1. Copyright © 2011 Pearson Education CHAPTER 14

2. Copyright © 2011 Pearson Education  The right region of the country  The right state in the region  The right city in the state  The right site in the city Ch. 14: Location and Layout 14 - 2

3. Copyright © 2011 Pearson Education  Census data ◦ http://www.census.gov/ http://www.census.gov/ ◦ http://factfinder.census.gov http://factfinder.census.gov  ZoomProspector ◦ www.zoomprospector.com www.zoomprospector.com  Population Reference Bureau ◦ www.prb.org www.prb.org  STAT-USA ◦ http://www.statusa.gov http://www.statusa.gov Ch. 14: Location and Layout 14 - 3

4. Copyright © 2011 Pearson Education  Demographics USA  Lifestyle Market Analyst  Survey of Buying Power  Editor and Publisher Market Guide  The American Marketplace: Demographics and Spending Patterns  Commercial Atlas and Marketing Guide  Zip Code Atlas  Geographic Information Systems (GIS) ◦ U.S. Census Department’s TIGER Ch. 14: Location and Layout 14 - 4

5. Copyright © 2011 Pearson Education  Computerized programs combining map-drawing with database management capability.  Search through virtually any database and then plot the results on a map.  Visual display reveals otherwise hidden trends. Ch. 14: Location and Layout 14 - 5

6. Copyright © 2011 Pearson Education  Proximity to markets  Proximity to needed raw materials  Wage rates  Labor supply needs  Business climate  Tax rates  Internet access  Total operating costs Ch. 14: Location and Layout 14 - 6

7. Copyright © 2011 Pearson Education State Weighted Score (Weight x Score ) Location CriterionWeight Score (Low = 1, High = 5)State 1State 2State 3 Quality of labor force Wage rates Union activity Property/building costs Utility costs Transportation costs Tax burden Educational/training assistance Start-up incentives Raw material availability Quality of life Other: Other Total Score Ch. 14: Location and Layout 14 - 7 TABLE 14.1

8. Copyright © 2011 Pearson Education  Population trends  Competition  Clustering  Compatibility with community  Local laws and regulations  Appropriate infrastructure  Cost of utilities and public services  Incentives  Quality of life Ch. 14: Location and Layout 14 - 8

9. Copyright © 2011 Pearson Education  Trade area size – the region from which a business can expect to draw customers  Retail compatibility  Degree of competition  Index of retail saturation (IRS) Ch. 14: Location and Layout 14 - 9

10. Copyright © 2011 Pearson Education C x RE RF Where: C = Number of customers in the trading area RE = Retail expenditures equals the average expenditure per person for the product in the trading area RF = Retail facilities = the total square feet of selling space allocated to the product in the trading area Ch. 14: Location and Layout 14 - 10 IRS =

11. Copyright © 2011 Pearson Education  Trade area size – the region from which a business can expect to draw customers.  Retail compatibility.  Degree of competition.  Index of retail saturation (IRS).  Reilly’s law of retail gravitation. Ch. 14: Location and Layout 14 - 11 (continued)

12. Copyright © 2011 Pearson Education Where: BP= Distance in miles from location A to the break point d = Distance in miles between locations A and B P a = Population surrounding location A P b = Population surrounding location B Ch. 14: Location and Layout 14 - 12

13. Copyright © 2011 Pearson Education  Transportation network  Physical and psychological barriers  Customer traffic  Adequate parking  Reputation  Visibility Ch. 14: Location and Layout 14 - 13 (continued)

14. Copyright © 2011 Pearson Education  Central Business Districts (CBDs)  Neighborhood locations  Shopping centers and malls Ch. 14: Location and Layout 14 - 14

15. Copyright © 2011 Pearson Education  Neighborhood shopping centers ◦ 3 to 12 Stores; anchor is supermarket or drugstore; serves up to 40,000 people.  Community shopping centers ◦ 12 to 50 stores; anchor is department or variety store; serves 40,000 to 150,000 people.  Power centers ◦ Combine drawing power of a mall with convenience of neighborhood shopping center; anchor stores typically occupy 80% of space. Ch. 14: Location and Layout 14 - 15

16. Copyright © 2011 Pearson Education  Theme or festival centers ◦ Employ a unifying theme, often involving entertainment, to attract tourists.  Outlet centers ◦ Feature manufacturers’ and retailers’ outlet stores selling name-brand goods at discount prices; usually follows “open air” design.  Lifestyle centers ◦ Located near affluent residential neighborhoods; designed to look more like a central business district than a shopping center or mall. Ch. 14: Location and Layout 14 - 16 (continued)

17. Copyright © 2011 Pearson Education  Regional shopping malls ◦ 50 to 100 stores; anchor is one or more major department stores; draws customers from a large trading area, often 5 to 15 miles or more.  Super-regional shopping malls ◦ Similar to a regional mall but bigger; trading area is 25 miles or more in all directions. ◦ Examples  Mall of America (Bloomington, MN), the largest mall in the U.S.  West Edmonton Mall (West Edmonton, Canada), the largest mall in North America. Ch. 14: Location and Layout 14 - 17

