Retail Location

Retail Location - Meaning of Retail Location, Types of Retail Location, Freestanding, City or Town business district, Shopping Center, Nontraditional location such as in an airport or within another store, Importance of Suitable Location, Steps involved in choosing a Retail Location

1. Dr. Parveen Kaur Nagpal
Retail Location Planning

2. Dr. Parveen Kaur Nagpal
Retail Location
•Locationisoneofthemostinfluentialconsiderationsinacustomer’sstore-
choicedecision.
•Locationdecisionshavestrategicimportancebecausetheycanbeusedto
developasustainablecompetitiveadvantage.Ifaretailerhasthebest
locationi.e.thelocationthatismostattractivetoitscustomers,competitors
cannoteasilycopythisadvantage.
•Locationdecisionsarerisky.Whenretailersselectalocation,theyeither
mustmakeasubstantialinvestmenttobuyanddeveloptherealestateor
mustcommittoalong-termleasewithdevelopers.Retailersoftencommit
toleasesfor5to15years.

3. Dr. Parveen Kaur Nagpal
Importance of Suitable Retail Location
•CustomerConvenience–Example:grocerystore,medicalstore,cargarage
etc.
•SustainableCompetitiveAdvantage-Retaillocationisauniquefactorwhich
thecompetitorscannotimitate.
•HugeInvestment-Locationdecisionsarerisky.Generally,whenretailers
selectalocation,theyeithermakeasubstantialinvestmenttobuyand
developtherealestateorcommittoalong-termlease(5to10years)with
thedevelopers.
•CostFactor-Locationinvolveslargecapitalinvestment,affects
transportationcostsaswellashumanresourcescostlikesalaries.
•RevenueFactor-Locationaffectstheamountofcustomertrafficandalso
thevolumeofbusinessoftheretailer.

4. Dr. Parveen Kaur Nagpal
Types of Retail Location
•Thereareseveraltypesoflocationchoicesavailableforretailstores,each
typewithitsownstrengthsandweaknesses.
•Thebasictypesoflocationare:
I.Freestanding(unplanned)
II.CityorTownbusinessdistrict(unplanned)
III.ShoppingCenteror
IV.Nontraditionallocationsuchasinanairportorwithinanotherstore.
•Choosingaparticularlocationtyperequiresevaluatingaseriesoftrade-offs,
suchasthesizeoftradearea,occupancycostoflocation,pedestrianand
vehiclecustomertrafficgenerated,restrictionsplacedonstoreoperations
bythepropertymanagers,customerconvenienceetc.

5. Dr. Parveen Kaur Nagpal
Types of Retail Location
I.IsolatedStore/FreeStandingLocation(Unplanned)
•Retaillocationsforanindividual,isolatedstoreunconnectedtoother
retailers;however,theymightbenearotherfreestandingretailersora
shoppingcenter.
•Theadvantagesoffreestandinglocationsare:
✓Convenienceforcustomers(easyaccessandparking)
✓Highvehiculartrafficandvisibilitytoattractcustomersdrivingby
✓Modestoccupancycosts
✓Fewerrestrictionsonnumberofhours,ormerchandise,asareimposedin
shoppingcenters.
✓Ampleparking

6. Dr. Parveen Kaur Nagpal
Types of Retail Location
•Theselocationsarepopularforgasstations,hotelsonhighways,fast-food
restaurants,suchasMcDonald’setc.
•However,freestandinglocationshavealimitedtradearea.Thereareno
othernearbyretailerstoattractcustomersinterestedinshoppingat
multipleoutletsononetrip.
•Freestandinglocationsmayhavehigheroccupancycostsbecausetheydo
nothaveotherretailerstosharethecostofoutsidelighting,parkinglot
maintenance,ortrashcollection.
•Freestandinglocationsmayhavelittlepedestriantraffic,limitingthe
numberofcustomerswhomightdropinbecausetheyarewalkingby.
•Outparcelsenableretailerstohaveadrive-throughwindow,dedicatedparking,
andclearvisibilityfromthestreet.(Outparcelsarestoresthatarenotconnected
tootherstoresinashoppingcenterbutarelocatedonthepremises,maybeina
parkingarea.)

