“Locate in Haste, Repent at Leisure” Site Location Analysis

Types of Retail Locations Isolated / Freestanding Business district Shopping Center

Importance of Store Locations Conveys image of the store Little flexibility once a location has been chosen Attributes of location have a strong impact on the retailer’s strategy Costs a lot of money

Factors affecting Evaluation of locations Economic conditions Competition Strategic Fit Operating Costs

Site Evaluation Characteristics Local Demographics Population and/or household base Population growth potential Lifestyles of consumers Income potential Age makeup Occupation mix

Site Evaluation Characteristics Retail Competition Number and types of stores in area Analysis of “key” players in general area Competitiveness of other merchants Possibility of joint promotions with local merchants Number and location of direct competitors in an area

Site Evaluation Characteristics Site Characteristic Number of parking spaces available Distance of parking areas Ease of access for delivery Visibility of site from street History of the site Compatibility of neighboring stores Size and shape of lot Condition of existing building Ease of entrance and exit for traffic Ease of access for handicapped customers Restrictions on sign usage Building safety code restrictions

Site Evaluation Characteristics Cost Factors Terms of lease/rent agreement Basic rent payments Length of lease Local taxes Operations and maintenance cost Restrictive clauses in lease Membership in local merchants association required Voluntary regulations by local merchants

Huff’s Gravity Model The Huff’s gravity model for estimating the sales of a retail store is based on the concept of gravity The force of the attraction is based on two factors : The size of the store The time it takes to travel to the store

Huff’s Model Assumptions: The proportion of consumers patronizing a given shopping area varies with the distance from the shopping area The proportion of consumers patronizing various shopping areas varies with the breadth and depth of merchandise offered by each shopping area The distance that consumers travel to various shopping areas varies for different types of products purchased The “pull” of any given shopping area is influenced by the proximity of competing shopping areas

Huff’s Formula

Retail Location Theories Index of retail saturation (IRS) is the ratio of demand for a product (households in the geographic area multiplied by annual retail expenditures for a particular line of trade per household) divided by available supply (the square footage of retail facilities of a particular line of trade in a geographic area).

Retail Location Theories Buying power index (BPI) is an indicator of a market’s overall retail potential and is composed of the weighted measures of effective buying income (personal income, including all nontax payments such as social security, minus all taxes), retail sales, and population size.

Case: Atria mall – Worli

Case: Inorbit Malad

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