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DC Project Guidelines (Jan 2011)
- 1. MKTG 1058 – Distribution Channels
Discussion Points for Project on Location Analysis and Store Environment
January 2011
Malls Approved for Location Study: Raffles City, Palais
Renaissance or Shaw Leisure Gallery
Before starting your project:
Survey the selected mall and have a broad idea of the kinds of stores and
the likely customers those stores are likely to attract. Think of this in terms
of segmentation and targeting strategies.
Selection of store: What is appropriate varies from group to group. Some
key questions need to be asked. Does the store have a unique retailing
concept? Where would it draw its customers from and does location
matter? Why do you think it could have a loyal customer base? Does it fit
within its overall image and positioning? Are you able to get supporting
market information? How does it sit within the overall shopping centre
layout? Any unique advantages offered by the shopping centre layout in
terms of appearance, accessibility and others?
Nature of the product / service of your selected store: This is vitally
important to the successful completion of your project. Many groups fail to
do well because their analysis is superficial and textbook based rather
than factoring the nature of the product. Product classification will include
convenience, shopping and specialty goods- you are expected to have
known this in your Principles of Marketing course. The nature of your
product will determine shopping behaviors- which is very much related
to location analysis since it determines the motivations for buyers to visit
your store. Is the store you have selected one that is randomly visited or is
it a „destination store‟?
The trading area analysis is the key issue because in your project you will
need to argue whether or not there is a clearly demarcated trading area or
whether customers may come from further away.
Read Chapter 7 in depth followed by Chapter 13. But take note that other
areas of retail management found in the remaining chapters could be of
use to your project.
Use Exhibit 7.5 as a guide to planning the stages of your analysis. This
model reminds us that we are working from macro market data and inwards
toward micro information about the site.
Guidelines for Student Project (MKTG 1058 DC) © Geoffrey da Silva 1
- 2. Note: Getting the Right Perspective for the Project:
You are reminded that you are NOT going to recommend other better sites
for your store. Your retail store is already in your selected mall. In fact, you
are required to discuss the merits and limitations only. It was mentioned in
class about adopting the correct perspective since so many groups in the
past were penalized because of this mistake.
The text chapter 7 is written from the perspective that ‘the retailer has not
yet selected a suitable site” and is using a screening approach in order to
narrow down the best choice. In this project, we are already operating from
the given site. You are to use the content in chapter 7 to select the
‘appropriate set of factors’ to comment on the suitability of the site. Those
groups who merely copy content using the headings of chapter 7 will not
secure a good pass. Instead you are urged to carefully analyze the nature
of your store and its products to determine which factors are ‘strongly
correlated’ to the patronage behavior at your store (notice that the project
brief often uses the term ‘hypothesis’). You are also encouraged to
introduce factors that may not be found in the chapter. This will show
initiative on you part.
Approach to Completing the Project:
Break up the instructions into parts. Make sure you address ALL of the
parts and don’t leave any area unanswered. The following working notes
are only guides and not answers. Use them to work through the different
sections of your report
Sections of the Project Brief (in boxes) followed by my
comments:
With their specific store the students are to first determine the trading area - that
being the geographic area from which that store draws its customers. They must
do so utilising Reilly‟s law of retail gravitation.
In doing this they will have to decide whether the store itself or something else,
such as the centre the store is located in, determines this trading area. Please
remember that theorists such as Paul Converse have noted that with a shopping
centre one can use the square metres of retail space rather than the actual
population one would use when working with a town.
Guidelines for Student Project (MKTG 1058 DC) © Geoffrey da Silva 2
- 3. Comments:
After providing some background information about your store (type of business,
target customers, competition, etc) proceed to discuss about location specifics of
the store within the mall and the trading area. The most important aspect of
location is a clear understanding of the trading area around the mall you have
selected.
Discuss the attributes of the trading area-other shopping malls, private residential
or offices. Use maps to show where your store is likely to draw customers from.
Use the focal trading area where your store is located as your anchor point
(remember to compute Reilly‟s model you need to have a base trading area. To
compute the statistics you will need to have at least 3-4 other malls from which
to compute the break points.
Note that we will be using square feet mall area space of your selected mall
and the nearly malls or shopping centers as a substitute for population
data (which is used in the formula in the text book. We use the floor area as
a surrogate measure of traffic (shopper) volume; sometimes known as „footfall‟.
Commuting distances are estimated from travel on main roads and the MRT (just
provide rough estimates will do).
All calculations must be shown in the appendix. After calculating the break
points, you must mark off the trading area on an appropriate diagram. The
lecture PowerPoint slides for Lecture 2 should be referred to, especially slides
number 2-80 to 2-93.