7. Dr. Parveen Kaur Nagpal
Types of Retail Location
II.CityorTownLocations(Unplanned)
•Urbanlocationshaveloweroccupancycoststhanenclosedmallsandoften
havehighpedestriantraffic.
•However,vehiculartrafficislimitedduetocongestioninurbanareas,and
parkingproblemsreduceconsumerconvenience.
•Unlikefreestandinglocations,storesignagecanberestrictedinthese
locations.
•Youngprofessionalsandretiredempty-nestersaremovingintotheseareasto
enjoytheconvenienceofshopping,restaurants,andentertainmentneartheir
residence.
•ManyurbanareasaregoingthroughaprocessofGentrification-therenewal
andrebuildingofoffices,housing,andretailersindeterioratingareas,coupled
withaninfluxofmoreaffluentpeoplethatdisplacestheformer,poorer
residents.

8. Dr. Parveen Kaur Nagpal
Types of Retail Location
a.CentralBusinessDistrict(CBD)
•Maincenterofcommerceandtradeinthecity.
•Ahubforpublictransportation,highlevelofpedestriantraffic
•Goodaccessibilityintermsoftransportfromallpartsofthecity.
•Largenumberofresidentslivinginthearea.
•Limitedparkingandlongerdrivingtimescandiscouragesuburbanshoppers
frompatronizingstoresinaCBD.
•Shopliftingisaconcern,requiringincreasedsecuritycosts.
•Lackofplanning(Oneblockmaycontainupscaleboutiques,nextmayhave
low-incomehousing.Consumersmaynothaveaccesstoenoughretailers
thattheycanvisitinoneshoppingtrip)

9. Dr. Parveen Kaur Nagpal
Types of Retail Location
b.MainStreet(calledHighStreetsintheUnitedKingdom)
•Traditionalshoppingareainsmallertownswithinalargercity
•MainStreetssharemostofthecharacteristicsofaCBD,buttheiroccupancy
costsaregenerallylower.
•MainStreetlocationsdonotdrawasmanypeopleasCBDbecausefewer
peopleworkintheareaandthefewerstoresgenerallymeanasmaller
overallselection.
•MainStreetsdonotoffertherangeofentertainmentandrecreational
activitiesavailableinCBDs.

10. Dr. Parveen Kaur Nagpal
Types of Retail Location
c.InnerCity
•Theterm‘innercity’intheUnitedStatesreferstoahighdensityurbanarea
thathashigherunemploymentandlowerincomethanthesurrounding
metropolitanarea.
•Generallyretailersavoidopeningstoresherebecauseitisriskierand
achieveslowerreturnsthanotherareas.Asaresult,inner-cityconsumers
havetotraveltothesuburbstoshop,evenforfooditems.
•Retailingcanplayanimportantroleininner-cityredevelopmentactivitiesby
providingneededservicesandjobsforinner-cityresidents,aswellas
propertytaxestosupporttheredevelopment.
•Becauseofthepotentialofthisuntappedmarketandincentivesfromlocal
governments,developersareincreasingtheirfocusonopportunitiesinthe
innercity.

11. Dr. Parveen Kaur Nagpal
Types of Retail Location
III.ShoppingCenters(Planned)
•Agroupofretailandothercommercialestablishmentsthatareplanned,
developed,owned,andmanagedasasingleproperty.
•Bycombiningmanystoresatonelocation,thedevelopmentattractsmore
consumerstotheshoppingcenterthanwouldbethecaseifthestoreswereat
separatelocations.
•Thedeveloperandshoppingcentermanagementcarefullyselectasetof
retailersthatarecomplementarytoprovideconsumerswithacomprehensive
shoppingexperience,includingawell-thought-outassortmentofretailers.
•Theshoppingcentermanagementmaintainsthecommonfacilitiessuchasthe
parkingarea-anarrangementreferredtoasCommonAreaMaintenance
(CAM)-andisresponsibleforprovidingsecurity,parkinglotlighting,outdoor
signageforthecenter,advertisingandspecialeventstoattractcustomersetc.

