The document provides a comprehensive overview of retail store location and layout, emphasizing the importance of selecting appropriate locations based on factors such as customer demographics, competition, foot traffic, and accessibility. It outlines various types of retail locations, location-based strategies, research methodologies, and the overall decision-making process for retail site selection. Additionally, it discusses store layout design, strategic retail planning, and differentiation strategies critical for the success of retail businesses.

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Jayanti R Pande
email: jayantipande17@gmail.com
RTMNU MBA Sem 4 – Retail Sales
Management & Services Marketing
[Marketing]
MODULE NO 2: STORE LOCATION & LAYOUT
RETAIL STORE LOCATION
Retail store location refers to the physical
position of a store where customers can
purchase products or services. It plays a
critical role in determining the store's success
by influencing factors such as foot traffic,
accessibility, and visibility. When selecting a
location, retailers consider various aspects like
demographics, competition, transportation,
and cost.
IMPORTANCE OF LOCATION IN RETAIL
Foot Traffic: Location impacts customer flow
and sales potential.
Accessibility: Convenient access enhances
customer reach.
Target Demographics: Location should align
with the desired customer base.
Competitor Proximity: Consider proximity to
competitors for strategic advantage.
Cost-effectiveness: Evaluate expenses to
ensure profitability.
TYPES OF RETAIL LOCATIONS
1 CBDs: Central business districts offer prime
locations with high foot traffic and
accessibility to public transportation.
2 Destination: These retail locations aim to
attract customers who are willing to travel for
a unique shopping experience.
3 Standalone: Retail stores located in
standalone buildings, providing convenience
and easy access for customers in suburban or
rural areas.
4 Convenience: Small retail locations
strategically placed in high foot traffic areas,
designed for quick and easy purchases.
FACTORS AFFECTING RETAIL LOCATION
DECISIONS
1 Pedestrian traffic: Higher foot traffic boosts
sales and brand exposure.
2 Transportation: Access to highways, public
transport, and parking facilities is crucial.
3 Parking facilities: Adequate parking attracts
customers, especially in suburban areas.
4 Store composition: Layout, design, and
ambiance impact the customer experience.
5 Specific site: Surrounding environment,
demographics, and zoning regulations affect
viability.
LOCATION BASED RETAIL STRATEGIES
1. Department stores: Prominent locations,
wide product range, diverse customer
segments.
2. Specialty apparel stores: Trendy areas,
unique shopping experience, specific
customer preferences.
3. Category specialists: High-demand areas,
specialized product category, targeted
customers.
4. Grocery or food stores: Convenient
locations, accessibility, meeting daily food
shopping needs.
ISSUES IN SELECTING A RETAIL LOCATION
1 Demographics: Aligning location with target
market's profile.
2 Trend consideration: Adapting to consumer
preferences for long-term viability.
3 Property asset: Assessing suitability, size,
layout, and infrastructure.
4 Limited sites: Difficulty in finding desirable
locations.
5 High investment: Evaluating financial
feasibility and return on investment.
PROCESS OF RETAIL LOCATION & SITE
SELECTION
1 Select city: Choose a city based on target
market and growth potential.
2 Evaluate trade locations: Assess customer
attraction, access routes, zoning, and product
demand.
3 Analyze alternative sites: Consider traffic,
visibility, accessibility, and parking.
4 Final site selection: Evaluate potential sites,
including customer data, lease terms, and
financial viability. Choose the best option.
RETAIL LOCATION RESEARCH
Retail location research involves gathering
and analyzing data on demographics, market
trends, competition, foot traffic patterns, and
other factors to identify the most suitable
location for a retail store, ensuring optimal
customer reach and business success. It helps
retailers make informed decisions and
maximize the potential of their chosen
location.

