Retail Store Location


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Retail Store Location

  1. 1. A note ABOUT • Retail Location Study  An Introduction  Factors in Detail • Indore as a Retail Market  A famous Test Market  Business opportunities  Demography – growth potential  Retail Options • Our Study  The two categories  Apparel Store  Retail Coffee Outlet • Our Findings  THE PROCEDURE  PANTALOONS o Company Profile o Site Visit Report o Conclusions in Quantifiable form  BARISTA o Company Profile o Site Visit Report o Conclusions in Quantifiable form • Appendix  SITE VISIT REPORT o Big Bazaar o Vishaal
  2. 2. RETAIL LOCATION STUDY An INTRODUCTION Retail and service centers are often the final stocking points in a physical distribution network. They include facilities like departmental stores, supermarkets, branch banks, medical centers etc. Location analysis for these points is highly sensitive to revenue and accessibility factors rather than cost factors. Few Factors that influence Location Selection in Retail outlets are: • Proximity to Competitors • Population Make up • Customer Traffic Patterns • Nearness to Complimentary Outlets • Parking Availability • Community Attitude • Nearness to complimentary outlets The Location of the Retail Store plays a very important Role in its Success. It is an integral n crucial part of the Retail Strategy as the location of the Store conveys a lot about its image. It also influences the merchandising mix and layout of the store. As once Set-up, a retailer can change its merchandise mix, adjust prices, improve communication/ services but it’s very difficult to change the location. So a lot of Planning, Resources, and Research go in before Deciding upon some Location, Be it about penetrating into a new city, new customer segment or a new location within the city but a lot of thought goes into every single thing. Where you choose to locate your retail business will have a major impact on everything your shop does. The difference between selecting the wrong location and the right site could be the difference between business failure and success. Before choosing a retail store location, defining the business, both for now and in the future is important. And thinking about the issues like: • Who are your target customers? • How do you want your store? • Determining the business area, store location and the store size. Without the answers to these basic questions, it will be hard to find the perfect location for generating the maximum amount of profit for the retail store.
  3. 3. TAKING SOME FACTORS IN DETAIL TYPE OF GOODS What kind of products the business is selling, as some goods will require certain types of locations. Would your store be considered a convenience store, a specialty shop or a shopping store? Convenience goods require easy access, allowing the customer to quickly make a purchase. A mall would not be a good location for convenience goods. This product type is lower priced and purchased by a wide range of customers. Specialty goods are more unique than most products and customers generally won't mind traveling out of the way to purchase this type of product. This type of store may also do well near other shopping stores. A shopping store usually sells items at a higher price which are bought infrequently by the customer. Furniture, cars and upscale clothing are examples of goods found at a shopping store. Because the prices of theses items are higher, this type of customer will want to compare prices before making a purchase. Therefore, retailers will do well to locate their store near like stores. POPULATION AND THE CUSTOMER If the retailer is choosing a city or state to locate the retail store, a through research of the area before making a final decision is to be carried out. Reading local papers and speaking to other small businesses in the area helps. Obtaining location demographics from the local library, chamber of commerce or the Census Bureau also gives a lot of idea. Any of these sources have information on the area's population, income and age. Knowing who are the customers, and assuring a location where your customers live, work and shop. ACCESSIBILITY, VISIBILITY AND TRAFFIC Don't confuse a lot of traffic for a lot of customers. Retailers want to be located where there are many shoppers but only if that shopper meets the definition of their target market. Small retail stores may benefit from the traffic of nearby larger stores. • How many people walk or drive past the location. • Is the area served by public transportation? • Can customers and delivery trucks easily get in and out of the parking lot? • Is there adequate parking? Depending on the type of business, it would be wise to have somewhere between 5 to 8 parking spaces per 1,000 square feet of retail space.