12. Dr. Parveen Kaur Nagpal
Types of Retail Location
•RetailersinthecenterpayaportionoftheCAMcostsforthecenter
accordingtothesizeoftheirstore’sspace.
•Shoppingcentermanagementgenerallyplacerestrictionsontheoperating
hours,signage,andeventhetypeofmerchandisesoldinthestores.
•Mostshoppingcentershaveatleastoneortwomajorretailers,referredto
asanchors,thatarespeciallycalledbythecenter’sdeveloperbecausethey
attractasignificantnumberofconsumersandmakethecentermore
appealingforotherretailers.
•Togettheseanchorretailerstolocateinacenter,developersgivethem
specialdeals,suchasreducedleaseamount.

13. Dr. Parveen Kaur Nagpal
Types of Retail Location
a.NeighborhoodandCommunityShoppingCenters
•Alsocalledstripshoppingcenters,areattachedrowsofnon-enclosed
stores,withon-siteparkingusuallylocatedinfrontofthestores.
•Smallercenters(neighborhoodcenters)areanchoredbyasupermarketora
drugstoreanddesignedforday-to-dayconvenienceshopping.

14. Dr. Parveen Kaur Nagpal
Types of Retail Location
•Thelargercenters(communitycenters)areanchoredbyatleastonebig-box
storesuchasadiscountdepartmentstoreoranoff-priceretailer.
•Themainadvantagesarethattheyofferthecustomers,convenient
locationsandeasyparkingandhaverelativelylowoccupancycosts.
•Disadvantageisthatsmallercentershavealimitedtradeareaduetotheir
size,andtheylackentertainmentandrestaurants.
•Thereisnoprotectionfromtheweather.Asaresult,neighborhoodand
communitycentersdonotattractasmanycustomersaslarger,enclosed
mallsdo.

15. Dr. Parveen Kaur Nagpal
Types of Retail Location
b.PowerCenters
•‘RetailPark’(U.K.,Ireland)or‘PowerCenter’(NorthAmerica)aretheterms
usedamongretailerstodescribeashoppingcomplex,generally250,000to
600,000sq.ftinarea,thatprimarilyconsistsofcollectionsofbig-boxretail
stores,suchasfull-linediscountstores,off-pricestores,warehouseclubs,
andspecialtystore.
•Althoughthesecentersare“open-air,”unliketraditionalstripcenters,power
centersoftenincludeseveralunconnectedanchorsandonlyaminimum
numberofsmallspecialtystoretenants.
•Powercentersmaybelargerthansomeregionalmallsandhavetradeareas
aslargeasregionalmalls.
•Powercentersofferlowoccupancycostsandmodestlevelsofconsumer
convenienceandvehicularandpedestriantraffic.

16. Dr. Parveen Kaur Nagpal
Types of Retail Location
Verticalpowercenterwithbigbox RetailParkinFrance
storesonmultiplefloorsinToronto

17. Dr. Parveen Kaur Nagpal
Types of Retail Location
c.ShoppingMalls
•Enclosed,climate-controlled,lightedshoppingcenterswithretailstoreson
oneorbothsidesofanenclosedwalkway.
•Parkingisusuallyprovidedaroundtheperimeterofthemall.
•Shoppingmallsareclassifiedaseitherregionalmalls(lessthan800,000
squarefeet)orsuperregionalmalls(morethan800,000squarefeet).
•Super-regionalcentersaresimilartoregionalcenters,butbecauseoftheir
largersize,theyhavemoreanchors,specialtystores,andrecreational
opportunitiesanddrawfromalargergeographicarea,andareconsidered
touristattractions.

