1. PPT 8-1 5 th Edition

2. PPT 8-2 McGraw-Hill/Irwin Levy/Weitz: Retailing Management, 5/e Copyright © 2004 by The McGraw-Hill Companies, Inc. All rights reserved. Site Location Chapter 8

3. PPT 8-3 Three Levels of Analysis

4. PPT 8-4 Trade Area Issues Which Trade Areas Are Most Attractive for Locating Retail Outlets? How Many Outlets to Locate in a Trade Area? –More Stores Increases Economies of Scale and Reduces Costs –More Stores also Results in More Cannibalization and Less Sales per Store

5. PPT 8-5 Factors Affecting Demand for a Region or Trade Area

6. PPT 8-6 Factors Affecting the Attractiveness of a Site How Attractive Is the Site to the Retailer’s Target Market? –Match Between Trade Area Demographics and Retailer’s Target Market –Likelihood of Customers Coming to Location Convenience Other Attractive Retailers At Location Principle of cumulative attraction - a cluster of similar and complementary retailing activities will have greater drawing power.

7. PPT 8-7 Convenience of Going to Site Accessibility Road pattern and condition Natural and artificial barriers Visibility Traffic flow Parking Congestion Ingress/egress

8. PPT 8-8 In High Traffic Areas Near Anchor Center of Shopping Area Near Stores Selling Complementary Merchandise Clustering Specialty Stores Appealing to Teenagers Better locations cost more Location Within a Center

9. PPT 8-9 Map of Dallas’ North Park Center

10. PPT 8-10 Estimating Demand for a New Location Definition of the Trade Area –Primary, Secondary, Tertiary Zones Approaches for Estimating Demand –Analog Approach –Regression Approach –Huff Gravity Model

11. PPT 8-11 Trade Area Primary zone - 60 to 65 percent of its customers Secondary zone - 20 percent of a store’s sales Tertiary zone - customers who occasionally shop at the store or shopping center

12. PPT 8-12 Factors Defining Trade Areas Accessibility Natural & Physical Barriers Type of Shopping Area Type of Store Competition Parasite Stores

13. PPT 8-13 Oblong Trade Area Caused by Major Highways and Natural Boundaries

14. PPT 8-14 Sources of Information Customer Spotting Census Data Geodemographic Information Systems –ACORN Information on Competition –Yellow Pages

15. PPT 8-15 Customer Spotting Purpose: to spot, or locate, the residences of customers for a store or shopping center. How to obtain data: credit card or checks customer loyalty programs manually as part of the checkout process automobile license plates

16. PPT 8-16 Selecting a Target Market Home Page Is the introductory or first material viewers see when they access a retailer’s Internet site. It is the equivalent to a retailer’s store-front in the physical world. Virtual Store Is the collection of all the pages of information on the retailer’s Internet site. Ease of Access Refers to the consumer’s ability to easily and quickly find a retailer’s Web site in cyberspace.

17. PPT 8-17 Target Market The Limited has a well- defined target market: the moderate-income, career- oriented woman who is fashion conscious. –How does this influence location decisions?

18. PPT 8-18 Identifying a Target Market Market segment should be measurable. Market should be accessible. Market should be substantial enough to be profitable.

19. PPT 8-19 Location of Store-Based Retailers Anchor Stores are the stores in a shopping center that are the most the most dominant and are expected to draw customers to the shopping center. Free-Standing Retailer generally locates along major traffic arteries and does not have any adjacent retailers to share traffic with.

20. PPT 8-20 Retail Location Theories Retail Gravity Theory Suggests that there are underlying consistencies in shopping behavior that yield to mathematical analysis and prediction based on the notion or concept of gravity.

21. PPT 8-21 Typical Size & Trading Area of Shopping Centers LO 2 Type of Shopping Center Neighborhood Gross Leasable Square Feet 30,000 to 150,000 Primary Trade Area 3 Miles

22. PPT 8-22 Typical Size & Trading Area of Shopping Centers LO 2 Type of Shopping Center Community Gross Leasable Square Feet 100,000 to 350,000 Primary Trade Area 3-6 Miles

23. PPT 8-23 Typical Size & Trading Area of Shopping Centers LO 2 Type of Shopping Center Regional Gross Leasable Square Feet 400,000 to 800,000 Primary Trade Area 5-15 Miles

24. PPT 8-24 Typical Size & Trading Area of Shopping Centers LO 2 Type of Shopping Center Super-Regional Gross Leasable Square Feet 800,000 Primary Trade Area 5-25 Miles

25. PPT 8-25 ID and Geographic Segments www.claritas.com –http://cluster1.claritas.com/claritas/Default.jsphttp://cluster1.claritas.com/claritas/Default.jsp –Free stuff Similar people share similar traits –Tend to live together

26. PPT 8-26 Geographic Information Systems Geographic Information System (GIS) - a computerized system that combines physical geography with cultural geography. Thematic maps are generated Color coded Culture – a set of shared values and behaviors held in common by an identifiable group of people. Culture can create barriers.

27. PPT 8-27 GIS Components Data Inputs Physical Geography Latitude/Longitude Land/Water Terrain Rainfall/Snow Temperature Cultural Geography Demographics Manmade Structures Consumption Patterns Work Patterns Leisure Behavior Deviant Behavior GIS (Data Aggregation and Analysis via Computer) Output Maps and Other Displays of Information

28. PPT 8-28 Uses of GIS Market selection. Site analysis. Trade area definition. New store cannibalization. Advertising management. Merchandise management. Evaluation of store managers.

29. PPT 8-29 Process for Selecting a Retail Location LO 3: Exhibit 7.5 Identify the most attractive markets in which to operate Select the best site(s) available Identify the most attractive sites that are available within each market

30. PPT 8-30 Customer Spotting Map for a Supermarket LO 5: Exhibit 7.8 City Limits Store 4 miles from store 3 miles from store 1 mile from store 2 miles from store

31. PPT 8-31 Store Density and Site Availability Map LO 5: Exhibit 7.11

32. PPT 8-32 Checklist for Site Evaluations Local Demographics Population and/or household base Population growth potential Lifestyles of consumers Income potential Age makeup Population of nearby special markets, that is, daytime workers, students, and tourists, if applicable Occupation mix

33. PPT 8-33 Checklist for Site Evaluations Traffic Flow and Accessibility Number and type of vehicles passing location Access of vehicles to location Number and type of pedestrians passing location Availability of mass transit, if applicable Accessibility of major highway artery Quality of access streets Level of street congestion Presence of physical barriers that affect trade area shape

34. PPT 8-34 Checklist for Site Evaluations Cost Factors Terms of lease/rent agreement Basic rent payments Length of lease Local taxes Operations and maintenance cost Restrictive clauses in lease Membership in local merchants association required Voluntary regulations by local merchants

35. PPT 8-35 Nature of Site Store CompatibilityExists when two similar retail businesses locate next to or nearby each other and they realize a sales volume greater than what they would have achieved if they were located apart from each other.

36. PPT 8-36 Debate Points: The most important factor in determining where a retailer is located is the place of residence of consumers in the area. 4 Super Walmarts operate in Hatco, TX, with a trade area of 125,000 people. 1 Super Target store is also located there. Should a 5 th Super Walmart be added?