McGraw-Hill/Irwin Retailing Management, 6/e Copyright © 2007 by The McGraw-Hill Companies, Inc. All rights reserved. Chapter 7 Retail Locations

7-2 Retailing Strategy Retail Locations Chapter 7 Site Locations Chapter 8 Human Resource Management Chapter 9 Information and Distribution Systems Chapter 10 Customer Relationship Management Chapter 11 Retail Market and Financial Strategy Chapter 5, 6

7-3 Elements in Retail Mix Customer Service Merchandise Assortment Pricing Communication Mix Store Display And Design Location Strategy

7-4 What Are the Three Most Important Things in Retailing? Location! Location! Location! Eddie Tan/Life File/Getty Images

7-5 Why is Store Location Important for a Retailer? Location is typically prime consideration in customer’s store choice. Location decisions have strategic importance because they can help to develop sustainable competitive advantage. Location decisions are risky: invest or lease? F. Schussler/PhotoLink/Getty Images

7-6 Types of Retail Locations Free Standing Sites City or Town Locations –Inner City –Main Street Shopping Centers –Strip Shopping Centers –Shopping Malls Other Location Opportunities PhotoLink/Getty Images

7-7 Types of Locations

7-8 Unplanned Retail Locations Freestanding Sites – location for individual store unconnected to other retailer Advantages: Convenience High traffic and visibility Modest occupancy cost Separation from competition Few restrictions The McGraw-Hill Companies, Inc./Andrew Resek, photographer JCPenney, Sears, Walgreens are shifting to stand alone locations

7-9 Unplanned Retail Locations Merchandise Kiosks – small temporary selling stations located in walkways of enclosed malls, airports, train stations or office building lobbies. Kent Knudson/PhotoLink/Getty Images

7-10 City or Town Locations Gentrification is bringing population back to the cities. The McGraw-Hill Companies, Inc./Andrew Resek, photographer Advantage to Retailers: Affluence returned Young professionals Returned empty-nesters Incentives to move provided by cities Jobs! Low occupancy costs High pedestrian traffic

7-11 Central Business District Draws people into areas during business hours Hub for public transportation Pedestrian traffic Residents High security required Shoplifting Parking is poor Evenings and weekends are slow Advantages Disadvantages Spike Mafford/Getty Images

7-12 Main Streets vs. CBDs Occupancy costs lower than CBDs They don’t attract as many people There are not as many stores Smaller selections offered Not as much entertainment Some planners restrict store operations

7-13 The Most Expensive Shopping Streets in the World StreetLocationCost / sq foot / year Fifth Avenue (48th to 58th St.) 57th Street (5th Ave. to Madison Ave.) Oxford Street Madison Avenue (57th to 72nd St.) Ave. des Champs Elysee New York City London New York City Paris $580 $500 $400 $375 $360

7-14 Inner City Inner city retailers achieve high sales volume, higher margins and higher profits (c) Brand X Pictures/PunchStock Unmet demand tops 25% in many inner city markets Inner city customer wants branded merchandise

7-15 Shopping Centers Shopping Center Management Controls: Parking Security Parking lot lighting Outdoor signage Advertising Special events for customers The McGraw-Hill Companies, Inc./Andrew Resek, photographer

7-16 Types of Shopping Centers Neighborhood and Community Centers (Strip Centers) Power Centers Enclosed Malls Lifestyle Centers Fashion Specialty Centers Outlet Centers

7-17 Neighborhood and Community Centers Attached row of stores Managed as a unit Onsite parking The McGraw-Hill Companies, Inc./Andrew Resek, photographer

7-18 Power Centers Big box stores PhotoLink/Getty Images Limited small specialty stores Free-standing stores Open air set up Available parking Desirable shopping experience Many located near enclosed malls Large trade areas Low occupancy costsConvenient Modest vehicular and pedestrian traffic

7-19 The Largest North American Shopping Malls

7-20 Mall of America Located near Minneapolis, MN Largest mall in the US Enough people to qualify as the third largest city in Minnesota Has more than 42 million visitors a year More people visit than Disney World, the Grand canyon and Graceland combined Digital Vision/Getty Images

7-21 Advantages and Disadvantages of Shopping Malls Advantages: Many different types of stores Many different assortments available Attracts many shoppers Main Street for today’s shoppers Never worry about the weather Comfortable surrounding to shop Uniform hours of operation Disadvantages: Occupancy costs are high Tenants may not like mall management control of operations Competition can be intense PhotoLink/Getty Images