  4. 4. When considering visibility, look at the location from the customer's view point. Can the store be seen from the main flow of traffic? Will your sign be easily seen? In many cases, the better visibility your retail store has, the less advertising needed. A specialty retail store located six miles out of town in a free standing building will need more marketing than a shopping store located in a mall. SIGNAGE, ZONING AND PLANNING Before signing a lease, be sure you understand all the rules, policies and procedures related to your retail store location. Contact the local city hall and zoning commission for information on regulations regarding signage. Ask about any restrictions that may affect your retail operation and any future planning that could change traffic, such as highway construction. COMPETITION AND NEIGHBORS Other area businesses in your prospective location can actually help or hurt your retail shop. Determine if the types of businesses nearby are compatible you're your store. For example, a high- end fashion boutique may not be successful next door to a discount variety store. Place it next to a nail or hair salon and it may do much more business. LOCATION COSTS Besides the base rent, consider all costs involved when choosing a retail store location. • Who pays for lawn care, building maintenance, utilities and security? • Who pays for the upkeep and repair of the heating/air units? • If the location is remote, how much additional marketing will it take for customers to find you? • How much is the average utility bill? • Will you need to make any repairs, do any painting or remodeling to have the location fit your needs? • Will the retailer be responsible for property taxes? The location you can afford now and what you can afford in the future should vary. It is difficult to create sales projects on a new business, but one way to get help in determining how much rent you can pay is to find out what sales similar retail businesses are making and how much rent they're paying. PERSONAL FACTORS If you plan to work in your store, think about your personality, the distance from the shop to home and other personal considerations. If you spend much of your time traveling to and from work, the commute may overshadow the exhilaration of being your own boss. Also, many restrictions placed on a tenant by a landlord, management company or community can hamper a retailer's independence.
  5. 5. SPECIAL CONSIDERATIONS Your retail shop may require special considerations. Make a list of any unique characteristic of your business that may need to be addressed. • Will the store require special lighting, fixtures or other hardware installed? • Are restrooms for staff and customers available? • Is there adequate fire and police protection for the area? • Is there sanitation service available? • Does the parking lot and building exterior have adequate lighting? • Does the building have a canopy that provides shelter if raining? • What is the crime rate in the area? • Are there (blue laws) restrictions on Sunday sales? Don't feel rushed into making a decision on where to put your retail store. Take your time, research the area and have patience. If you have to change your schedule and push back the date of the store's opening, than do so. Waiting to
  6. 6. INDORE as a RETAIL MARKET INDORE AS A TEST MARKET Indore is the largest city in Madhya Pradesh. Indore is amongst the fastest growing Tier II cities in India. It is the commercial capital of central India. Indore is the biggest contributor of revenue to the Madhya Pradesh government. It was always a major center for retailing industry. Indore also boasts being the best shopping destination in central India. The construction of several new shopping malls like the Treasure Island, Mangal City, Orbit, M2K Mega Mall, Cine Mall, Indore Center, C21 Mall (10 Floor Mall), have helped it develop this reputation.. Indore has emerged as a major test market for India. The most prominent reason for this is the diversity of its population. Indore is the most populous city in Madhya Pradesh with population of about 1,597,445 according to the 2001 census. The city is undergoing a fast rise in population owing to its growing stature as a commercial city. The average annual growth rate of population is around 3% as per the statistics of census 2001. Hindi is the main language spoken here, however, being ruled by Marathas, there is a large Marathi speaking population. There are many Gujarati speaking families here; Punjabi & Sindhi are also spoken in Indore. Few people speak Bengali too. Malvi is the local language spoken in Indore and its surrounding regions. So Indore is the only city of central India that is a melting pot of different Indian cultures. Another major factor contributing to the emergence of Indore as a test market is that per capita income of the population is rising. A major chunk of the city belongs to upper class and upper middle class which enhances the purchasing power of the people and increases their ability to spend. The above mentioned factors along with some other reasons have lead to the development of Indore as a major test market and thus brands like Globus, Radio Mirchi, Max etc chose to begin their success story from Indore.
