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Chapter4RetailLocationsElementsinRetailMixCustomerServiceMerchandiseAssortmentPricingCommunicationMixStoreDisplayAndDesignLocationStrategy2WhatAretheThreeMostImportantThingsinRetailing?Location!Location!Location!EddieTan/LifeFile/GettyImages
3WhyisStoreLocationImportantforaRetailer?Locationistypicallyprimeconsiderationincustomer’sstorechoice.Locationdecisionshavestrategicimportancebecausetheycanhelptodevelopsustainablecompetitiveadvantage.Locationdecisionsarerisky:investorlease?F.Schussler/PhotoLink/GettyImages
4TypesofRetailLocationsFreeStandingSitesCityorTownLocationsInnerCityMainStreetShoppingCentersStripShoppingCentersShoppingMallsOtherLocationOpportunitiesPhotoLink/GettyImages
5UnplannedRetailLocations
FreestandingSites–locationforindividualstoreunconnectedtootherretailer
Advantages:ConvenienceHightrafficandvisibilityModestoccupancycostSeparationfromcompetitionFewrestrictionsTheMcGraw-HillCompanies,Inc./AndrewResek,photographer
JCPenney,Sears,Walgreensareshiftingtostandalonelocations6UnplannedRetailLocations
MerchandiseKiosks–smalltemporarysellingstationslocatedinwalkwaysofenclosedmalls,airports,trainstationsorofficebuildinglobbies.KentKnudson/PhotoLink/GettyImages
7CityorTownLocations
Gentrificationisbringingpopulationbacktothecities.TheMcGraw-HillCompanies,Inc./AndrewResek,photographer
AdvantagetoRetailers:AffluencereturnedYoungprofessionalsReturnedempty-nestersIncentivestomoveprovidedbycitiesJobs!LowoccupancycostsHighpedestriantraffic8CentralBusinessDistrictDrawspeopleintoareasduringbusinesshoursHubforpublictransportationPedestriantrafficResidentsHighsecurityrequiredShopliftingParkingispoorEveningsandweekendsareslowAdvantagesDisadvantagesSpikeMafford/GettyImages
9TheMostExpensiveShopping
StreetsintheWorldStreet
LocationCost/sqfoot/yearFifthAvenue(48thto58thSt.)57thStreet(5thAve.toMadisonAve.)OxfordStreetMadisonAvenue(57thto72ndSt.)Ave.desChampsElyseeNewYorkCityNewYorkCityLondonNewYorkCityParis$580$500$400$375$36010InnerCity
Innercityretailersachievehighsalesvolume,highermarginsandhigherprofits(c)BrandXPictures/PunchStock
Unmetdemandtops25%inmanyinnercitymarketsInnercitycustomerwantsbrandedmerchandise11ShoppingCentersShoppingCenterManagementControls:ParkingSecurityParkinglotlightingOutdoorsignageAdvertisingSpecialeventsforcustomersTheMcGraw-HillCompanies,Inc./AndrewResek,photographer
12TypesofShoppingCentersNeighborhoodandCommunityCenters(StripCenters)PowerCentersEnclosedMallsLifestyleCentersFashionSpecialtyCentersOutletCenters13NeighborhoodandCommunityCentersAttachedrowofstoresManagedasaunitOnsiteparkingTheMcGraw-HillCompanies,Inc./AndrewResek,photographer
14PowerCentersBigboxstoresPhotoLink/GettyImages
LimitedsmallspecialtystoresFree-standingstoresOpenairsetupAvailableparkingDesirableshoppingexperienceManylocatednearenclosedmallsLargetradeareasLowoccupancycostsConvenientModestvehicularandpedestriantraffic15TheLargestNorthAmericanShoppingMalls16MallofAmericaLocatednearMinneapolis,MNLargestmallintheUSEnoughpeopletoqualifyasthethirdlargestcityinMinnesotaHasmorethan42millionvisitorsayearMorepeoplevisitthanDisneyWorld,theGrandcanyonandGracelandcombinedDigitalVision/GettyImages