7-22 Challenge to Malls Time pressured society makes it impractical to wander malls Fashion apparel sold in malls experiencing limited growth Malls are getting old and rundown – unappealing to shop Anchor tenants are decreasing due to retail consolidation

7-23 Lifestyle Centers Courtesy of General Growth Properties Photo provided by ICSC and used with permission of Aspen Grove Lifestyle Center

7-24 Stores and Restaurants at Lifestyle Centers Starbucks Panera Bread Bed Bath & Beyond Ann Taylor Victoria’s Secret Eddie Bauer Coldwater Creek Banana Republic The Gap Restoration Hardware Williams-Sonoma Pottery Barn Barnes & Noble/Borders Dick’s Sporting Goods Aeropostale Hallmark Johnny Rockets

7-25 Lifestyle Centers Usually located in affluent residential neighborhoods Includes 50K sq. ft. of upscale chain specialty stores Open-air configuration Design ambience and amenities Upscale stores Restaurants and often a cinema or other entertainment Small department store format may be there

7-26 Fashion Specialty Centers Upscale apparel shops Need to be anchored Décor is elegant The McGraw-Hill Companies, Inc./Lars A. Niki, photographer

7-27 Outlet Centers These shopping centers contain mostly manufacturers and retail outlet stores Courtesy of Beall’s, Inc.

7-28 Tradeoff Between Locations Rent Traffic There are relative advantages and disadvantages to consider with each location.

7-29 Relative Advantages of Major Retail Locations LocationCity Strip Shopping Free Issues Center Mall Standing Large size draws people to area People working/living in area provided source of customers Source of ? entertainment/ recreation Protection against weather

7-30 Relative Advantages of Major Retail Locations LocationCBDStrip Shopping Free IssuesCenter Mall Standing Security Long, uniform hours of operation Planned shopping area/balanced tenant mix Parking Occupancy ? costs (e.g. rent)

7-31 Relative Advantages of Major Retail Locations LocationCity Strip Shopping Free IssuesCenter Mall Standing Pedestrian traffic Landlord control Strong competition Tax ? ? ? ? incentives

7-32 Other Retail Location Opportunities Mixed Use Developments Airports Resorts Hospitals Store within a Store Royalty-Free/CORBIS

7-33 Alternative Locations Mixed Use Developments MXDs Skip Nall/Getty Images Rob Melnychuk/Getty Images D. Falconer/PhotoLink/Getty Images Civic Centers Office Buildings Hotels

7-34 Alternative Locations Airports Airports: Why wait with nothing to do? Rents are 20% higher than malls Sales/sqft are 3-4 times higher than malls Best airports are ones with many connecting flights Kim Steele/Getty Images

7-35 Alternative Locations Resorts Captive audience Well-to-do customer Customers have time to shop Royalty-Free/CORBIS

7-36 Alternative Locations Hospitals Patients cannot leave Gifts are available Royalty-Free/CORBIS

7-37 Matching Location to Retail Strategy Department Stores  Regional Mall Specialty Apparel  Central Business District, Regional Malls Category Specialists  Power Centers, Free Standing Grocery Stores  Strip Shopping Centers Drug Stores  Stand Alone

7-38 Shopping Situations Convenience Shopping Minimize the customer’s effort to get the product or service by locating store close to where customers are located The McGraw-Hill Companies, Inc./Andrew Resek, photographer

7-39 Shopping Situations Comparison Shopping Customers have a good idea of what type of product they want, but don’t have a strong preference for brand, model or retailer. Ryan McVay/Getty Images Typical for furniture, appliances, apparel, consumer electronics, hand tools and cameras.

7-40 Category Specialists Consumers can see almost all brands and models in one store The McGraw-Hill Companies, Inc./Andrew Resek, photographer

7-41 Shopping Situations Specialty Shopping Customers know what they want Designer labels Convenient location matters less The McGraw-Hill Companies, Inc./Andrew Resek, photographer

7-42 Environmental Issues “Above-ground” risks - such as asbestos-containing materials or lead pipes used in construction. Hazardous materials - e.g. dry cleaning chemicals, motor oil, that have been stored in the ground. Retailers’ Protection Stipulate in the lease that the lessor is responsible for removal and disposal of this material if it’s found. Retailer can buy insurance that specifically protects it from these risks.

7-43 Other Legal Issues Zoning and Building Codes Zoning determines how a particular site can be used. Building codes determine the type of building, signs, size, type of parking lot, etc. that can be used Signs Restrictions on the use of signs can also impact a particular site’s desirability Licensing Requirements Some areas may restrict or require a license for alcoholic beverages