When choosing the other shopping centers or malls try to justify your selection. In
addition, the other malls should have stores that have similar products or
services that your selected store is offering. The competitor stores in those other
malls will give you some idea of whether the trading area is over or under
stored.
Key issue here: is it the store or something else such as the centre of the store
or factors such as the uniqueness of the product, etc that determines the trading
area. Bear in mind that the concept of LA must be moderated to fit Singapore‟s
context (we are a city state). The nature of the product and the resulting
shopping / search behaviors will give you some indication of how wide or narrow
the trading area is likely to be.
Once the trading area for their store is identified the students need to analyse the
merits of that trading area in terms of whether it is understored or overstored.
Guidelines for Student Project (MKTG 1058 DC) © Geoffrey da Silva 3
- 4. Comments:
Look at the definitions of under/ over stored on page 225 of the text. Think back
to your own store. Don‟t be limited by a comparison of exact retail store type
comparisons but also consider other equivalent stores or store formats that
might offer similar but not the same products. Just to consider an example-
Harvey Norman store sells furniture as well as electrical products so if your store
sells furniture you should count Harvey Norman as one of your direct
competitors. So look wider before you commit to a decision on the trading area
being over or under-stored. Give evidence of over or under- stored situations by
showing the count of similar stores in your own mall itself as well as similar
stores in surrounding malls. You can then comment briefly on the intensity (or
lack of) competition for your store‟s brand.
Saturation theory describes the concept of „intensity of distribution‟ or „market
coverage‟ based on the number of retailers, the concentration within a given
geographical market and the types of products offered by those retailers.
When you comment on the extent of the trading area being over or understored,
support with justifications.
They also need to carefully utilise all the other market demand and market supply
factors which are described in detail in the prescribed text and be in a position to
report on all aspects of that particular trading area.
Comments:
You can comment on as many relevant factors, but do not feel obliged to force fit
every criteria. Some factors will stand out as having high correlation to the
attractiveness of your store. You can even include factors that are not included in
the list shown in the text provided these are relevant. Be selective and point
these out and elaborate on them. Example high consumer mobility in Singapore
means that distance is not a barrier in store choice and location. Market demand
factors are those that can sustain demand for the store products over a period of
time. By analyzing the demand factors, you are actually profiling the types of
customers that your store attracts. As for supply factors, the square feet issue
relates to the “costs” of operating- rental cost is high depends on the location and
level within the mall, as well as staffing costs and costs of turnover of staff. If you
look at the nature of your product, you need to examine the expected profitability
of running that store‟s operations. Is it high value or low value added? Is it high
turnover low margin or low turnover high margin? Also you need to comment on
the intensity (or lack of it) of competition around that trading area- how many
stores in your existing mall and other surrounding malls, the range of products,
types and intensity of promotions used, power of store brand, etc.
Guidelines for Student Project (MKTG 1058 DC) © Geoffrey da Silva 4
- 5. In summary, this part of your analysis helps you to profile your trading area-
gives a sort of description of who buys and who sells in that vicinity including the
shopping mall itself.
In doing this admittedly there might be some factors which they cannot fully
ascertain. If that is the case they should explain this and then work with a
reasonable hypothesis after identifying that this is a hypothesis
Comments:
This means those factors not considered in the list of pages 228-231. This where
your group can excel in the project because you are applying creative and strategic
thinking to your understanding of retail management. Hypothesis means showing
relationships between a dependent and independent variable/s.
Examples could be written as follows (do NOT copy!)
- The number of stores selling similar product lines as ours in the shopping centre
in which our store is located does not contribute to the condition of over-storing
because this situation leads to an overall increase in customer traffic due to the
strong positioning of the mall as being a specialist centre with deep product
assortment.
- The nature of our product predetermines the condition that there might not be a
clearly demarcated trading area (as specified by traditional location analysis
models such as Reilly) because of the ‘specialty nature’ of the brand. Customers
are clearly segmented into niche segments and ours represents a small but
focused segment. Therefore customers may come from all corners of Singapore
- Technology makes location irrelevant because our products and services are
available online on the web 24/7
After explaining that stores trading area the students should proceed to carefully
evaluate the actual site their store occupies. A checklist for site evaluations is in
exhibit 7.13 on page 239 of the prescribed text and the students should attempt
to include those factors.
Comments:
Remember we are now writing about the actual site- don‟t bring in discussion of
the trading area any more here. The list shown in exhibit 7.13 is very long so you
need to study each one carefully and eliminate those that have no bearing to the
store and its brands.
Guidelines for Student Project (MKTG 1058 DC) © Geoffrey da Silva 5
- 6. Be selective about how you choose the factors- better to have more in-depth
discussion of a fewer number of relevant points rather than to skim over many
factors in a superficial manner. The factors that you consider are those that best
explains the merits of your store‟s location at the given site- did it meet the
requirements of those factors and if not- why.