17AdvantagesandDisadvantagesofShoppingMallsAdvantages:ManydifferenttypesofstoresManydifferentassortmentsavailableAttractsmanyshoppersMainStreetfortoday’sshoppersNeverworryabouttheweatherComfortablesurroundingtoshopUniformhoursofoperationDisadvantages:OccupancycostsarehighTenantsmaynotlikemallmanagementcontrolofoperationsCompetitioncanbeintensePhotoLink/GettyImages
18ChallengetoMallsTimepressuredsocietymakesitimpracticaltowandermallsFashionapparelsoldinmallsexperiencinglimitedgrowthMallsaregettingoldandrundown–unappealingtoshopAnchortenantsaredecreasingduetoretailconsolidation19LifestyleCentersCourtesyofGeneralGrowthPropertiesPhotoprovidedbyICSCandusedwithpermissionofAspenGroveLifestyleCenter20StoresandRestaurantsatLifestyleCentersStarbucksPaneraBreadBedBath&BeyondAnnTaylorVictoria’sSecretEddieBauer
ColdwaterCreekBananaRepublicTheGapRestorationHardwareWilliams-SonomaPotteryBarn
Barnes&Noble/BordersDick’sSportingGoodsAeropostaleHallmarkJohnnyRockets21LifestyleCentersUsuallylocatedinaffluentresidentialneighborhoodsIncludes50Ksq.ft.ofupscalechainspecialtystoresOpen-airconfigurationDesignambienceandamenitiesUpscalestoresRestaurantsandoftenacinemaorotherentertainmentSmalldepartmentstoreformatmaybethere22FashionSpecialtyCentersUpscaleapparelshopsNeedtobeanchoredDécoriselegantTheMcGraw-HillCompanies,Inc./LarsA.Niki,photographer
23OutletCentersTheseshoppingcenterscontainmostlymanufacturersandretailoutletstoresCourtesyofBeall’s,Inc.24TradeoffBetweenLocationsRentTraffic
Therearerelativeadvantagesanddisadvantagestoconsiderwitheachlocation.25RelativeAdvantages
ofMajorRetailLocationsLocation City Strip Shopping FreeIssues CenterMall StandingLargesize + - + -drawspeopletoareaPeople + + - -working/livinginareaprovidedsourceofcustomersSourceof ? - + -entertainment/recreationProtection - - +-againstweather26RelativeAdvantages
ofMajorRetailLocationsLocation CBD Strip Shopping FreeIssues Center Mall StandingSecurity - - + -Long,uniform - + + +hoursofoperationPlanned - - + -shoppingarea/balancedtenantmixParking - + - +Occupancy ? + -+costs(e.g.rent)27RelativeAdvantages
ofMajorRetailLocationsLocation City Strip Shopping FreeIssues CenterMall StandingPedestrian + - + -trafficLandlord + + - +controlStrong + + - +competitionTax ? ?
?
?incentives28OtherRetailLocationOpportunities
Airports
Resorts
Hospitals
StorewithinaStoreRoyalty-Free/CORBIS
29AlternativeLocations
AirportsAirports:Whywaitwithnothingtodo?Rentsare20%higherthanmallsSales/sqftare3-4timeshigherthanmallsBestairportsareoneswithmanyconnectingflightsKimSteele/GettyImages
30AlternativeLocations
ResortsCaptiveaudienceWell-to-docustomerCustomershavetimetoshopRoyalty-Free/CORBIS
31AlternativeLocations
HospitalsPatientscannotleaveGiftsareavailableRoyalty-Free/CORBIS
32MatchingLocationtoRetailStrategyDepartmentStoresRegionalMallSpecialtyApparelCentralBusinessDistrict, RegionalMallsCategorySpecialistsPowerCenters, FreeStandingGroceryStoresStripShoppingCentersDrugStoresStandAlone33ShoppingSituations
ConvenienceShopping
Minimizethecustomer’sefforttogettheproductorservicebylocatingstoreclosetowherecustomersarelocatedTheMcGraw-HillCompanies,Inc./AndrewResek,photographer
34ShoppingSituations
ComparisonShoppingCustomershaveagoodideaofwhattypeofproducttheywant,butdon’thaveastrongpreferenceforbrand,modelorretailer.RyanMcVay/GettyImages
Typicalforfurniture
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