Retail location

Question 1

What are the store types?

Answer 1

• Non-enclosed: Central Business District, Cluster in Neighborhood, Isolated, Strip Mall
• Enclosed: Neighborhood, Community, Regional, Power, Theme Malls, Megamalls
• In Other Stores (sbux in chapters)
• Internet and Mail Order

Question 2

what is trading area determined by?

Answer 2

• customer spotting (figure out where customers come from and put store there!)
• retail gravitation (double # stores in a mall = more than double the # customers bc draw more people from further)
• natural boundaries (river, ravine, freeway, railway)

Question 3

factors to consider for choosing retail location

Answer 3

• Consumers’ Proximity
• Competition Proximity
• Company: Costs and Investment Proximity
• Company: Zoning
• Site: Vacancies, crime, attractiveness, visibility

Question 4

what is yeg avg cost per sq foot to buy? to rent?

Answer 4

buy = $200/sqfoot
rent = $20/sqfoot

Question 5

What are the 3 ways to forecast?

Answer 5

• By Analogy: use stores that match yours, take average, do regression.
  (benchmark = avg Sales Per Square Foot
• By Market Build-Up: Customers in mkt area x Expenditure on Category x mkt share
• Customer Flow Method: Expenditure per customer visit x number of visits/day x number of days (good for services)

Question 6

What is hotelling’s model?

Answer 6

law = often beneficial to make products as similar as possible

if 2 sellers, one dimensional selling space, either starts at 1/4 and 3/4 spots = each have 0.5 of biz
however each can get more by encroaching on the middle bc still closest for all one the one side, and start stealing some of the closest from the middle
end up with each moving all the way to the middle, sharing the space completely
(nash eq. = both choose the center!)