1. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Choosing the Right Location and Layout CHAPTER 14

2. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 14 - 2 Ch. 14: Location and Layout Choosing a Location The right region of the country The right region of the country The right state in the region The right state in the region The right city in the state The right city in the state The right site in the city The right site in the city

3. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 14 - 3 Ch. 14: Location and Layout Choosing the Region: Sources of Information Census data Census data http://www.census.gov/ http://www.census.gov/ http://www.census.gov/ http://factfinder.census.gov http://factfinder.census.gov http://factfinder.census.gov ZoomProspector ZoomProspector www.zoomprospector.com www.zoomprospector.com www.zoomprospector.com Population Reference Bureau Population Reference Bureau www.prb.org www.prb.org www.prb.org STAT-USA STAT-USA http://www.statusa.gov http://www.statusa.gov http://www.statusa.gov

4. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 14 - 4 Ch. 14: Location and Layout Choosing the Region: Sources of Information Demographics USA Demographics USA Lifestyle Market Analyst Lifestyle Market Analyst Survey of Buying Power Survey of Buying Power Editor and Publisher Market Guide Editor and Publisher Market Guide The American Marketplace: Demographics and Spending Patterns The American Marketplace: Demographics and Spending Patterns

5. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 14 - 5 Ch. 14: Location and Layout Choosing the Region: Sources of Information Commercial Atlas and Marketing Guide Commercial Atlas and Marketing Guide Zip Code Atlas Zip Code Atlas Geographic Information Systems (GIS) Geographic Information Systems (GIS) U.S. Census Department’s TIGER U.S. Census Department’s TIGER (continued)

6. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 14 - 6 Ch. 14: Location and Layout Geographic Information Systems (GIS) Computerized programs combining map-drawing with database management capability. Computerized programs combining map-drawing with database management capability. Search through virtually any database and then plot the results on a map. Search through virtually any database and then plot the results on a map. Visual display reveals otherwise hidden trends. Visual display reveals otherwise hidden trends.

7. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 14 - 7 Ch. 14: Location and Layout Choosing the State Proximity to markets Proximity to markets Proximity to needed raw materials Proximity to needed raw materials Wage rates Wage rates Labor supply needs Labor supply needs Business climate Business climate Tax rates Tax rates Internet access Internet access Total operating costs Total operating costs

8. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch. 14: Location and Layout State Evaluation Matrix 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 14 - 8 TABLE 14.1

9. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 14 - 9 Ch. 14: Location and Layout Choosing the City Population trends Population trends Competition Competition Clustering Clustering Compatibility with community Compatibility with community Local laws and regulations Local laws and regulations

10. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 14 - 10 Ch. 14: Location and Layout Appropriate infrastructure Appropriate infrastructure Cost of utilities and public services Cost of utilities and public services Incentives Incentives Quality of life Quality of life (continued) Choosing the City

11. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 14 - 11 Ch. 14: Location and Layout Location Criteria for Retail and Service Trade area size – the region from which a business can expect to draw customers Trade area size – the region from which a business can expect to draw customers Retail compatibility Retail compatibility Degree of competition Degree of competition Index of retail saturation (IRS) Index of retail saturation (IRS)

12. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 14 - 12 Ch. 14: Location and Layout Index of Retail Saturation C x RE C x RE RF RFWhere: C = Number of customers in the trading area 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 IRS =

13. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 14 - 13 Ch. 14: Location and Layout Location Criteria for Retail and Service Trade area size – the region from which a business can expect to draw customers. Trade area size – the region from which a business can expect to draw customers. Retail compatibility. Retail compatibility. Degree of competition. Degree of competition. Index of retail saturation (IRS). Index of retail saturation (IRS). Reilly’s law of retail gravitation. Reilly’s law of retail gravitation. (continued)

14. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch. 14: Location and Layout Reilly’s Law of Retail Gravitation 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 14 - 14

15. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 14 - 15 Ch. 14: Location and Layout Location Criteria for Retail and Service Transportation network Transportation network Physical and psychological barriers Physical and psychological barriers Customer traffic Customer traffic Adequate parking Adequate parking Reputation Reputation Visibility Visibility (continued)

16. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 14 - 16 Ch. 14: Location and Layout Retail & Service Location Options Central Business Districts (CBDs) Central Business Districts (CBDs) Neighborhood locations Neighborhood locations Shopping centers and malls Shopping centers and malls

17. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 14 - 17 Ch. 14: Location and Layout Shopping Centers and Malls Neighborhood shopping centers Neighborhood shopping centers 3 to 12 Stores; anchor is supermarket or drugstore; serves up to 40,000 people. 3 to 12 Stores; anchor is supermarket or drugstore; serves up to 40,000 people. Community shopping centers Community shopping centers 12 to 50 stores; anchor is department or variety store; serves 40,000 to 150,000 people. 12 to 50 stores; anchor is department or variety store; serves 40,000 to 150,000 people. Power centers Power centers Combine drawing power of a mall with convenience of neighborhood shopping center; anchor stores typically occupy 80% of space. Combine drawing power of a mall with convenience of neighborhood shopping center; anchor stores typically occupy 80% of space.

18. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 14 - 18 Ch. 14: Location and Layout Shopping Centers and Malls Theme or festival centers Theme or festival centers Employ a unifying theme, often involving entertainment, to attract tourists. Employ a unifying theme, often involving entertainment, to attract tourists. Outlet centers Outlet centers Feature manufacturers’ and retailers’ outlet stores selling name-brand goods at discount prices; usually follows “open air” design. Feature manufacturers’ and retailers’ outlet stores selling name-brand goods at discount prices; usually follows “open air” design. Lifestyle centers Lifestyle centers Located near affluent residential neighborhoods; designed to look more like a central business district than a shopping center or mall. Located near affluent residential neighborhoods; designed to look more like a central business district than a shopping center or mall. (continued)

19. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 14 - 19 Ch. 14: Location and Layout Shopping Centers and Malls Regional shopping malls 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. 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 Super-regional shopping malls Similar to a regional mall but bigger; trading area is 25 miles or more in all directions. Similar to a regional mall but bigger; trading area is 25 miles or more in all directions. Examples Examples Mall of America (Bloomington, MN), the largest mall in the U.S. Mall of America (Bloomington, MN), the largest mall in the U.S. West Edmonton Mall (West Edmonton, Canada), the largest mall in North America. West Edmonton Mall (West Edmonton, Canada), the largest mall in North America.

20. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch. 14: Location and Layout FIGURE 14.1 Shopping Mall Patterns Source: International Council of Shopping Centers. 14 - 20

21. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 14 - 21 Ch. 14: Location and Layout Retail and Service Location Options Near competitors Near competitors Inside large retail store Inside large retail store Outlying areas Outlying areas Home-based businesses Home-based businesses (continued )

22. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 14 - 22 Ch. 14: Location and Layout Location Decisions for Manufacturers Foreign trade zones Foreign trade zones

23. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch. 14: Location and Layout FIGURE 14.2 How a Foreign Trade Zone (FTZ) Works 14 - 23

24. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 14 - 24 Ch. 14: Location and Layout Manufacturing Locations Foreign trade zones Foreign trade zones Empowerment zones Empowerment zones Business incubators Business incubators

25. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 14 - 25 Ch. 14: Location and Layout Business Incubators Organizations that combine low-cost, flexible rental space with a multitude of support services for their small business residents. 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. More than 1,100 in operation across the U.S. They work! They work! Companies that “graduate” from incubators have a success rate of 87%. Companies that “graduate” from incubators have a success rate of 87%. 84% of graduates stay in the local community, creating local job opportunities. 84% of graduates stay in the local community, creating local job opportunities.

26. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall Ch. 14: Location and Layout FIGURE 14.3 Business Incubator Tenants by Industry Source: National Business Incubation Association. 14 - 26

27. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 14 - 27 Ch. 14: Location and Layout Layout 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. Study: Employees believe that the quality and quantity of their work would increase by an average of 25% with better workplace design.

28. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 14 - 28 Ch. 14: Location and Layout Layout: External Factors The size must be adequate to accommodate business needs. 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 appearance must create the proper image or “personality” for the business in the customer’s eyes. The entrance must invite customers to come in. The entrance must invite customers to come in.

29. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 14 - 29 Ch. 14: Location and Layout Must comply with Americans with Disabilities Act (ADA). Must comply with Americans with Disabilities Act (ADA). Pay attention to the business sign, the most direct method of reaching potential customers. Pay attention to the business sign, the most direct method of reaching potential customers. (continued) Layout: External Factors

30. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 14 - 30 Ch. 14: Location and Layout A Business Sign Tells potential customers who you are and what you’re selling. Tells potential customers who you are and what you’re selling. Contrasting colors and simple typeface. Contrasting colors and simple typeface. Should be visible, simple, and clear. Should be visible, simple, and clear. Should be legible both day and night. Should be legible both day and night. Must be maintained properly. Must be maintained properly. Must comply with local sign ordinances. Must comply with local sign ordinances.

31. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 14 - 31 Ch. 14: Location and Layout Building Interiors Ergonomics is an integral part of any design. Ergonomics is an integral part of any design. Proper layout and design pays off in higher productivity, efficiency, or sales. 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. 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. Sound and scent should appeal to all customers and can boost sales. Environmental-friendly design for efficiency and appeal. Environmental-friendly design for efficiency and appeal.

32. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 14 - 32 Ch. 14: Location and Layout Layout Guidelines Know your customers’ buying habits and plan your layout accordingly. Know your customers’ buying habits and plan your layout accordingly. Display merchandise as attractively as your budget will allow. Display merchandise as attractively as your budget will allow. Display complementary items together. Display complementary items together. Recognize the value of floor space; never waste valuable selling space with non-selling functions. Recognize the value of floor space; never waste valuable selling space with non-selling functions.

33. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 14 - 33 Ch. 6: Franchising and the Entrepreneur FIGURE 14.4 Space Values for a Small Store Source: Retailing, 6e, 1997 Prentice Hall ©Dale M. Lewis

34. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 14 - 34 Ch. 14: Location and Layout Three Retail Layout Patterns Grid Rectangular with parallel aisles; formal; controls traffic flow; uses selling space efficiently. Rectangular with parallel aisles; formal; controls traffic flow; uses selling space efficiently. Supermarkets and self-service discount stores. Supermarkets and self-service discount stores. In addition to the text

35. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 14 - 35 Ch. 14: Location and Layout Free-Form Free-flowing; informal; creates “friendly” environment; flexible. Free-flowing; informal; creates “friendly” environment; flexible. Small specialty shops. Small specialty shops. Three Retail Layout Patterns In addition to the text

36. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 14 - 36 Ch. 14: Location and Layout Boutique Divides store into a series of individual shopping areas, each with its own theme; unique shopping environment. Divides store into a series of individual shopping areas, each with its own theme; unique shopping environment. Small department stores. Small department stores. Three Retail Layout Patterns In addition to the text

37. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 14 - 37 Ch. 14: Location and Layout Layout for Manufacturers Type of product Type of product Type of production process Type of production process Ergonomic considerations Ergonomic considerations Economic considerations Economic considerations Space availability within the facility Space availability within the facility

38. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 14 - 38 Ch. 14: Location and Layout Manufacturing Layouts Analyzing production layouts: Avoid the 7 forms of waste Analyzing production layouts: Avoid the 7 forms of waste Transportation Transportation Inventory Inventory Motion Motion Waiting Waiting Overproduction Overproduction Processing Processing Defects Defects

39. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 14 - 39 Ch. 14: Location and Layout Conclusion Location is an important decision for businesses in the areas of: Retail Retail Service Service Manufacturing Manufacturing The criteria for site selection, layout, design, and ADA considerations present challenges and opportunities for entrepreneurs.

40. Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 14 - 40 Ch. 14: Location and Layout All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America.