This document discusses factors to consider when evaluating potential retail locations. It outlines the importance of location for retailers and describes key criteria like population characteristics, transportation access, competitive situation, and more. A trading area analysis is recommended as the first step to describe and evaluate potential areas. The document then presents a model for analyzing retail trade areas that aims to maximize total demand. It provides location details, criteria weightings, and calculates distances between locations to determine the optimized site.

1. Retail Location Model
Submitted By: Group 1
Krishna Bhawsar (007)
Mayur Verma (008)
Roziwala Suraj (016)

2. Structure
– Importance of location for retailer
– Trading area analysis
– Chief factor to consider in evaluating an area
– Weightages given to a criteria
– Analyzing retail trade area
– Model applied

3. Importance of location
– Critical importance - can make or break the business
– Must be consistent with its mission and goals
– Some basic questions to be answered:
– Target customer?
– What are you selling?
– Retail space or storage space size of your store

4. Type of goods
– Convenience goods
– Specialty goods
– Infrequent goods

5. Population and Customer
– Research the area thoroughly before making a final decision.
– Obtain location demographics on the area's population,
income and age.
– Find a location where your customers live, work and shop.

6. Accessibility, Visibility and
Traffic
– Don't confuse a lot of traffic for a lot of customers.
– 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?

7. Cont...
– Visibility
– 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.

8. 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?

9. Other 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?

10. Trading-Area Analysis
– Trading area- geographic area containing the customers of
a particular firm or group of firms for specific goods or
services
– First step in the choice of a retail store location is to
describe and evaluate alternate trading areas and then
decide the most desirable one

11. Benefits of thorough trading
area analysis
– Reveals opportunities
– Focus on promotional activities is ascertained
– New customers or take business from existing stores
– Anticipate- whether competitors want to open nearby
stores if the firm doesn't do so itself

12. Cont...
– Best number of stores for a chain to operate in a given area
is calculated.
– Geographic weaknesses are highlighted
– The impact of the internet is taken into account.
– Other factors (transportation, labour availability etc.) are
reviewed.

13. Primary, Secondary and
Fringe trading areas

14. Destination and parasite
store
– Destination store: better assortment, promotes more and
creates a stronger image
– Parasite store: does not create its own traffic and has no
real trading area of its own

16. Analyzing
retail trade
areas

18. Model
Objective - Maximize total
demand at Client's side

19. Assumptions
– We are working for Big Bazaar
– Determining location for opening 4th store in Ahmedabad
– Some data are fuzzy ( randomly generated to demonstrate
the model). To do actual analysis we needs primary
research to determine various data and POS (point of sale)
data

20. Comparison of different
Model
Characterisitics Huff’s Law Reilly’s Law Our Model
Law/Model Law of shopper
attraction
Law of retail
gravitation
Competition
Ignoring Model
Formula Pij=(Sj/(Tij)^λ)/(
𝑗
𝑛
𝑆𝑗/(𝑇𝑖𝑗)^λ
Dab=d/1+ 𝑃𝑏/𝑃𝑎 Min
𝑗𝜖𝑆∪𝐹 𝐴𝑖𝑗 𝑊𝑖 𝐷𝑖𝑗
Pij= Probability of
consumer travelling
from home I to
shoping location j
Sij = square footage
of selling space in
shopping location j
Tij = travel time
λ= parameter used
to measure effect of
travel time
N= number of
shopping location
Dab = Limit of city
A’s Trading area,
measured in miles
along the road to
city B
d = distance in miles
along a major
roadway between
cities A & B
Pa = population of
city A
Pb = population of
city B
Aij = 1, if demand
point I is allocated to
site j.
Wi = weightage of
each
Wards(location)
Dij = [(xi-uj)^2+(yi-
vj)^2)]^(1/2)
Distance from all
demand points to all
sites

21. Criteria - Overview
– Population Size and
Characteristic –
– No. of houses
– Total population
– Total literate population
– Availability of Store
location
– Transportation Access
– Traffic Conditions
– Closeness to source of
supply
– Delivery Costs
– Timelineness
– Availability of Labor
– Clerical
– Managerial
– Competitive Situation
– Size of Existing Competitors
– Level of Saturation

22. Criteria
– Population Size and characteristics
– Extensive knowledge about an area’s population characteristics
can be gained from secondary sources such as AMC
(Ahmedabad Municipality Corporation)
– After converting, 0-0.4 –poor, 0.4-0.7 – moderate, 0.7-1 – good
– Map of Ahmedabad is shown on next slide with 57 wards
– Xi & Yi are the coordinates of the centroid of the wards.

23. Criteria
– Availability of store location
– Transportation Access provides the ease of availability of public
transportation to that ward. Such data can be obtained from
AMTS ( Ahmedabad Municipality transportation service ) as
well as BRTS ( Bus rapid transit system) along with the data of
traffic conditions. It is a secondary source of data and is
provided in Sheet amts in Excel file provided.

25. Criteria
– Closeness to sources of supply
– Two criteria such as delivery costs : depends upon the truck
load and the location within the city. Prices fluctuate based on
the location of the ward where the delivery is to be made.
– Timeliness shows the constraints that suppliers faced while
making deliveries in the city during day. There are some
restriction of the truck size that cannot be entered in the city
during day.

26. Criteria
– Availability of Labor
– Staff – shop floor workers working at POS or stocking the
merchandise.
– Managerial – Managers such as operations and merchandise
manager required at location. Their availability depends upon
the type of location, its risk associated and the distance from
the city center or their home.

27. Criteria
– Competitive Situation
– Size of existing competitors can be determine by primary study
by calculating the assortment’s value.
– Level of saturation depends upon the various type of retailers
present in that particular ward ranging from Kirana shops to big
Bazzar.

28. Calculating weights Wi using
AHP(analytical Hierarchy
Process)
– To calculate weight for each location (wards) refer sheet
weight of excel sheet provided,
– 1st step – determine maximum value of each column. Then divide
every cell value to its respective maximum value found. We will get
output ranging from 0 to 1
– 2nd step – add the row value of each wards separately.
– 3rd step divide each total row value with the sum of all the value.
Thus we obtain weights corresponding to each location (wards)
– AHP is pairwise comparison on ratio scale method to
determine the ranking or weightage of various demand points.

29. Location of existing &
Proposed site
A (iscon ) B (himalaya mall)
existing sites F 800 700 940 458
c(shahibaugh) d (kankaria) e(RTO)
optimized sites S 1240 580 1300 800 1020 380
f (satellite) g(bodakdev)
competitive
sites C 980 680 820 620
complete set
of sites T
T Uj Vj
a 800 700
b 940 458
c 1240 580
d 1300 800
e 1020 380
f 980 680
g 820 620

30. Running Model
– Refer to excel sheet distance
– Location Shahibaugh shows least distance 2.06 out of
proposed three location. Hence it should be selected.
T Uj Vj Dij Model
f
iscon(51) a 800 700 254.6625 3.603339
himalaya(14) b 940 458 10.44031 0.221969
s
shahibaugh(53) c 1240 580 83.35466 2.067215
kankaria (9) d 1300 800 639.151 12.04332
rto(24) e 1020 380 192.0104 3.332077
c
satellite(59) f 980 680 63.32456 1.328803
bodakdev (49) g 820 620 902.3464 19.66612

31. Thank you