Ch.

7
 What Are the Three Most Important
Things in Retailing?

7-2
Location! Location! Location!
Eddie Tan/Life File/Getty Images
 Introduction

 Location is the prime consideration in a

customer’s store choice decision.
 Locations – Strategic decision – It can be used
to develop a sustainable competitive advantage.
 Location decisions are risky: invest or lease?
 Location decisions are more restricted in Asia.
 Types of Locations

UNPLANNED
RETAIL SHOPPING CENTERS
LOCATIONS

OTHER NON-
TRADITIONAL
LOCATION
 Cont’d
Factors for choosing a location:
• Size of trade area
• The occupancy cost of the location
• The pedestrian and Vehicle customer traffic generated
• Convenience of the location for customers

The trade area is the geographic area encompassing most

of the customers who would patronize a specific retail site.
 Unplanned Retail Locations
• An unplanned retail cluster is the result of a natural
evolutionary process.
• The freestanding buildings as well as the spaces in the
downtown area are called unplanned retail areas.
• These buildings weren't designed specifically as
shopping areas.
• These buildings can be occupied by a retail store, or a
restaurant, or even a law firm.
• There is no centralized management to determine where
specific stores are and how they are operated.
 Unplanned Retail Locations

• Freestanding Sites
• Merchandise Kiosks
• City or Town Locations
- Central Business District
- Main Street
- Inner City
 Freestanding Sites
• Freestanding Sites are retail locations for and
individual, isolated store unconnected to other
retailers.
• They might be near other freestanding retailers, a
shopping center or kiosk, inside an office building or
shopping center.
 Advantages and Disadvantages
Advantages and Disadvantages
 Convenience for customers
 High vehicular traffic
 Visibility to attract customers driving by
 Modest occupancy cost
 Separation from direct competition
 Fewer restrictions on hours or merchandise

Disadvantage:
 Limited Trading Area
 Occupancy cost is more than strip centers
 Such stores appears in area with little pedestrian traffic
 Merchandise Kiosk
• These are small, temporary selling spaces typically
located in the walkways of enclosed malls, airports,
train stations, or office building lobbies.
• Space: 40 to 500 sq. feet
• They usually have short term leases and often
operated seasonally.
• For mall operators, kiosks are an opportunity to
generate rental income.
• Office building managers view kiosks as a way to
provide services for people working in building.
 City or Town Locations

