Lecture Retailing management (6/e): Chapter 7 - Levy Weitz

Lecture Retailing management (6/e) - Chapter 7: Retail locations. This chapter presents the following content: Elements in retail mix, why is store location important for a retailer? Types of retail locations, unplanned retail locations, central business district,...

Retailing Management, 6/e Copyright © 2007 by The McGraw­Hill Companies, Inc. All rights reserved.

Chapter 7 Retail Locations

Retail Locations

Chapter 7 Site Locations Chapter 8

Human Resource Management Chapter 9

Retail Market and

Financial Strategy

Chapter 5, 6

Elements in Retail Mix

Customer Service

Merchandise Assortment

Pricing Communication Mix

Store Display

And Design

Location Strategy

Things in Retailing?

Location! Location! Location!

Why is Store Location Important for a Retailer?

• Location is typically prime

consideration in customer’s store

choice.

• Location decisions have strategic

importance because they can

help to develop sustainable

competitive advantage.

• Location decisions are risky:

invest or lease?

F Schussler/PhotoLink/Getty Images

• Free Standing Sites

• City or Town Locations

Types of Locations

Unplanned Retail Locations

Freestanding Sites – location for individual

store unconnected to other retailer

Advantages:

Convenience

High traffic and visibility

Modest occupancy cost

Separation from competition

Few restrictions

The McGraw-Hill Companies, Inc./Andrew Resek, photographer

JCPenney, Sears, Walgreens are shifting to stand alone locations

Unplanned Retail Locations

Merchandise Kiosks – small temporary

selling stations located in walkways of

enclosed malls, airports, train stations or

office building lobbies.

Kent Knudson/PhotoLink/Getty Images

City or Town Locations

Gentrification is bringing population back to the cities

The McGraw-Hill Companies, Inc./Andrew Resek, photographer

•Low occupancy costs

•High pedestrian traffic

Central Business District

• Draws people into areas during business hours

• Hub for public transportation

Main Streets vs CBDs

• Occupancy costs lower than CBDs

• They don’t attract as many people

• There are not as many stores

• Smaller selections offered

• Not as much entertainment

• Some planners restrict store operations

The Most Expensive Shopping

Streets in the World

Street Location Cost / sq foot / year

New York City

New York City

London New York City

Unmet demand tops

25% in many inner city

markets

Inner city customer wants branded merchandise

•Special events for customers

The McGraw-Hill Companies, Inc./Andrew Resek, photographer

• Neighborhood and Community Centers

Neighborhood and Community Centers

Attached row of stores

Power CentersBig box stores

Many located near enclosed malls

Large trade areas

Modest vehicular and pedestrian traffic

The Largest North American Shopping Malls

Mall of America

• Located near Minneapolis, MN

• Largest mall in the US

• Enough people to qualify as the

third largest city in Minnesota

• Has more than 42 million

visitors a year

• More people visit than Disney

World, the Grand canyon and

Graceland combined

Digital Vision/Getty Images

Advantages and Disadvantages of Shopping Malls

Advantages:

Many different types of stores

Many different assortments available

Attracts many shoppers

Main Street for today’s shoppers

Never worry about the weather

Comfortable surrounding to shop

Uniform hours of operation

Disadvantages:

Occupancy costs are high Tenants may not like mall management control of operations Competition can be intense

Lifestyle Centers

Courtesy of General Growth Properties

Photo provided by ICSC and used with permission of Aspen Grove Lifestyle Center

Panera Bread Bed Bath & Beyond

Restoration Hardware Williams-Sonoma

Pottery Barn Barnes & Noble/Borders

Dick’s Sporting Goods

Johnny Rockets

Lifestyle Centers

Usually located in affluent residential neighborhoods

Includes 50K sq ft of upscale chain specialty stores

Fashion Specialty Centers

Upscale apparel shops

Outlet Centers

These shopping centers contain mostly manufacturers and retail outlet stores

Courtesy of Beall’s, Inc.

Traffic

There are relative advantages and disadvantages to consider with each location.

Relative Advantages

of Major Retail Locations

Location City Strip Shopping Free

Issues Center Mall Standing

of Major Retail Locations

Location CBD Strip Shopping Free

Issues Center Mall Standing

Relative Advantages

of Major Retail Locations

Location City Strip Shopping Free

Issues Center Mall Standing

Mixed Use

Developments Airports

Resorts Hospitals Store within a Store

Royalty-Free/CORBIS

Alternative Locations

Mixed Use Developments MXDs

Skip Nall/Getty Images

Hotels

Airports: Why wait with nothing to do?

Rents are 20% higher than malls

Sales/sqft are 3-4 times higher than malls

Best airports are ones with many connecting flights

Alternative Locations

Resorts

Captive audience Well-to-do customer Customers have time to shop

Royalty-Free/CORBIS

Patients cannot leave

Gifts are available

Royalty-Free/CORBIS

Matching Location to Retail Strategy

• Department Stores  Regional Mall

• Specialty Apparel Central Business District,

• Category Specialists  Power Centers,

Free Standing

• Grocery Stores  Strip Shopping Centers

• Drug Stores  Stand Alone

Convenience Shopping

Minimize the customer’s effort

to get the product or service by

locating store close to where

customers are located

Shopping Situations

Comparison Shopping

Customers have a

good idea of what

type of product they

want, but don’t

have a strong

preference for

brand, model or

retailer

Ryan McVay/Getty Images

Typical for furniture, appliances, apparel, consumer electronics, hand tools and

cameras.

Category Specialists

Consumers can see almost all brands and models in one store

The McGraw-Hill Companies, Inc./Andrew Resek, photographer

Convenient location matters less

The McGraw-Hill Companies, Inc./Andrew Resek, photographer

“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.

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