18. Dr. Parveen Kaur Nagpal
Types of Retail Location
AdvantagesofShoppingMalls
•Attractmanyshoppersandhavealargetradeareabecauseoflargenumber
ofstoresandtheopportunitytocombineshoppingwithentertainment.
•Provideaninexpensiveformofentertainment.
•Peoplecansocialize
•Sincetheyareenclosed,customerscanconvenientlyshopduringall
seasons.
•Mallmanagementensuresalevelofconsistencythatbenefitsallthe
tenants.Forinstance,mostmajormallsenforceuniformhoursofoperation

19. Dr. Parveen Kaur Nagpal
Types of Retail Location
DisadvantagesofShoppingMalls
•Shoppingmalloccupancycostsarehigherthanthoseofstripcenters,
freestandingsites,andmostcentralbusinessdistricts.
•Someretailersmaynotlikemallmanagement’scontroloftheiroperations,
suchasstrictrulesgoverninghoursofoperations,windowdisplaysand
signage.
•Competitionwithinshoppingcenterscanbeintense.Severalspecialtyand
departmentstoresmightsellsimilarmerchandiseandbelocatedinclose
proximity.
•Freestandinglocations,stripcenters,lifestylecenters,andpowercenters
haveconvenientparkingfacilities.

20. Dr. Parveen Kaur Nagpal
Types of Retail Location
d.LifestyleCenters
•Shoppingcentersthathaveanopen-airconfigurationofspecialtystores,
entertainment,andrestaurants,withdesignambienceandamenitiessuch
asfountainsandstreetfurniture.
•Theyresemblethemainstreetsinsmalltowns,wherepeoplestrollfrom
storetostore,havelunch,andsitforawhileonabenchtalkingtofriends.
Thus,theycatertothe“lifestyles”ofconsumersintheirtradeareas.
•Lifestylecentersareparticularlyattractivetospecialtyretailersandcanbe
anchoredbydepartmentstores.
•Peopleareattractedtolifestylecentersnotonlybecauseoftheirshopsand
restaurantsbutalsobecauseoftheiroutdoorattractionssuchasapop-up
fountain,icecreamcarts,balloonartists,magicians,facepaintersetc.

21. Dr. Parveen Kaur Nagpal
Types of Retail Location
•Duetotheeaseofparking,lifestylecentersareveryconvenientfor
shoppers,andtheoccupancycosts,likethoseofallopen-airdevelopments,
areconsiderablylowerthanthoseforenclosedmalls.
•Theyhavelessretailspacethanenclosedmallsandthusmayattractfewer
customersthanenclosedmalls.
•Manylifestylecentersarelocatednearhigher-incomeareas,sothehigher
purchasespervisitcompensateforthefewernumberofshoppers.

22. Dr. Parveen Kaur Nagpal
Types of Retail Location
e.Mixed-usedevelopments(MXDs)
•Mixed-usezoningallowsforhorizontalandverticalcombinationofland
usesinagivenarea,combiningtwoormoreuseswithinabuilding,siteor
blockthatcanbeorganizedvertically,horizontally,oracombinationofthe
two.
•Shopsorothercommercialpremisesatgroundfloorwithapartmentsor
officesaboveareacommonexampleofaverticalmixedusedevelopment.
•MXDscombineseveraldifferentusesintoonecomplexincludingretail,
office,residential,hotel,recreation,orotherfunctions.
•Theyarepedestrian-orientedandthereforepeoplecanlive,workandplay.

23. Dr. Parveen Kaur Nagpal
Types of Retail Location
•MXDsprovideapleasant,pedestrianenvironmentandareanefficientuse
ofspace.
•MXDsmakeuseofspaceproductively.Forinstance,landcoststhesame
whetheradeveloperbuildsashoppingmallbyitselforanofficetoweron
topofthemallorparkingstructure.

24. Dr. Parveen Kaur Nagpal
Types of Retail Location
f.OutletCenters
•Shoppingcentersthatcontainmostlymanufacturers’andretailers’outlet
stores.
•Outletcenterrentratesarelowerthanthoseatshoppingmalls.
•Someoutletcentershaveastrongentertainmentcomponent,including
movietheatersandrestaurantstokeepcustomersonthepremisesfora
longerperiodoftime.
•Tourismrepresents50percentofthetrafficgeneratedformanyoutlet
centers.Thus,manyarelocatedwithconvenientinterstateaccessandclose
topopulartouristattractions.