  7. 7. INDORE OFFERS MYRIAD POSSIBILITIES It is an important industrial city with its robust textile, engineering and machinery sectors. An SEZ (Pithampur), and gems/ jewellery park are proposed in the city. Indore is a regional centre for trade and commerce, industrial centre and educational centre. The city is a large collection and distribution centre for grains, cloth, cotton, hardware, glassware, timber, vegetables and fruits. The city has the highest Work Participation Ratio of 32%, which indicates a greater probability of availability of Disposable income. INDORE - GROWTH POTENTIAL City Population Urban ( in lakh) 20.82 No of households Urban ( in lakhs) 3.87 ( source E & Y Report 2007) Indore is the most populated city in Madhya Pradesh. Indore has witnessed a steady population growth from 1951 to 1991, when the industrial activities and development in indore was on a high. The population growth in the last decade has been high with a decadal growth rate of about 46 % and the population according to 2001 census was 15 lakhs. THE RETAIL FUTURE IN INDORE Special Economic Zones – spread over 1000 hectare at pithampur is under development. Phase I of 138 acre is already operational. Phase II of 138 acre ( pharma and textile zone) is under development. Gems and jewellery park is also in process. With so much developmental activity centered in and around indore, it is but natural that the retail sector will witness a steady growth.
  8. 8. OUR CATEGORIES The two categories we have chosen for the study are: Retail Coffee Outlet Apparel Store The brands in the respective categories were COFFEE OUTLET – BARISTA APPAREL – PANTALOONS After surveying nearly five major retail outlets we chose these two because they two are totally different in terms of the sectors they belong to and the functioning. In terms of commonness both for that matter every retail outlet looks for • Consumer base • Paying Capacity • Socio Economic conditions of the residents around • A visible, accessible store location • Budget constraints • Parking • Competitors around • Store Size availability And as far as the difference is considered First it was in the CONSUMER BASE Both of the brands basically target upper segment of the society but what pantaloons looks for is rich paying families around, on the other hand Barista targets Youth and Business Clients. As both of them are centrally located, and where all the segments aimed for are present that’s dint came as a problem. Another difference being the STORE SIZE Pantaloons Stores are huge, spread in 1000s of square feet. This is a very big consideration before locating a store location. While for barista they are happy with a space od a few hundred of square feet. VISIBILITY Visibility becomes a very important factor in a apparel store to increase the number of foot falls in the store but barista looks for just the customers their main target is not about increasing just the foot falls. COMPETITORS With so many apparel stores present in the same mall, or in the vicinity, pantaloon wanted to be the first catcher. It holds a huge space on the ground floor and anybody entering in the mall wont miss pantaloon. While barista does not have an immediate competitor around so it happily took a peaceful corner, right in front of the elevator on second floor. POLICIES Future group being a very big brand holds at least around four stores in the same mall to capture a large chunk and having supportive mall policies. While barista deliberately goes for revenue rent model.
  9. 9. THE PROCEDURE First of all we determined the major factors that are to be considered while selecting a location on our own judgement and also the visit to a few retail chains in indore. After this, we visited the outlets of Pantaloon and Barista and interacted with the key personnel their. Based on the information provided by them we allotted weights to these factors. The weights were assigned on a scale of 1 to 10 with weights approaching 10 indicating great importance. Thereafter the outlets were given scores individually from 1 to 10 with scores approaching 10 referring to favored location status. Then the weights were multiplied with the respective scores to calculate the weighted score and finally a percentage was calculated by divining the weighted total with the maximum possible score and based on these percentages the locations have been compared.
