbourhood Business District
Community Centers
Power centers
Theme/festival centers
Free standing sites
Steps Involved
Market Identification
Determining the potential market
Identify alternate site and select the site
Three levels of Spatial
Analysis
Regional Analysis
Trade Area Analysis
Site Analysis
Defn: Trade area analysis
“ A geographical area containing the customers
of a particular firm or group of firms for
specific goods or services”
Factors affecting the demand for a
trade area

Demographic and life style, socioeconomic


characteristics
Promotional activities
Trading area overlap
Geographic weaknesses can be highlighted
Business climate
Competition
Saturated trade area
Understored trade area
Overstored
• Span of Managerial control
Factors affecting the attractiveness
of a site
Accessibility
Macro Analysis
Road pattern
Natural Barriers
Artificial Barriers
• Micro Analysis
 Visibility
 Traffic Flow
 Parking Facility
 Congestion
Size and shape of trade
area
Primary Trading Area
Secondary Trading Area
Fringe Trading Area
Eg. Destination Store
Parasite store
Terms of Occupancy
“Ownership Vs Leasing”
Straight lease
Percentage lease
Graduated lease
Maintenance-increase-recouponment lease
Net lease
Methods to Evaluate A Trading
area
Analog model
Regression Model
Gravity model
Reilly’s Law of Retail gravitation
The Herfindahl- Herschman Index
The Index of Retail saturation
Central Place theory
Huff’s Model of Trading area analysis
The Herfindahl- Herschman
Index
HHI-Market concentration

“It is found by adding squares of the


competitors market shares within the relevant
product and geographic market”
The Index of Retail
saturation
IRS=H* RE/RF
where:
IRS= Index of Retail saturation
H=No. of Households in that area
RE= Annual retail expenditures for a particular
line of trade per household in that area
RT= the total square footage of that particular
line of trade in that area including the proposed
store
Reilly’s Law of Retail
gravitation
(Ba/Bb)=(Pa/Pb) (Db/Da)
Where:
Ba=the business which the city a draws from the
immediate place
Bb=The business which city b draws from the
immediate place
Pa= population of city a
Pb= population of city b
Da=Distance of city a to the immediate place
Db= Distance of city b to the immediate place
A jα Dij -β
Pij = ________ ,

∑ Ajα Dij –β

j rangesfrom1ton.

Where
A j - is a measure of attractiveness of store j
Dij - The distance from I to j
α -
Attractiveness parameter
β -
Distance decay parameter
n - total number of stores including store j

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