25. Dr. Parveen Kaur Nagpal
Types of Retail Location
g.Theme/FestivalCenters
•Shoppingcentersthatemployaunifyingthemecarriedbytheindividual
shopsintheirarchitecturaldesignand,toanextent,intheirmerchandise.
•Shoppingcentersareveryappealingtothetourists.
•Thesecentersaregenerallylocatedinurbanareasorinaplaceofhistorical
interest,ormaysimplyreplicateahistoricalplace,orcreateaunique
shoppingenvironment.
•Thecentersdonothavelargespecialtystoresordepartmentstores.
•Theme/festivalcenterscanbeanchoredbyrestaurantsandentertainment
facilities.

26. Dr. Parveen Kaur Nagpal
Types of Retail Location
h.Larger,MultiformatDevelopments-Omnicenters
•Newshoppingcenterdevelopmentsarecombiningenclosedmalls,lifestyle
centers,andpowercenters.Suchplacesarecommonlyreferredtoas
‘omnicenters’
•Theyrepresentaresponsetoseveraltrendsinretailingsuchas:
✓includingthedesireoftenantstolowercommonareamaintenancecharges
✓spreadingthecostsamongmoretenants
✓functioninsidelargerdevelopmentsthatgeneratemorepedestriantraffic
andlongershoppingtrips.
✓Facilitatethegrowingtendencyofconsumerstocross-shop.

27. Dr. Parveen Kaur Nagpal
Types of Retail Location
IV.OtherNon-TraditionalLocation
a.Pop-upStores
•Storesintemporarylocationsthatfocusonnewproductsoralimitedgroup
ofproductstocreatealongterm,lastingimpressionwithpotential
customers.
•Retailersandmanufacturersareusingthesespacestocreatebuzzortest
newconcepts,connectwithcustomersandincreasesales.
•Popupstoresmaystockmerchandiserelatedtofashiontotechgadgetsand
fooditems.
•Suchstoresareevenpopping-uponcollegecampuses.Forinstance,Kiehl’s
pop-upstoreattheUniversityofColorado,isthefashionbrands’latest
attemptatdevelopingbrandloyaltyamongcollegestudents.

28. Dr. Parveen Kaur Nagpal
Types of Retail Location
b.StoreswithinaStore(Shop-in-Shop)
•Heretheretaileractsasahost,allowingoneormoreotherbrandsto
operateindependentlywithinthestore.
•Retailers,particularlydepartmentstores,havetraditionallyleasedspaceto
otherretailers,suchassellersoffinejewelry,orhigh-enddesignerbrands.
•Grocerystoreshavestore-within-a-storeconceptwithserviceproviderslike
coffeebars,bankATMsetc.
•Store-within-a-storeretailgivesbrandsthepowertomanagetheirown
inventory,determinethepricesoftheirproducts,andindependently
developtheirownmarketingcampaigns.
•Shoppersenjoythestore-within-a-storemodelbecauseitmaximizes
convenience,encouragesvarietyandenhancestheirshoppingexperience.

29. Dr. Parveen Kaur Nagpal
Types of Retail Location
•Thismodelalsohelpsbrandssavemoneybyremovingmuchofthe
overheaditcoststorunanindependentstore.Ifthehostretailergenerates
alotoffoottraffic,brandswithintheirstorealsoendupsellingmore.
•Theversatilityofthismodelgivesretailstoresandstorekeepersthe
opportunitytoservicedifferentmarketsegments,createamore
comfortableshoppingexperience,andintroducenewandexclusive
products.