Note again- in the Dunne text, the factors listed are based on the view that the
retailer has not yet selected a site and is looking at prospective sites for a new
outlet. You cannot use that thinking here. Many students failed this section of
the report because they blindly copied from the text without knowing what they
were writing about! In short, you are summarizing the advantages or constraints
of your location of the store from the point of view of ex-ante or “after-the-fact.”
DO NOT make recommendations for changing the current location- just comment
on its suitability.
In the case of this report, you are reflecting on the suitability of site in terms of its
location suitability in drawing customers from the trading area or surrounding
malls. Does the checklist factors shown in Exhibit 7.13 support or limit the
viability of the store you have selected. Explain why.
They should also give some attention to factors such as demand density. The
same rules as to working hypothesis holds here as in the above paragraph.
Incidentally, with the store in a shopping centre pay attention not only to the
surrounding traffic flow and accessibility, but also to the location of that store in
that centre and the actual pros and cons of that location in that shopping centre.
Comments:
The issue of demand density is that of whether your site meets with multiple
choice criteria. See the example of Exhibit 7.12 in the text. See if you can map
out a similar version of this figure, if not you can just describe this in words. In
short, given the location of your selected mall, do you think that the area itself
attracts customers that have multiple criteria that support strong patronage of the
store and its products?
Hypothesis in this instance means can you prove either as supporting or non-
supporting that your current site meets a set of criteria. Some possible
examples:
- the location of the mall is strategically located within the heart of Orchard
Road belt which give it greater exposure to the tourist shoppers who
comprise of higher end consumers in search of luxury and quality brands
- the location of major offices in the main and adjacent buildings help to
augment the traffic volume in addition to casual shopper traffic
Guidelines for Student Project (MKTG 1058 DC) © Geoffrey da Silva 6
- 7. - the site of the underground MRT station brings additional shopper footfall
throughout the weekdays
- and so on.
As for supply density, the text refers to availability of tracts of land for retail sites
and expansion. We are not talking about tracts of land but instead we need to
look within the mall for areas of possible expansion. If a mall is fully subscribed
by tenants then there is less scope for a given retailer to change its location or to
expand the floor space.
You must be able to show floor plans of your selected mall. From this you must
comment on:
- The suitability of the store location within the mall in terms of visibility and
accessibility- does it have a strategic location?
- The store size (is it overcrowded or just nice? Scope for expansion?)
- The locations of other retailers who offer complementary or competing
products. How do these stores add / subtract from the number of
customers visiting your store?
With regard to the „surrounding traffic flow‟ take into account the movement of
shopper around the vicinity of the mall. For example, how does the commuter
traffic from the MRT line contribute to shopper traffic in the mall?
Further to that the students are expected to critically comment on the store
image. Also the floor plan of the store, the store design and the visual
communications all as explained at length in Chapter 13 of the prescribed text.
Comments:
Use Figure 13.1 on page 434 to comment on store image. Discuss the strengths
and limitations (but don‟t go into too much commentary on what changes you plan
to make).
Discuss how the store image helps to differentiate the store brand. In the case of
lack of store image, critically evaluate how the store loses its competitive
advantage in terms of customers not noticing it and moving on to other stores.
One of the key issues to be brought up is how well the store‟s image clearly
communicates the “retailing concept” (research on this!). How does the store
front and its visual merchandising „tell a brand story‟ when the shopper enters the
store?
Guidelines for Student Project (MKTG 1058 DC) © Geoffrey da Silva 7
- 8. And also how the store layout helps to communicate the brands offered as well as
being attractive and outstanding compared to other stores.
Photos will help- put them in the appendix.
But make sure you get the right approvals and don‟t be caught by the security if
you are unauthorized to take pictures. This can be serious since they might view
you as „representing competitors‟.
We expect to see diagrams showing the store layout and your comments on
the „type of layouts used and its suitability for the given product. Does it facilitate
more impulse buying for example?
In short students are looking at a particular store and doing an extensive retail
location analysis of that store, and then contemplating the store layout and
design. Students are not defending the location of their store, nor its layout, but
commenting on both the advantages and the disadvantages of the current
location and layout.
Take note of this final comment closely into consideration and stay on track. This
is not a difficult project to do provided you start early and answer the seven
sections listed in this set of guidelines. This is strictly a retail study using the
techniques of observation and data collection. You are to comment on both the
positive and negative attributes of store location and store design. At all times
keep your mind focused on the nature of the product or service when
commenting on the suitability of the store location and store design.
Essentially we want you to browse the store, contemplate the operation, and
think this out for yourself anonymously. In doing this you can make certain
assumptions as long as you identify those assumptions.
