Module 8: Retail Site Location Flashcards
FACTORS AFFECTING THE DEMAND FOR A RETAIL OR TRADE AREA: (4)
Economic Conditions
Competition
Strategic Fit with the Target Market
Cost of Operating Stores
NUMBER OF STORES IN TRADING AREA
An ADVANTAGE of locating multiple stores is ACHIEVING ECONOMIES OF SCALE in PROMOTION AND DISTRIBUTION
However, SALES CANNIBALIZATION is likely to occur when locating too many stores, thus retailer suffers diminishing returns.
is likely to OCCUR WHEN LOCATING TOO MANY STORES, thus RETAILER SUFFERS DIMINISHING RETURNS.
Sales Cannibalization
FACTORS TO CONSIDER IN EVALUATING A SITE FOR LOCATING A RETAIL STORE:
(3)
A. Site characteristics
B. Characteristics of trading area
C. Estimated potential sales
A. Site characteristics
i. Traffic flow and accessibility
ii. Location characteristics
iii. Restrictions and Cost
iv. Locations within a Shopping center
A. Site characteristics
i. Traffic flow and accessibility
ii. Location characteristics
iii. Restrictions and Cost
iv. Locations within a Shopping center
ii. Location characteristics
(3)
- Parking Congestion
- Store visibility
- Existence of adjacent retailers
is an EXCESS LEVEL OF TRAFFIC that results in customer delays
Parking Congestion
- refers to the CUSTOMERS ABILITY TO SEE FROM THE STREETS
Store visibility
this principle states that
a CLUSTER OF SIMILAR OR COMPETING RETAIL ACTIVITIES will have a greater drawing power than isolated
stores that engage in the same retailing activities
Cumulative Attraction
is a CONTIGUOUS GEOGRAPHIC AREA that accounts for the
majority of a store’s sales and customers
trade area
Characteristics of trading area
Primary (within 5min drive) 3miles
Secondary (10min drive) 5miles
Tertiary (15min drive) 10 miles
is one that DOES NOT CREATE ITS OWN TRAFFIC and whose
trade area is determined by the dominant retailer in the shopping center or retail area
Parasite store
is the PROCESS OF LOCATING THE RESIDENCES of CUSTOMERS for a store on a map and displaying their positions relative to the store location.
Customer spotting
Estimated potential sales. This can be done by following these steps:
(4)
- Do a competitive analysis.
- Define present trade area.
- Analyze trade area characteristics.
- Match characteristics of present trade area with potential sites.