Retail Store Locations Store Site Selection 2

Chapter Objectives Identify the types of retail locations. Explain the difference between a strip center and a mall. Define trade areas. Explain the retail site-selection criteria. Explain the importance of traffic for a retail business. 3

The Importance of Location Have you ever wondered how a retail storeowner decides where to locate a new store? This chapter will examine the factors that go into making that decision. 4

Types of Store Locations There are many types of locations a retailer can choose. The store location is related to the store image and the types of merchandise and services the store offers. 5

Shopping Centers There are two types of shopping centers: shopping center a group of retail stores and service businesses operated as one business by one owner There are two types of shopping centers: Strip centers strip center a group of stores that feature a parking lot in front and is not an enclosed shopping area Malls Regional malls Fashion malls Outlet malls mall shopping area that is usually enclosed and has customer parking near the mall building 6

Shopping Centers Kiosks are another place to shop in many malls. kiosk a freestanding, small shopping space usually located in a mall Retailers may also locate in a central business district. central business district an exterior shopping area that has developed without much planning 7

It’s a Jungle Out There Going to a music store can be inefficient; you may have to go to several locations to find what you want. At online retailer Amazon.com, you can browse through hundreds of Operating an e-tail business on an electronic channel—the Web—can be costly, due to design, delivery, returns, and operating expenses. Though Many larger dot-com companies crashed in the 1990’s, small stores like Harris Cyclery of West Newton, Massachusetts, actually increase sales using a basic Web site. Today, a third of Harris’s bicycle business rides in on the Web to get hard-to-find parts and personal service. Describe an e-business’s home page to your class after viewing one through marketingseries.glencoe.com. thousands of new and used CDs in a matter of minutes. A brick-and-mortar store would have to be huge to offer this kind of variety and convenience. By offering music for sale online, Amazon.com keeps overhead costs low, their selection high—and their customers satisfied. For more information on retailing, go to marketingseries.glencoe.com. 8

Freestanding Locations The advantages of a freestanding location are: freestanding location a store that is not attached to other retail stores Lower rent More parking Better visibility No direct competition Convenience Few restrictions on signs, hours, or merchandise Ability to expand 9

Business Climate The retailer must consider the business climate of a town or area before making a final decision about a location for a store. 10

Business Climate Considerations Population growth More customers Demographics Population decline Fewer customers Employment Trends High rate High spending Low rate Low spending Acceptance People welcome new businesses People reject new development Competition Healthy competition Too much competition Out-of-date competition Less competitive Modern competition More competitive 11

What are the three broad categories of shopping locations? 1. What are the three broad categories of shopping locations? What are two differences between strip centers and malls? Why would a small retailer be unlikely to locate in a freestanding location? 2. Quick Check Answers shopping centers, business districts, and freestanding locations In strip centers, businesses are connected by walkways or sidewalks, and the parking is usually in front of the center. Strip malls usually feature stores where people go often for convenience: dry cleaners, drug stores, etc. Malls are usually enclosed and have climate control; the parking encircles the mall building. Often, malls are anchored by major department stores. Businesses must attract customers with the lure of other businesses to help generate customer traffic. 3. 12

Elements of Site Selection Retailers examine business trade areas, as well as other criteria when selecting a specific site for a store. Retailers must decide between renting a location and buying a location. 13

Trade Area The type of store, the merchandise or services offered, and the amount of competition in the area all have an effect on the size of a business’s trade area. trade area the geographic area from which a store draws most of its customers and sales 14

Other Site-Selection Criteria Eight criteria that retailers can use to evaluate a potential business site are: traffic the number of people who pass a retail location during a given period of time Traffic ease of access ability of customers to get in and out of a business site easily Ease of access visibility ability of the site to be easily seen by customers Parking Visibility continued 15

Other Site-Selection Criteria continued Competition lease a rental agreement between a landlord and a renter for a property Zoning Lease terms Percentage Fixed-rate lease Merchandise sold 16

Securing a Business Site When a retailer owns property, the retailer is responsible for all repairs and upkeep. The other option is for the retailer to lease, or rent, business space. If the retailer decides that the business would be best located in a strip mall, then the retailer would have to lease space. 17

What is a business’s trade area? 1. What is a business’s trade area? What are nine site-selection criteria? Why is competition important when selecting a business location? 2. Quick Check Answers It is the geographic area from which a store draws most of its customers. trade area, traffic, ease of access, parking, visibility, competition, zoning, lease terms, and merchandise sold Some nearby competition is valuable because shoppers are more likely to shop where they can compare the quality and value of merchandise or services. 3. 18

Checking Concepts 1. Describe the the types of retail locations. 2. shopping centers, including strip centers and malls; business districts, and freestanding locations 1. trade area, traffic, ease of access, parking, and visibility 4. A strip center houses a group of shops connected by walkways or sidewalks with parking in front; a mall is a usually a closed space or building housing shops with parking around the exterior of the space. 2. It's the geographic area from which the store draws most of its customers. 3. 2. Explain the differences between a strip center and a mall. Checking Concepts Answers shopping centers, including strip centers and malls; business districts, and freestanding locations A strip center houses a group of shops connected by walkways or sidewalks with parking in front; a mall is a usually a closed space or building housing shops with parking around the exterior of the space. It's the geographic area from which the store draws most of its customers. trade area, traffic, ease of access, parking, and visibility 3. Define trade areas. 4. Describe retail site-selection criteria. continued 19

Checking Concepts 5. Explain the importance of traffic. rent amount, services provided by landlord, length of the lease, and lease renewal terms 6. The retailer should see if the merchandise or service offered is compatible with the site. 7. Traffic refers to the number of people who pass a retail location; traffic can most usefully be counted in terms of people who are potential customers. Retailers need customers to sell their products. 5. List at least two of four terms in a lease. 6. Name one factor that a retailer should review several times before deciding on a store site. 7. Checking Concepts Answers Traffic refers to the number of people who pass a retail location; traffic can most usefully be counted in terms of people who are potential customers. Retailers need customers to sell their products. rent amount, services provided by landlord, length of the lease, and lease renewal terms The retailer should see if the merchandise or service offered is compatible with the site. continued 20

Checking Concepts Critical Thinking 8. People consider the dry cleaners to be a quick stop; clients run in and run out after dropping off or picking up their cleaning. They want to be close to the shop to avoid wasting any time. 8. 8. Explain why you think it would be important for a dry-cleaning shop to have ease of access. Checking Concepts Answers People consider the dry cleaners to be a quick stop; clients run in and run out after dropping off or picking up their cleaning. They want to be close to the shop to avoid wasting any time. 21

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