Types of Retail locations, its importance and Decisions making. Types 1. Freestanding or isolated store location 2. Part of a business center 3. Part of a shopping center

1. MUHAMMAD HASRATH
TYPES, IMPORTANCE AND DECISION MAKING

2. Various options are available to the retailer for choosing the location
of his store. The choice of the location of the store again depends on
the target audience and the kind of merchandise to be sold.
For example, the location of a convenience store would not be
suitable for that of an expensive jewellery/ fashion boutique.
Typically, a store location may be classified as:
l. Freestanding/ isolated store
2. Part of a business district
3. Part of a shopping center
Types of Retail Locations

3. 1. The Isolated Store or a Freestanding
Location
A freestanding location is a store located along a major traffic
artery, without any other competitive retailers around. The biggest
advantage of such a location is that there is no competition around.
Due to this, rents are usually low and facilities like ample parking
are available When taking a decision to locate a store as an isolated
store, a retailer needs to bear in mind that the advertising costs for
such a location are usually high, as the retailer needs to draw out
customers to visit the location. Eg: Gas stations, convenience stores,
hotels and fast food restaurants on highways.

4. 2. Part of a Business District
A retail store can also be located as a part of a business district. A
business district is a place of commerce in the city, which
developed historically as the centre of trade and commerce in the
city or town and most probably, would have no pre set format or
structure. A business district can be classified as a Central,
Secondary or a Neighbourhood Business District.
a.) Central Business District -CBD
• Traditional downtown business area in a city or town.
• A CBD is the hub of retailing activity in a city.
• Has large number of people in that area during business hours
• Hub for public transportation, high level of pedestrian traffic.
• Large no. of residents living in that area
Eg: Colaba in Mumbai, Commercial Street in Bangalore, Fifth Avenue-
NY

5. 3. Part of a Shopping Center
A shopping center has been defined by the International Council of Shopping Centers as ‘a group of
retail and other commercial establishments that is planned, developed, owned and managed as a
single property. The availability of parking is an important feature of a shopping center.
The basic configuration of a shopping center is a mall and a strip center. A mall is typically enclosed
and climate controlled. A walkway is provided between two facing strips of stores. A strip center on
the other hand, is a row of stores with parking provided in front of the stores.
The International Council of Shopping Centers has defined eight basic type of shopping centers. They
are:
1. Neighbourhood Shopping Center
2. Community Shopping Center
3. Regional Shopping Center
4. Super Regional Center
5. Fashion/ Speciality Center
6. Power Center
7. Theme Center
8. Outlet Center

6. Type of shopping centers
1. Neighborhood Center
This center is designed to provide convenience shopping for
the day-to-day needs of consumers in the immediate
neighborhood. A neighborhood center is typically a straight-
line strip with no enclosed walkway or mall area.
2. Community Center
A community center offers a wider variety of apparel and
other goods than a neighborhood center. Configuration is a
straight line, L- or U-shaped.
3. Regional Center
This center sells a full variety of general merchandise,
mostly apparel, in typically enclosed malls with inward
facing stores that share a common walkway. Its main
attractions are its anchors.

7. 4. Super-Regional Center
This center is similar to the regional center, but it is larger
with more anchors and carries a deeper selection of
merchandise. Super-regional centers draw from a larger
population base. Typical configuration is enclosed with
multi levels.
5. Fashion/Specialty Center
This center is composed of upscale national-chain specialty
stores with dining & entertainment in an outdoor setting.
They may not be anchored, but restaurants or
entertainment provide the draw of anchors. A sophisticated
design emphasizes the rich decor and landscaping.

8. 6. Power Center
Several large anchors, including discount department stores, off-
price stores, warehouse clubs or "category killers" (stores that
offer huge selection in particular merchandise categories at low
prices) dominate. The center consists of several freestanding
anchors and only a few, small specialty tenants.
7. Theme/Festival Center
The centers appeal to tourists; restaurants and entertainment
facilities may anchor. Anticipate seeing them in urban areas
adapted from older, possibly historic, buildings and part of
mixed-use projects.
8. Outlet Center
Outlet centers consist of manufacturers’ and retailers' outlet
stores selling their brands at a discount. They are found in rural
or tourist locations. Outlet center designs include enclosed malls,
a "village" cluster or a strip configuration.

