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Chapter 8 Retail Site Location

The document discusses factors to consider when evaluating potential retail store locations, including population and economic growth, competition, operating costs, and fit with target demographics. It also addresses determining the optimal number of stores in an area, considering economies of scale but also risks of cannibalization. Additional site characteristics that influence store performance are discussed, such as traffic flow, parking availability, visibility, and adjacent businesses that can drive cumulative attraction. Trade areas that stores draw customers from are defined, with primary areas accounting for 50-70% of sales and secondary/tertiary areas representing more dispersed customers. Demographic data sources for analyzing trade areas include Census information and tools like geographic information systems.

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188 views

Chapter 8 Retail Site Location

The document discusses factors to consider when evaluating potential retail store locations, including population and economic growth, competition, operating costs, and fit with target demographics. It also addresses determining the optimal number of stores in an area, considering economies of scale but also risks of cannibalization. Additional site characteristics that influence store performance are discussed, such as traffic flow, parking availability, visibility, and adjacent businesses that can drive cumulative attraction. Trade areas that stores draw customers from are defined, with primary areas accounting for 50-70% of sales and secondary/tertiary areas representing more dispersed customers. Demographic data sources for analyzing trade areas include Census information and tools like geographic information systems.

Uploaded by

Lexy
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Chapter 8 Retail site location

Evaluating areas for locations and determining the number of stores in an area

 Metropolitan statistical area

o A core urban area with 50,00 or more inhabitants

o Micropolitan statistical area- somewhat removed from larger cities, often by up to 100

miles

 Exhibit 8-1

 Considerations in evaluating store locations

o Economic

 Population and employment growth levels

o Competition

o Strategic Fit

 Right demographic and lifestyle fit

o Operating Costs

 Proximity of area

 Local and state regulations

 Number of Stores in an Area

o Economies of Scales from Multiple stores

o Cannibalization

 Diminishing returns when too many stores in an area

 Marginal revenues must be greater than marginal costs

 Exhibit 8-2

 Site Characteristics

o Traffic Flow and accessibility


 Natural Barriers

 Artificial barriers

o Parking

 Congestion

o Visibility

o Adjacent tenants

 Cumulative attraction

o Restrictions and costs

 Traffic flow

 Airports are an appealing location for some retailers because there are

lots of potential customers with time to shop

 Location within a shopping center

o Affects both sales and occupancy costs

o Strips shopping center-closest to the supermarket more expensive as more foot traffic

o Enclosed shopping malls- retailers who sell comparison shopping goods locate close to

the department store anchors

o Locate store that appeal to similar target markets

 Princical of cummulatuve attraction

 Because of the principal of cumulative attraction, stores selling similar

merchandise to similar target markets, such as rolex and piaget should

locate in close proximity to one another to increa

 Trade area definition

o Primary trading area

 50 to 70 percent of customers
o Secondary trading area

 20 to 30 percent of a stores sales

o Tertiary trading area or fringe trading area

 Customers who come from widely dispersed areas, might travel long distances

 Factors affecting the size of the trade area

o Accessibility

o Natural and physical barriers

o Competitors

o Nature of merchandise

o Assortment offered

o Location of alternative sources

 Measuring the trade area for a retail site

o Customer spotting

 Sources of information about trade areas

o Demographic data from the U.S census Bureau

 Census every ten years

 Census blocks

 block groups

o geographic information system suppliers

 GIS used to store, retrieve, map, analyze geographic data

 Identified with coordinates

o Exhibit 8-5 information provided by GIS Report

o Tapestry Segmentation C
 Classifies all u.s resifential neighborhoos into 67 distinct segments based on

demographics and socioeconomic charadcteristics

o Spending Potential

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