18. Copyright © 2011 Pearson Education Ch. 14: Location and Layout FIGURE 14.1 Shopping Mall Patterns Source: International Council of Shopping Centers. 14 - 18

19. Copyright © 2011 Pearson Education  Near competitors  Inside large retail store  Outlying areas  Home-based businesses Ch. 14: Location and Layout 14 - 19 (continued )

20. Copyright © 2011 Pearson Education  Foreign trade zones Ch. 14: Location and Layout 14 - 20

21. Copyright © 2011 Pearson Education Ch. 14: Location and Layout FIGURE 14.2 How a Foreign Trade Zone (FTZ) Works 14 - 21

22. Copyright © 2011 Pearson Education Ch. 14: Location and Layout 14 - 22 Foreign trade zones Foreign trade zones Empowerment zones Empowerment zones Business incubators Business incubators

23. Copyright © 2011 Pearson Education  Organizations that combine low-cost, flexible rental space with a multitude of support services for their small business residents.  More than 1,100 in operation across the U.S.  They work! ◦ Companies that “graduate” from incubators have a success rate of 87%. ◦ 84% of graduates stay in the local community, creating local job opportunities. Ch. 14: Location and Layout 14 - 23

24. Copyright © 2011 Pearson Education Ch. 14: Location and Layout FIGURE 14.3 Business Incubator Tenants by Industry Source: National Business Incubation Association. 14 - 24

25. Copyright © 2011 Pearson Education The logical arrangement of the physical facilities of a business that contributes to efficient operations, increased productivity, and higher sales.  Study: Employees believe that the quality and quantity of their work would increase by an average of 25% with better workplace design. Ch. 14: Location and Layout 14 - 25

26. Copyright © 2011 Pearson Education  The size must be adequate to accommodate business needs.  The appearance must create the proper image or “personality” for the business in the customer’s eyes.  The entrance must invite customers to come in. Ch. 14: Location and Layout 14 - 26

27. Copyright © 2011 Pearson Education  Must comply with Americans with Disabilities Act (ADA).  Pay attention to the business sign, the most direct method of reaching potential customers. Ch. 14: Location and Layout 14 - 27 (continued) Layout: External Factors

28. Copyright © 2011 Pearson Education  Tells potential customers who you are and what you’re selling.  Contrasting colors and simple typeface.  Should be visible, simple, and clear.  Should be legible both day and night.  Must be maintained properly.  Must comply with local sign ordinances. Ch. 14: Location and Layout 14 - 28

29. Copyright © 2011 Pearson Education  Ergonomics is an integral part of any design.  Proper layout and design pays off in higher productivity, efficiency, or sales.  Proper lighting is measured by what is ideal for the job being done – the u se of natural light can increase retail sales.  Sound and scent should appeal to all customers and can boost sales.  Environmental-friendly design for efficiency and appeal. Ch. 14: Location and Layout 14 - 29

30. Copyright © 2011 Pearson Education  Know your customers’ buying habits and plan your layout accordingly.  Display merchandise as attractively as your budget will allow.  Display complementary items together.  Recognize the value of floor space; never waste valuable selling space with non-selling functions. Ch. 14: Location and Layout 14 - 30

31. Copyright © 2011 Pearson Education Ch. 6: Franchising and the Entrepreneur 14 - 31 FIGURE 14.4 Space Values for a Small Store Source: Retailing, 6e, 1997 Prentice Hall ©Dale M. Lewis

32. Copyright © 2011 Pearson Education Grid ◦ Rectangular with parallel aisles; formal; controls traffic flow; uses selling space efficiently. ◦ Supermarkets and self-service discount stores. Ch. 14: Location and Layout 14 - 32 In addition to the text

33. Copyright © 2011 Pearson Education Free-Form ◦ Free-flowing; informal; creates “friendly” environment; flexible. ◦ Small specialty shops. Ch. 14: Location and Layout 14 - 33 In addition to the text

34. Copyright © 2011 Pearson Education Boutique ◦ Divides store into a series of individual shopping areas, each with its own theme; unique shopping environment. ◦ Small department stores. Ch. 14: Location and Layout 14 - 34 In addition to the text

35. Copyright © 2011 Pearson Education  Type of product  Type of production process  Ergonomic considerations  Economic considerations  Space availability within the facility Ch. 14: Location and Layout 14 - 35

36. Copyright © 2011 Pearson Education  Analyzing production layouts: Avoid the 7 forms of waste ◦ Transportation ◦ Inventory ◦ Motion ◦ Waiting ◦ Overproduction ◦ Processing ◦ Defects Ch. 14: Location and Layout 14 - 36

37. Copyright © 2011 Pearson Education 14 - 37 Ch. 14: Location and Layout Conclusion Location is an important decision for businesses in the areas of: ◦ Retail ◦ Service ◦ Manufacturing The criteria for site selection, layout, design, and ADA considerations present challenges and opportunities for entrepreneurs.