Retail

Retail Site
Site Selection
Selection
Figure 2.1 Kroger Providing Extra Value for Customers
Figure 2.3 Places to Bring the Care Back to
Health Care
Retail Site Selection

 Openings

 Expansions

 Closings

What are the effects of proposed changes in retail sites

on the revenues of new and existing stores?
Retail Site Selection
Why Does It Matter?
 Access to consumers
 Number
 Characteristics
 Growth
 Locations of other stores
 Cannibalization – own stores
 Agglomeration
Competition
Complementarily

According to Wal-Mart’s Real Estate group, the

difference between good and bad locations exceed $25
million in gross profit
Retail Site Selection
How Is It Done?

Select:

 Geographic market

 Site within the geographic market

 If an opening or expansion, the format/size of

the store to be opened
Retail Site Selection
Agglomeration
 Agglomeration captures the countervailing effects of
complementarity and competition among retailers
 Intra-type - Stores of the same type locating near
one another
 Facilitates consumer search
 Examples: “motor miles” and “restaurant rows”
 Inter-type - Stores of different types locating near
one another
 Facilitates multi-purpose shopping, virtual one-stop-
shopping, and offers a wider variety of goods to
choose from
 Examples: shopping centers and shopping malls

Recognizes that consumers may use multiple

stores to meet their needs - shopping strategically!!
Retail Site Selection
Agglomeration

 “Trip chaining” – Make

unrelated purchases on the
same trip
 Price search – Search until
you find an attractive price
 “Cherry picking” – Visit multiple
stores for their bargain prices
Retail Site Selection
Where Do Consumers Work?
 Another consideration in retail site selection is where
consumers work
 Do shopping trips begin from home?
 From work?
Retail Agglomeration
Trip Chains
 Trip chains reflect the routing problem faced by shoppers
 Consumers minimize shopping costs by reducing
travel, subject to fulfilling diverse product/service needs
 Price search
 Our research incorporates price uncertainty, allowing
shoppers to terminate or continue a shopping trip
(unplanned)
 Data limitations require that we:
 Consider visits only to selected store formats
 Assume that shopping trips begin from the consumer’s
home
Retail Site Selection
Agglomeration
How does retail location affect multi-store shopping?

RETAIL
RETAILLOCATION
LOCATION

Relative
Relativeto
tocustomers
customers Relative
Relativeto
toother
otherstores
stores

Retail
Retail Destination
Destination
Competition
Competition Effect
Effect

Specifically, how are retailer revenues affected by nearby

supermarkets, drug stores, mass merchandisers and
supercenters, dollar stores and warehouse clubs?
 SITE SELECTION
After a retailer investigates alternative trading areas :

1. It then determines what type of location is desirable.

2. Select the general location.
3. evaluate alternative specific store sites.
TYPES OF LOCATIONS

 ISOLATED STORE

An isolated store is a freestanding retail outlet located on

either a highway or a street . There are no adjacent
retailers with which this type of store shares traffic .
Figure 5.5 J.C. Penney’s Eckerd
ADVANTAGES

 There is no competition in close proximity .

 Rental cost is relatively low .
 Easy parking can be arranged.
 Cost reduction is possible ,leading to lower prices .
 Better road and traffic visibility is possible .
DISADVANTAGES

 Many people will not travel very to get to one store on a

continuous basis .
 Initial customer may be difficult to attract .
 Most people like variety in shopping .
 Advertising expenses may be high .
UNPLANNED BUSINESS DISTRICT

 An unplanned business is a type of retail location where

two or more stores situated together in such a way that
the total arrangement or mix of stores is not due to prior
long range planning.
CENTRAL BUSINESS DISTRICT

 A CBD is the hub of retailing in a city . It exist where

there is the greatest density of office building and stores.
Both vehicular and pedestrian traffic are very high.
Figure 5.9 Brooks Brothers:
Realizing the Power of the Factory Outlet
ADVANTAGES &DISADVANTAGES

 excellent goods service assortment.

 access to public transportation .
 wide range of prices .
 Variety of customer services .
 nearness commercial and social

DISAD…
 Inadequate parking and traffic and delivery congestion.
 High rent and taxes for the most popular sites.
SECONDARY BUSINESS DISTRICT

 A SBD is an unplanned shopping area in a city or town

that is usually bounded by the intersection of two major
streets. Cities particularly larger ones often have
multiple SBDs .
Figure 5.7 Supermarkets Have
Come a Long Way
Figure 5.6 Wendy’s and Pilot
Figure 5.9 Brooks Brothers:
Realizing the Power of the Factory Outlet
Figure 5.5 J.C. Penney’s Eckerd
Figure 5.7 Supermarkets Have
Come a Long Way
Figure 5.8 Home Depot
Figure 2.5 Augmented Services: Going Above
and Beyond
Figure 1.3 The High Costs and Low Profits of
Retailing
Figure 1.6 J.C. Penney and
Multi-Channel Retailing
Figure 1.9 “Pay Less + Export More” at Target