PPT th Edition

PPT 7-2 McGraw-Hill/Irwin Levy/Weitz: Retailing Management, 5/e Copyright © 2004 by The McGraw-Hill Companies, Inc. All rights reserved. Retail Locations Chapter 7

PPT 7-3 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

PPT 7-4 What Are the Three Most Important Things in Retailing? Location! Location! Location!

PPT 7-5 Retail Locations Shopping Centers –Strip Shopping Centers –Shopping Malls City or Town Locations –Inner City –Main Street Free Standing Sites Other Location Opportunities

PPT 7-6 Types of Strip Shopping Centers Traditional Mom and Pop Local Merchants, Children’s Place, GapKids, Blockbuster Video Power Centers Target, Home Depot, Office Depot, PetsMart, Best Buy, Sports Authority, Toys R Us

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

PPT 7-8 Strip Shopping Centers

PPT 7-9 Types of Shopping Malls Regional Centers Superregional Centers Lifestyle Centers Fashion/Specialty Centers Outlet Centers Theme/Festival Centers Merchandise Kiosks

PPT 7-10 Shopping Malls

PPT 7-11 The Largest U.S. Shopping Malls

PPT 7-12 Problems Facing Regional Malls Competition from Alternative, More Convenient Locations Focus on Apparel – Weak Apparel Sales Aging Demographic Shifts

PPT 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

PPT 7-14 Tradeoff Between Locations Rent Traffic There are relative advantages and disadvantages to consider with each location.

PPT 7-15 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

PPT 7-16 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)

PPT 7-17 Relative Advantages of Major Retail Locations LocationCity Strip Shopping Free IssuesCenter Mall Standing Pedestrian traffic Landlord control Strong competition Tax ? ? ? ? incentives

PPT 7-18 Other Retail Location Opportunities Mixed Use Developments Airports Resorts Hospitals Store within a Store

PPT 7-19 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

PPT 7-20 Types of Leases Percentage Fixed - Rate Percentage leases – lease based on a % of sales. Retailers also typically pay a maintenance fee based on a percentage of their square footage of leased space. Most malls use some form of percentage lease.

PPT 7-21 Variations of Percentage Leases Percentage lease with specified maximum - percentage of sales up to a maximum amount. Rewards retailer performance by allowing retailer to hold rent constant above a certain level of sales Percentage lease with specified minimum - retailer must pay a minimum rent no matter how low sales are. Sliding scale - percentage of sales as rent decreases as sales go up.

PPT 7-22 Fixed Rate Leases Fixed Rate Leases - used by community and neighborhood centers. -Retailer pays a fixed amount per month over the life of the lease. -Not as popular as percentage leases Graduated Lease - a variation of the fixed rate lease -Rent increases by a fixed amount over a specified period of time.

PPT 7-23 Percentage or Fixed Rate Leases Maintenance-increase-recoupment lease - used with either a percentage or fixed rate lease. Rent increases if insurance, property taxes, or utility bills increase beyond a certain point. Net lease - retailer is responsible for all maintenance and utilities.

PPT 7-24 Prohibited Use Clause Limits the landlord from leasing to certain tenants. Some tenants take up parking spaces and don’t bring in shoppers: bowling alley, skating rink, meeting hall, dentist, or real estate office. Some tenants could harm the shopping center’s wholesome image: bars, pool halls, game parlors, off-track betting establishments, massage parlors and pornography retailers.

PPT 7-25 Exclusive Use Clause Prohibits the landlord from leasing to retailers selling competing merchandise Specify no outparcels Specify if certain retailer leaves center, they can terminate lease. Escape Clause Allows the retailer to terminate its lease if sales don’t reach a certain level after a specified number of years, or if a specific co-tenant in the center terminates its lease.

PPT 7-26 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.

PPT 7-27 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