9. The Importance of Store Location
- Store location is most often the first consideration in a store choice
- Having a good location increases chances of developing a strong
sustainable competitive advantage
- Location decisions can be risky and should be well-thought out
- Business location is a unique factor which the competitors cannot imitate.
Hence, it can give a strong competitive advantage.
- Selection of retail location is a long-term decision.
- It requires long-term capital investment.
- Good location is the key element for attracting customers to the outlet.
- A well-located store makes supply and distribution easier.
- Locations can help to change customer’s buying habits.

10. Step involved in choosing a Retail
Location / site selection
• In order to arrive at the decision on where to locate the retail store a
retailer needs to first on the region that he wants to locate the store.
• After identifying the region the following steps Have to be followed .
1. Identifying the market in which to locate the store.
2. Evaluate the demand and supply within that market. i.e.
determine the market potential.
3. Identify the most attractive sites
4. Select the best site available

11. Step 1: Market Identification
• The first step in arriving at a decision on retail location is to
identify the market attractiveness to a retailer.
• This is important that retail needs to understand the market well.
Especially in a country like India, where every region has its own
peculiarities and needs.
• Similarly, this is also Important, in case of an international
expansion. The characteristics of the markets of Europe are
different from those of America and the Far East.

12. Step 2: Determining the Market
Potential
In order to determine the market potential, the retailer
needs to take into consideration various elements. The
chief among them are:
• Demographic features of the population
• The characteristics of the household in the area
• Competition and compatibility
• Laws & regulations
• Trade area analysis

13. Step 2: Determining the Market
Potential
• Demographic features of the population
it is essential to know the break-up of rural and urban population as
growth of urbanization is again essential for the growth of retail.
The retailer also needs to understand the level of literacy and the
level of education in the population.
• The characteristics of the household in the area
The retailer needs to have a clear understanding of the average
household income and the distribution of this income in the area.
This is very essential as the level of income largely determines the
kind of retail facilities required For example, in a locality which has
household with relatively low income as regular bania is bound to
exist, however high fashion apparel store is unlikely to succeed.

14. Step 2: Determining the Market
Potential
• Competition and compatibility
While determining the market potential, it is necessary to check the
compatibility of the retail store with the other retail outlets in an area.
For example, a good location for a gift shop would be near a department
store or a theatre or restaurant, as such a location would allow potential
customers to spend time looking at the gift shops display windows.
Similarly, locating a high fashion boutique next to a bakery or a
hardware store may not be a very good idea.
• Laws & regulations
Before opening a retail store in a region, it is essential to have a good
understanding of the laws and regulations for opening a retail shop in
the area. Various permissions which are needed, the hours for which the
store can operate, the minimum wages to be offered to the persons
working, the holidays required, etc. can affect the profitability of the
store.

15. The factors affecting the choice of a market
Demographics of
population & area
Laws &
Regulation
Trade area
analysis
Competition

16. • A trade area is the geographic area that generates the majority of the
customers for the store.
• Primary trade area: primary trading covers between 50-80% of the store’s
customers.
• Secondary Trading Area: this area contains the additional 15- to 25% of
the store’s customers.
• Tertiary trading area covers the balance customers. These trading areas
are dependent on distance and do not always have to be concentric in
nature.
Trade area analysis:
Retail
Store
Primary trading area
Secondary Trading Area
Tertiary trading area

17. Steps 3and 4: Identify Alternate Sites and Select
the Site
After having determined the market potential and taking a decision on the
location of the store, a retailer has to select the site to locate the store.
Though each retailer strives to find the 100% perfect location, there are
various factors which affect his decision.
• Traffic
This refers to both pedestrian and vehicular traffic. The traffic that passes
the site is an important determinant of the potential sales that can be
generated.
• Accessibility of the Market is also a Key Factor
Accessibility of the market is defined in terms of availability of public
transport and road/local train connections to reach the market.
• The Total Number of Stores and the Type of Stores that Exist in
the Area
A market with a large number of stores, usually, has more people visiting the
area than locations where one or two stores exist. The type of stores that
exist in the area is also equally important. If a particular place is a market for
cloth or footwear, it may not be the best place for other product categories

18. Steps 3and 4: Identify Alternate Sites and Select
the Site
• Amenities Available
Depending on the type of product to be retailed, facilities like free and
ample parking become important.
• To Buy or to Lease
An important factor to be considered before taking the decision on the site is
the decision to buy the More or to lease it. If the store is to be leased, then
the terms of lease will have to be studied carefully. The length of the lease
period should not be too long or too short.
• The product mix offered
The kind of product mix to be offered by the retailer also effects his choice
of location. For example, a food and grocery retailer or a supermarket would
need to locate his store near or in a residential area. Locating a supermarket
in a pure business district may not be very advisable.