Professional Documents
Culture Documents
Chapters 8 & 9
Criteria to be considered:
Size & characteristics of population Level of competition Access to transportation Availability of parking Attributes of nearby stores Property costs Length of agreement (if lease) Population trends Legal restrictions
Site Evaluation
Accessibility Locational advantages Terms of occupancy Legal considerations (e.g. environmental considerations, zoning restrictions, building codes, signs, licensing requirements)
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
Number and types of stores in area Analysis of key players in general area Competitiveness of other merchants Number and location of direct competitors in area Possibility of joint promotions with local merchants
Site Selection
Trade area -- contiguous geographic area that accounts for the majority of a stores sales and customers Primary trade zone -- Usually 3-5 mile radius; generates 60-65% of customers Secondary trade zone -- Usually 3-7 mile radius; generates 20% of customers Tertiary trade zone -- Usually 15 - 50 mile radius
Retail Formats
Store-Based
Nonstore-Based
Business District
Shopping Centers/Malls
Freestanding
Nontraditional
Street Peddling
Mail-Order
Direct Selling
Interactive TV
Internet
Types of Leases
Percentage Fixed - Rate Percentage leases - rent is based on a percentage of sales.
Retailers also typically pay a maintenance fee based on a percentage of their square footage of leased space. Most malls use some form of percentage lease.
tenants
Some tenants take up parking spaces and dont bring in shoppers: bowling alley, skating rink, meeting hall, dentist, or real estate office.
Some tenants could harm the shopping centers wholesome image: bars, pool halls, game parlors, off-track betting establishments, massage parlors and pornography retailers.
Escape clause
Allows the retailer to terminate its lease if sales dont reach a certain level after a specified number of years, or if a specific co-tenant in the center terminates its lease.
Environmental Issues
Above-ground risks - such as asbestos-containing
materials or lead pipes used in construction.
Retailers Protection
Stipulate in the lease that the lessor is responsible for removal and disposal of this material if its found. Retailer can buy insurance that specifically protects it from these risks.
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 sites desirability
Licensing Requirements
Some areas may restrict or require a license for alcoholic beverages
GIS Components
Physical Geography Latitude/Longitude Land/Water Terrain Rainfall/Snow Temperature Cultural Geography
Data Inputs
Demographics Man-Made Structures Consumption Patterns Work Patterns Leisure Behavior Deviant Behavior
GIS (Data Aggregation and Analysis via Computer) Output Maps and Other Displays of Information
Huffs Law
Assumptions: The proportion of consumers patronizing a given shopping area varies with the distance from the shopping area The proportion of consumers patronizing various shopping areas varies with the breadth and depth of merchandise offered by each shopping area The distance that consumers travel to various shopping areas varies for different types of products purchased The pull of any given shopping area is influenced by the proximity of competing shopping areas
Probability = .43 .43 x 12,000 students = 5,160 customers 5,160 customers x $150 = $774,000
Repeat steps 1 to 3 for the remaining areas and then sum them.
where IRS is the index of retail saturation H is the number of households in the area RE is the annual retail expenditures for a particular line of trade per household in the area RF is the square footage of retail facilities of a particular line of trade in the area (including square footage of the proposed store)
Source: The Census and You, U.S. Department of Commerce, Bureau of the Census.
Buying Power
Web sites for additional information
http://www.selig.uga.edu/forecast/totalbuy/total/tbp1.html http://www.repgroup.com/bpi.htm http://www.census.gov/epcd/www/97EC44.HTM http://demographicsusa.com/p_demographics.html
Other
http://www.mlb.ilstu.edu/ressubj/subject/business/home.htm
Identifying Communities with High Demand Potential for Fast-Food Drive-In Restaurant
Demographic Characteristic Desired Target Market Community A 375 $28,024 48% 38% 61% 49% $521 Community B 423 $32,418 63% 54% 72% 74% $619
Population per over 400 Square Mile Median Family Income over $31,000 % Population 14-54 over 60% % White Collar over 50% % People Living in 1-3 over 70% Person Units % Workforce Traveling over 75% 0-14 Minutes to Work Average Annual over $600 Household Expenditure on Eating Out