Important Reminders: The report should incorporate some basic maps or
diagrams so that someone not familiar with this location can very easily ascertain
the circumstances pertaining to it. The actual report is to be handed to the SIM
Administration (NOT directly to the local lecturer) with proper RMIT assignment
cover page. These reports are not to exceed five thousand words and must
accord with the instructions which follow relating to the presentation of written
work. Please do not contact anyone working at or associated with your chosen
store or the shopping centre it is in.
Deadline: 1 April 2011. This is week 12 in our lecture schedule; do NOT
hand over the assignment to lecturer. Please deposit in the BOX.
Guidelines for Student Project (MKTG 1058 DC) © Geoffrey da Silva 8
- 9. Administrative Details:
Please make sure the names printed on the cover page MATCHES the
names listed in the register. Please list the names in alpha order and
correct admin numbers.
Please note: I also would like a soft copy (CD-ROM) to be attached to your
report. This should contain the main report and all the accompanying
appendices. The report must have ‘spiral binding.’
Here are the suggested outline headings for the project report:
You should try to follow this flow; of course if you have additional areas to
comment on, do feel free to add.
1. Introduction (background information of the store and its
products, target customers and local competition)
2. Objectives of the study
3. Determination of Trading Area and Commentary
4. Merits of the Trading Area (under and over stored)
5. Market and Supply Factors impacting on Trading Area
6. Additional Hypothesis/es that describe Trading Area
7. Site Evaluation Factors and alternative hypothesis
8. Impact of Location within Mall or Shopping Area
9. Evaluation of Store Image and Design
10. Overall Assessment of Store Location and Design
11. Appendices
12. Bibliography
Guidelines for Student Project (MKTG 1058 DC) © Geoffrey da Silva 9
- 10. References:
** To help you get started here are few possible references. Please use your own
references as much as possible. The list below shows some of the leading
academic references in the field of location analysis in retailing. Be selective.
Evaluating Retail Trade Areas for convenience Stores. By: Houston, Franklin S.;
Stanton, John. Journal of Retailing, Spring84, Vol. 60 Issue 1, p124
Developing a location research methodology. By: Rogers, David S.. Journal of
Targeting, Measurement & Analysis for Marketing, Mar2005, Vol. 13 Issue 3, p201-208
A Disaggregate Model for Predicting Shopping Area Market Attraction. By:
Weisbrod, Glen E.; Parcells, Robert J.; Kern, Clifford. Journal of Retailing, Spring84, Vol.
60 Issue 1, p65
The Contribution of Store-Image Characteristics to Store-Type Choice. By:
Schiffman, Leon G.; Dash, Joseph F.; Dillon, William R.. Journal of Retailing,
Summer77, Vol. 53 Issue 2, p3
Specification of Patronage Models for Retail Center Choice. By: Gautschi, David
A.. Journal of Marketing Research (JMR), May81, Vol. 18 Issue 2, p162-174
Shopping-centre attributes affecting male shopping behaviour. By: Sim Loo
Lee; Ibrahim, Muhammad Faishal; Chong Hsueh-Shan. Journal of Retail & Leisure
Property, Oct2005, Vol. 4 Issue 4, p324-340
Attitudes to transport modes for shopping purposes in Singapore. By: Ibrahim,
Muhammad F.. Transport Reviews, Mar2005, Vol. 25 Issue 2, p221-243
E-retailing versus physical retailing: A theoretical model and empirical test of
consumer choice. By: Lee, Khai Sheang; Tan, Soo Jiuan. Journal of Business
Research, Nov2003, Vol. 56 Issue 11, p877
Shoppers' perceptions of retail developments: Suburban shopping centres
and night markets in Singapore. By: Ibrahim, Muhammad Faishal; Soh Kok Leng.
Journal of Retail & Leisure Property, Oct2003, Vol. 3 Issue 2, p176-189
The Importance of Entertainment in the Shopping Center Experience:
Evidence from Singapore. By: Ibrahim, Muhammad F.; Wee, Ng C.. Journal of Real
Estate Portfolio Management, Sep-Dec2002, Vol. 8 Issue 3, p239
Congruency of scent and music as a driver of in-store evaluations and
behavior. By: Mattila, Anna S.; Wirtz, Jochen. Journal of Retailing, Summer2001, Vol.
77 Issue 2, p273
Influences on Store Patronage Behavior: A Comparison of Department and
Discount Stores in Singapore. By: Shamdasani, Prem N.; Hean Tat Keh; Lee,
Evelyn Z.C.. Journal of Asian Business, 2001, Vol. 17 Issue 2, p63
Guidelines for Student Project (MKTG 1058 DC) © Geoffrey da Silva 10