30. Dr. Parveen Kaur Nagpal
Types of Retail Location
c.MerchandiseKiosks
•Smallsellingspaces,locatedinthewalkwaysofenclosedmalls,airports,
collegecampuses,orofficebuildinglobbies.
•Theyare'mini-stores'andarealsoknownasMallKiosk,IslandRetailUnit,
Shop-in-shop,VendingKioskandsoon.
•Somemerchandisekiosksarestaffedandresembleaminiaturestoreorcart
thatcouldbeeasilymoved,othersare21stcenturyversionsofvending
machines,suchastheApplekiosksthatselliPodsandotherhigh-volume
Appleproducts.
•Formalloperators,kiosksareanopportunitytogeneraterentalincomein
otherwisevacantspaceandofferabroadassortmentofmerchandisefor
visitors.

31. Dr. Parveen Kaur Nagpal
Types of Retail Location
•Mallkioskscanbechangedquicklytomatchseasonaldemand.
•Whenplanningthelocationofkiosksinamall,operatorsaresensitiveto
theirregularmalltenants’needs.Theyarecarefultoavoidkiosksthatblock
anystorefronts,createanincompatibleimage,oractuallycompetedirectly
withpermanenttenantsbysellingsimilarmerchandise.

32. Dr. Parveen Kaur Nagpal
Types of Retail Location
d.AirportLocation
•Ahigh-pedestrianareathathasbecomepopularwithnationalretailchains
isairports.
•Passengersarriveearlierfortheirflightsthantheydidinthepast,leaving
themmoretimetoshop.
•Salespersquarefootatairportmaybehigherthanatregularmallstores.
•However,rentsarehigher,costscanbehigher-hoursarelonger,and
becausethelocationisofteninconvenientforworkers,theretailersmay
havetopayhigherwagestoemployees.
•Thebestairportlocationstendtobeoneswheretherearemanyconnecting
flights(AtlantaandFrankfurt)andinternationalflights(NewYork’sKennedy
andLondon’sHeathrow),becausecustomershavedowntimetobrowse
throughstores.

33. Dr. Parveen Kaur Nagpal
Steps in Choosing a Retail Location
Evaluate
Alternate
Geographic
Trading
Area
Determine
Type of
Location
Select
General
Location
Analyze
Alternate
Sites
Analysis of
Competitive
Situation
Other Relevant
Trading Area
Considerations
Financial
Planning
for New
Ventures

34. Dr. Parveen Kaur Nagpal
Trading Area
•Atradeareaistheadjacentgeographicareathataccountsforthemajority
ofastore’ssalesandcustomers.
•Knowingtheboundariesoftradingareahelpsaretailertoestimatethe
potentialcustomerswhomaypatronizetheretailstore.
•Accordinglytheretailercangatherinformationaboutthedemographicsand
lifestyleofpeopleandestimatesales.
•Understandingthetradeareaalsohelpsretailersformulatesuitable
promotionalandcommunicationstrategies.
•Thusdefiningthetradeareaisoneofthemostimportantstepsinmarket
analysis.

35. Dr. Parveen Kaur Nagpal
Trading Area
Trade areas can be divided into three zones:
Retail
Store
Primary
Trade Area
Secondary
Trade Area
Tertiary
Trade Area

36. Dr. Parveen Kaur Nagpal
Trading Area
1.PrimaryTradingArea
Itisthegeographicareafromwhichtheshoppingcenterorstoresitederives
50to70percentofitscustomers.
2.SecondaryTradingArea
Itisthegeographicareaofsecondaryimportanceintermsofcustomersales,
generatingabout20to30percentofthesite’scustomers.
3.Tertiary/FringeTradingArea
Itincludestheremainingcustomerswhoshopatthesitebutcomefrom
widelydispersedareas.
Thesecustomersmighttravelanunusuallylongdistancebecausetheydonot
havecomparableretailfacilitiesclosertohome,ortheymaydrivenearthe
storeorcenterontheirwaytoorfromwork.

37. Dr. Parveen Kaur Nagpal
References
1.MichaelLevy&BartonAWeitz,“RetailingManagement”,8
th
Edition,Tata
McGrawHill.
2.SwapnaPradhan,“RetailingManagement–TextandCases”,5
th
Edition,
TataMcGrawHill.

38. Dr. Parveen Kaur Nagpal
THANK YOU
www.linkedin.com/in/dr-parveen-kaur-nagpal-82965b15