Retail Location Strategy: Trade Area Decisions And Site Assessment

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Chapter Five
Retail Locations Strategy - Trade Area Decisions and Site Assessment

© 2011 McGraw-Hill Ryerson, Ltd. All Rights Reserved.

Learning Objectives
1. Explore the types of locations that are available to retailers. 2. Examine the relative advantages of each location type. 3. Discuss which types of locations are growing in popularity with retailers. 4. Illustrate why some locations are particularly well-suited to specific retail strategies. 5. Examine the factors retailers should consider when determining where to locate stores. 6. Define a trade area. 7. Determine how retailers determine the trade area for a retail store. 8. Explore the factors retailers consider when deciding on a retail site. 9. Investigate where retailers get information to evaluate potential store locations.
© 2011 McGraw-Hill Ryerson, Ltd. All Rights Reserved

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Factors Affecting Demand for a Region or Trade Area
 Economies of Scale Versus Cannibalization  Demographic and Lifestyle Characteristics  Business Climate  Competition  Span of Managerial Control

© 2011 McGraw-Hill Ryerson, Ltd. All Rights Reserved

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Location and Retail Strategy
The selection of a location type must reinforce the retailer’s strategy.  Be consistent with the shopping behaviour and size of its target market. Be consistent with its positioning strategy.

© 2011 McGraw-Hill Ryerson, Ltd. All Rights Reserved

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Types of Shopping Situations
Convenience
Comparison Specialty

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Density of Target Market
A good location has many people in the target market that are drawn to it. Convenience – CBD (central business district) Comparison – Mall Specialty – will travel to get there

Examples?

© 2011 McGraw-Hill Ryerson, Ltd. All Rights Reserved

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Types of Locations
 Shopping Centre  A group of retail and other commercial establishments that is planned, developed, owned and managed as a single property.  Strip Centre  A shopping centre that usually has parking directly in front of the stores and does not have enclosed walkways linking the stores.

© 2011 McGraw-Hill Ryerson, Ltd. All Rights Reserved

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Types of Shopping Areas
 Mall  A shopping centre with a pedestrian focus where customers park in outlying areas and walk to the stores. (Not typical to Canada)

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Power Centres
A shopping centre that is dominated by several large anchors:  Discount stores – Wal-Mart  Off-Price retailers – Winners  Category Specialists – Golf Town, Future Shop, Home Depot  Warehouse Club - Costco

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Types of Shopping Centres

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Advantages of Malls
Different types of stores – choice for customers Entertainment options – theatres, restaurants Social – ‘mall walkers’, teens Mix can be planned – one stop shopping Out of the elements

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Problems Facing Malls
Rising costs – rent, utilities Lack of control – hours, location, signage, window displays Competition – power centres, strip malls and specialty stores Age of the mall Time strapped consumer that does not have time to ‘browse’

© 2011 McGraw-Hill Ryerson, Ltd. All Rights Reserved

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Superregional Centres
West Edmonton Mall in Alberta  800 stores, 110 restaurants  Amusement park, waterpark, hockey rink, a lagoon & casino  20,000 parking spaces  Draws millions of people as a vacation destination

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Closer To Home?
Vaughn Mills Mall, Toronto  14 anchor stores  200 specialty stores  Bass Pro Shops, Largest Tommy Hilfiger
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