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RM (5) Location

Retail location is a strategic decision that can provide competitive advantage if chosen correctly. The document discusses various factors to consider when selecting a retail location, including: accessibility, traffic patterns, real estate costs, type of goods being sold, target customer demographics, levels of competition, and potential for future growth. Key location types include free standing sites, planned shopping centers, central business districts, and neighborhood commercial areas. A thorough trade area analysis is important to evaluate opportunities and competition.

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189 views

RM (5) Location

Retail location is a strategic decision that can provide competitive advantage if chosen correctly. The document discusses various factors to consider when selecting a retail location, including: accessibility, traffic patterns, real estate costs, type of goods being sold, target customer demographics, levels of competition, and potential for future growth. Key location types include free standing sites, planned shopping centers, central business districts, and neighborhood commercial areas. A thorough trade area analysis is important to evaluate opportunities and competition.

Uploaded by

api-3756651
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© Attribution Non-Commercial (BY-NC)
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Retail Marketing Management

RM 5

Retail Location
Retail Location & Site Selection

Retail location can be a strategic


differentiator & a source of competitive
advantage.
… most variables can be easily altered to
counter competition, except location due
to long term commitments in lease
tenures / or financial investments.
Importance of location decision

• Location is a major cost factor


– Involves large capital outlay
– Affects transportation costs
– Affects human resource costs

• Location is a major contributor to revenue


– Affects the number of customers visiting
– Affects the volume of business
Location decision & Type of goods
– Convenience goods purchases are either planned or
bought on impulse. Considerations relevant would be:
• Quantity & quality of traffic
• Large display possibilities to induce impulse purchase
• Easy accessibility
– Shopping goods are usually high involvement, planned
purchase & bought infrequently. Considerations
relevant would be:
• Shoppers may be willing to travel a distance
• Positioning of the store or the merchandise carried
• Parking & approaches would be important
– Specialty goods are bought infrequently & have
established clientale. Considerations relevant would be:
• Even isolated or standalone locations will work
• Proximity to complementary products would help
Levels of location decision

• Decisions relating to
– Selection of city
– Selection of an area within a city
– Identification of a specific site
Level of location decision

Selection of city Area within city Specific site

•Size of trading area •Popularity of shopping area •Adequacy potential of traffic

•Population & growth trends •Nature & type of comp’tn •Nature of adjacent stores

•Purchasing power & its •Access routes •Adequacy of parking


dist
•Nature of zone regulations •Costs
•Trade potential e.g McDonald Ludhiana
•Expansion possibilities
•Type/level of competition •Direction of area expansion
•Storage & w/housing
•Costs •Costs
Types of retail locations
• Free standing locations
– Neighbourhood stores….Shoppers Stop at Andheri
– Highway stores….Vishal Mart on NH 8
• Unplanned business district
– Neighbourhood stores…Lajpat Nagar
– String malls
• Planned business district
– Central business district….CP
– Suburban business district….Rajendra Place
• Planned shopping centres
– Community Centres…..colony based
– Regional malls…..East Delhi Mall
– Specialist markets….Kirti Nagar for furniture
– Periodic markets….weekly Mangal bazar
Free Standing Locations

A stand-alone site is a retail location that’s not connected to other


retailers or in any organised market.

Features
 Usually those retailers whose space req. are large
 Offer a specialty product, that customers will be willing to travel to
see / buy
 Advantages could be lower rents / costs, ample parking, fever
restrictions – long hours.
 The stores offering something special in merchandise, price,
promotion or services and capable to pulling customers are
favoured.
 Can be neighbourhood stores or highway stores
Neighbourhood Area

• Located in residential neighborhoods and serve


small localities
• Sell convenience products
• High street locations…selling prime brands
• South Extension
• M-Block, GK-I
• Karol bagh
• Khan Market
• Lajpat Nagar
CENTRAL BUSINESS DISTRICT

• CBD is a traditional downtown business


area in a city or a town. It draws many
people into the area during business
hours. People also go to work here.
• A suburban business district would be
located in a suburb with similar profile.
Central Business District

Features

- a traditional business area in a city or town


- high density of offices
- certain % of committed footfalls
- high transportation & parking needs
- high pedestrian traffic
- weekend / holiday traffic non-existent
- profile of visitors heterogeneous
- maintenance is poor / neglected
- lack of planning in allocating space
– diversity of business / shops
Major consumer – friendly / favourite anchors like entertainment
joints / food parlours required to generate / sustain shoppers
interest.
Shopping Areas / Centres

A collection of stores offering a variety of merchandise managed by a


group / local body or association and catering to a homogenous
customer base.
 Central shopping area e.g. Connaught Place
 Suburban e.g. South Ex. / Lajpat Nagar
 String Malls e.g. Mehrauli-Gurgaon Road
 Malls e.g. Ansals Plaza
 Community centre e.g. Colony based
Trading Area

A trading area is a contiguous geographic area from which a retailer


draws customers that account for the majority of a store’s sales &
customers. It may be part of a city or extend beyond the city.

 Primary zone : Area from which the store or shopping area


derives 60 – 65% customers

 Secondary zone: Generating about 20% customers

 Tertiary Zone: Caters to either those who are mobile / travel that
way on work but live away / their area lacks
facilities / entertainment hub.
Profile of Delhi Areas

Local <10 KM 10-15 >15 KM

Connaught Place 10% 14% 14% 62%

South Extn 10% 66% 17% 7%

M-Blk, GK – I 32% 47% 16% 5%

Sarojani Nagar 13% 33% 26% 28%

Source: Colliers Jardine, 1999


Trading area analysis
A through analysis of the trading area is necessary to evaluate
alternate geographic (trading) areas in terms of the profile of
residents & existing retailers, market potential, level & type of
competition. A retailer would have to consider some of the following
factors:

Decision Making Process


 Demographics
- Growth of population
- Size, composition of households
- Lifestyle profile of population
 Business climate
- Employment trends
- Growth of businesses in the area
- Diversity of industry
 Competition
- Saturated area
- Under-stored area
- Over-stored area
Parameters for Location / Site Evaluation
Accessibility
 Macro Level  Highways / Road systems
 Traffic intensity / congestion
 Time taken to reach
 Type of traffic
 Road conditions
 Traffic restrictions
 Public transport?
 Micro Level  Store visibility
 Availability of parking
 Safety
 Congestion
 Pedestrian traffic
Real Estate
 Availability & terms of occupancy
 Ownership
 Lease
 Franchise
 Legal considerations

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