 Some retailers find urban locations attractive due to re-

development in downtowns.
 Urban areas go through a process of gentrification.
 Young professionals and retired people are moving in
these areas to enjoy convenience of shopping, restaurants
and entertainment nearby.
 Retailers bring needed goods and services to such area
and bring jobs.
 Advantages and Disadvantages
• Low occupancy costs
• Locations in central business district often
have high pedestrian traffic.
• Vehicular traffic is limited and parking
problems reduce consumer convenience.
 Central Business District
• The CBD is the traditional downtown business area in a city or
town.
• Due to its daily activity, it draws many people and employees
into the area during business hours.
• The CBD is also hub for public transportation.
• There is high level of pedestrian traffic.
• CBDs have a large number of residents living in the area.
• High security required at CBD
 Cont’d
• Shoplifting can be common in CBDs.
• Parking problems may arise.
• Parking problems and drive times can discourage the
customers from patronizing stores.
• Lack of planning in CBDs.
 Main Street
• Also referred as traditional shopping area of smaller towns or
Secondary Business District in suburb or within a larger city.
• Streets in these areas have been converted into pedestrian
walkways.
• They represent an effort by cities to draw people for shopping.
• Main streets have characteristics like CBD.
• Occupancy costs are generally lower.
• They do not draw as many people as the primary CBD.
• Main streets do not offer the range of entertainment and
recreational activities available in primary CBD.
• Restrictions are imposed due to redevelopment.
• In UK, 80% of retail sales are made by small retailers in Main
Street.
 Shopping Centers
• A shopping center is a group of retail and other commercial
establishments that is planned, developed, owned and
managed as a single property.
• By combining many stores at one location, more consumers
are attracted to the shopping center.
• The developer and shopping center management carefully
select a set of retailers that are complementary to provide
consumers with a one-stop shopping experiences with well-
balanced assortment of merchandise.
• Common facilities are shared.
• The stores in the center pay a negotiated annual fee based on
their size to cover the CAM (Common Area Maintenance)
cost.
 Cont’d
• Restrictions on operating hours, signage and even the type of
merchandise sold in the stores.
• Most shopping centers have at least one or two major
retailers, referred to as anchors.
• To get these anchor retailers to locate in a center, developers
frequently make special deals like reduced lease costs for the
anchor tenants.
• In strip centers, supermarkets are typically anchors.
 Types of Shopping Centers
• Neighborhood and Community Shopping Centers
• Power Centers
• Shopping Malls
• Lifestyle Centers
• Fashion/Specialty Centers
• Outlet Centers
• Theme/Festival Centers
• Other Types of Shopping Centers
 Neighborhood and Community Shopping Centers
• These are also called strip shopping centers.
• These stores are an attached row of stores managed as a unit.
• Onsite parking in front of the stores.
• Common areas are not enclosed and are called “open air
centers”.
• L-shaped and inverted U-shaped.
• Smaller centers (Neighborhood centers) are typically
anchored by a supermarket or a drugstore.
• Larger centers (Community centers) have additional
anchors such as discount stores, off-price retailers or
category specialists etc.
 Cont’d
Advantages:
• They offer customers convenient locations
• Easy parking
• Relatively low occupancy costs
Disadvantages:
• Smaller centers have limited trade area
• Lack of entertainment and restaurants
• No protection from weather
• They do not attract so many customers like malls.
 Power Centers
• These are shopping centers that consist primarily of
collections of big-box retail stores like discount
stores, off-price retail stores, category specialists.
• These are “open air” and may include several
freestanding anchors and minimum number of small
specialty tenants.
• Many power centers are located near an enclosed
shopping mall.
• E.g. South Edmonton Common is the largest power
centre in Canada spread over 320 acres.
South Edmonton Common
 Shopping Malls
• Shopping malls are enclosed, climate controlled,
lighted shopping centers.
• They have retail stores on one or both sides of an
enclosed walkway.
• Classification:
Regional (less than 1 million square feet) or
Super regional (more than 1 million sq. feet)
• E.g. South China Mall is the largest shopping mall in
the world.
South China Mall
 Cont’d
Advantages:
• Due to many stores, high assortments.
• Shopping with entertainment facility
• Attract many shoppers
• Generate significant pedestrian traffic in front of the mall.
• Friends and family hangout
• Retailers need not worry about external environment.
• Customers are protected from weather.
• Mall management takes care of maintaining common area.
• Uniform hours of operation.
 Cont’d
Disadvantages:
• High occupancy costs
• Some tenants may not like mall management’s control of
their operations.
• Competition
• Shopping malls appeal to consumers who have the time to
enjoy wandering through stores.
• Most retailers in shopping malls sell fashionable apparel
which has limited growth.
• If the location is unfavorable, malls may not be able to
draw consumers.
• Consolidation in retailing has decreased the number of
potential anchor tenants.
 Lifestyle Centers
• These are shopping centers with an open-air
configuration of upscale specialty stores, entertainment
and restaurants.
• It includes ambience and amenities like fountains and
street furniture.
• Located near affluent neighborhoods. (upscale
consumers)
• Convenient for shoppers and ease of parking.
• Smaller than enclosed malls
• Smaller trade area and attract fewer customers than
enclosed malls.
• Occupancy cost is less than enclosed malls.
 Fashion/Specialty Centers
• These are shopping centers mainly
composed of upscale apparel
shops, boutiques and gift shops
carrying selected fashions.
• These stores carry high quality
and price product.
• Such stores are very elegant.
• Found in trade areas with high
income levels.
• High occupancy cost.
 Outlet Centers
• Outlet centers are shopping centers that contain mostly
manufacturers outlet stores.
• Off-price retailers.
• The newest outlet centers have a strong entertainment
component include movie theaters, theme restaurants.
 Theme/Festival Centers
• These shopping centers employ unifying theme carried
by the individual shops in the their design and
merchandise.
• Such centers contain tenants similar to those in the
specialty centers.
• They create unique shopping environment.
• E.g. Restaurants.
 Other types of Shopping centers
• Mixed use developments (MXDs) – They combine
several different uses in one complex.
- Developers of MXDs use space productively.
• Airports
• Resorts
• Hospitals
• Store within a Store
 Location and Retail Strategy
1. Types of shopping situations
• Convenience Shopping
• Comparison Shopping
• Specialty Shopping

2. Density of Target Market

3. Uniqueness of Retail Offering
- Location is not important
 Legal Considerations
• Environmental Issues
- The environmental protection agency is involved in issued
that could affect retail stores.
• Zoning and Building Codes
- Zones: Residential, Industrial and Retail Use
- Codes : Type of building, size and type of parking
lot used by location.
• Signs
• Licensing Requirements
THANK YOU