  10. 10. STORE VISIT REPORT COMAPANY PROFILES - PANTALOONS Pantaloon Retail (India) Limited, is India’s leading retailer that operates multiple retail formats in both the value and lifestyle segment of the Indian consumer market. Headquartered in Mumbai (Bombay), the company operates over 12 million square feet of retail space, has over 1000 stores across 71 cities in India and employs over 30,000 people. The company’s leading formats include Pantaloons, a chain of fashion outlets, Big Bazaar, a uniquely Indian hypermarket chain, Food Bazaar, a supermarket chain, blends the look, touch and feel of Indian bazaars with aspects of modern retail like choice, convenience and quality and Central, a chain of seamless destination malls. Some of its other formats include Brand Factory, Blue Sky, aLL, Top 10 and Star and Sitara. The company also operates an online portal, A subsidiary company, Home Solutions Retail (India) Limited, operates Home Town, a large-format home solutions store, Collection i, selling home furniture products and eZone focussed on catering to the consumer electronics segment. Pantaloon Retail was recently awarded the International Retailer of the Year 2007 by the US-based National Retail Federation (NRF) and the Emerging Market Retailer of the Year 2007 at the World Retail Congress held in Barcelona. Pantaloon Retail is the flagship company of Future Group, a business group catering to the entire Indian consumption space.
  11. 11. COMPANY PROFILE - BARISTA Barista traces its roots back to the old coffee houses in Italy - the hotbeds of poetry, love, music, writing, revolution and of course, fine coffee. Drawing inspiration from them, we have single-handedly taken on the challenge to open people's eyes to the simple pleasures of coffee and revolutionize the coffee drinking experience in every city that we invade. To live up to this promise, we have employed skilled Italian roastmasters at our roastery in Venice. Sourced only the finest quality Arabicas. And have had our espresso bars designed to reflect a warm, friendly and inviting atmosphere. Add to this, a menu you can ponder over for hours and you have everything you need to escape the pressures of daily life. At last count, the aroma of fine Barista coffee permeated in over 100 espresso bars across India, Sri Lanka and the Middle East. If you have any trouble finding one, we suggest you simply follow your nose. Drawing inspiration from them, Barista has single-handedly taken on the challenge of transporting the magic of Italian coffee houses to countries across the globe. The cafes were designed to reflect the warmth, culture and romance of Italy. Barista is a wholly owned subsidiary of the Sterling InfoTech Group based in Chennai.The group, built over two decades, is a pioneer in technology – with diverse interests in areas such as broadband internet DSL services, agro products, food and beverage, health and fitness, among others.Today, the group stands on the threshold of the US$ 1 billion (Rs. 4500 crore) mark. Its commitment to its customers is stronger than ever; while its belief that business should address the needs of the consumer remains unshakeable.
  12. 12. QUANTIFYING THE DATA - Pantaloons FACTORS WEIGHTAG POINT WEIGHTED E S SCORES Consumer Base Accessibility Visibility Parking Space Cost ( BEP) Proximity with Competitors Proximity with Complementar y Stores Conclusions - Pantaloons Location plan is feasible enough. Being centrally located it is able to attract the masses. Since its target audience is the upper class of the society, the location is close to its customer base. However the location costs a lot to the owner and a major part of the revenues is used in the location which happens to be the major drawback. Moreover since its located in the mall the parking space is common to all the stores. And thus it also gets crowded specially in weekends and acts as a repellent for the store.
  13. 13. QUANTIFYING THE DATA - Barista FACTORS WEIGHTAG POINT WEIGHTED E S SCORES Consumer Base Accessibility Visibility Parking Space Cost ( BEP) Proximity with Competitors Proximity with Complementar y Stores Conclusions – Barista is suitably located. As barista aims at perfectly catering the affluent segment of the society, its location is visible because the major chunk of the city belonging to upper middle class visits TI. Thus it can be said that Barista has chosen a location which is close to its target audience and is easily accessible too.
  14. 14. APPENDIX While carrying out the field work for the project we happen to visit few others site locations too. Though we have chosen Barista n Pantaloon, we also had a detailed talk with the store managers of Vishaal and Big Bazaar. Here’s a report of the visit.