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Jayanti R Pande
email: jayantipande17@gmail.com
PROCESS OF RETAIL LOCATION RESEARCH
1 Market identification: Identify the target
market and specific customer segments for
the retail location research.
2 Determining market potential: Assess the
market size, growth potential, and demand
for the products or services offered.
3 Identify alternate sites: Explore potential
locations that align with the target market
and meet the desired criteria such as
demographics, competition, accessibility, and
cost.
4 Select the site: Evaluate the identified sites
based on factors like foot traffic, visibility,
competition, accessibility, and financial
feasibility. Choose the most suitable site for
the retail location.
TECHNIQUES OF RETAIL LOCATION
RESEARCH
1. Trade area analysis: Analyzing the
characteristics of the surrounding trade
area, including demographics, customer
behavior, competition, and market
potential.
2. Computerized simulation model: Utilizing
computer software to simulate and model
the impact of different retail location
scenarios based on factors such as
customer traffic, sales potential, and
market dynamics.
3. Analog: Drawing insights from similar
existing retail locations or market areas to
inform decision-making for the new retail
location.
4. Multiple regression method: Employing
statistical analysis to identify and measure
the relationship between various factors
(such as demographics, competition, and
accessibility) and their impact on retail
location success.
RETAIL LOCATION DECISIONS
Retail location decision refers to the process
of selecting the optimal physical location for a
retail store. It involves evaluating various
factors such as demographics, competition,
foot traffic, accessibility, visibility, cost, and
market potential to determine the location
that will best meet the needs of the target
market and contribute to the success of the
retail business. The retail location decision is a
critical strategic choice that can significantly
impact sales, profitability, and overall
business performance.
1 MARKET AREA/COUNTRY/REGION
ANALYSIS
Market area analysis defines the geographic
region around a retail location that is likely to
attract customers, aiding in targeted
marketing and advertising decisions.
DMA:
DMA stands for Designated Market Area.
It is a region defined by media market
researchers to identify the target audience for
television and radio stations.
DMA is based on population size,
demographics, and economic indicators.
MSA:
MSA stands for Metropolitan Statistical Area.
It refers to a region that includes an urban
center with a population of at least 50,000
people.
MSA also encompasses surrounding areas
that are economically and socially integrated
with the urban center.
2 TRADING AREA ANALYSIS
Trading Area Analysis: Retailers determine
their customer draw by analyzing data on
location, buying habits, and demographics.
This helps tailor marketing strategies, product
offerings, and pricing to maximize sales and
profits.
TYPES OF TRADING AREA
Primary Area: Region where retailer generates
majority of sales (50-80%).
Secondary Area: Surrounding region with
smaller sales contribution (10-20%).
Fringe Area: Outermost region with minimal
sales contribution (<10%)
TECHNIQUES OF TRADE AREA ANALYSIS
1. Reilly's Law of Retail Gravitation:
Consumers choose the closest and most
convenient shopping center based on
distance and attractiveness.
2. Huff's Gravity Model: Estimates the
probability of customer store choice
based on proximity and store
attractiveness.
3. Central Place Theory: Explains
development and function of urban

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Jayanti R Pande
email: jayantipande17@gmail.com
centers based on size, location, and customer
travel distance.
4. Herfindahl-Hirschman Index: Measures
market concentration based on
competitor market share.
5. Index of Retail Saturation Theory:
Determines optimal store number based
on population density, income, and
competition in the market.
3 SITE EVALUATION
Site evaluation is a crucial step in retail,
assessing suitability and potential. Factors
include customer proximity, accessibility,
visibility, demographics, competition, site
attributes, and financial aspects. The goal is to
make informed decisions aligned with
business goals and growth strategy.
TYPES OF RETAIL SITES
A] Freestanding sites: Independent retail
locations with their own dedicated space and
parking facilities, offering retailers control
over branding and store layout. Examples:
Standalone grocery store or a single-brand
retail store.
B] City or town location: Retail sites in central
business districts or commercial areas of cities
or towns, benefiting from high foot traffic,
proximity to other businesses, and easy
accessibility. Examples: Boutique clothing
store in a busy downtown area.
C] Planned shopping center: Purpose-built
complexes with various retail options in one
location, providing convenience and a diverse
shopping experience. Examples: Large
shopping mall with retail stores, restaurants,
and entertainment facilities.
RATING PLAN METHOD
The rating plan method is a site evaluation
technique used in retail to compare and rate
potential locations based on specific criteria.
Scores are assigned to factors, weighted
according to importance, and ratings are
given based on performance. Overall ratings
are calculated to facilitate comparative
analysis and location selection.
STORE LAYOUT Store layout refers to the
arrangement and organization of physical
space within a retail store to optimize
customer flow and product presentation.
TYPES OF STORE LAYOUT
1 Grid Layout: A store layout that features
long, straight aisles arranged in a grid pattern.
This layout provides a simple and organized
shopping experience, with easy navigation
and efficient use of space.
2 Loop/Racetrack Layout: A store layout that
forms a loop or racetrack shape, guiding
customers along a defined path. This layout
encourages exploration and maximizes
exposure to merchandise, with a clear
beginning and end point.
3 Free Flow/Boutique Layout: A store layout
that offers a more open and flexible design,
allowing customers to move freely and
explore different sections. This layout is often
used in boutique-style stores or those with
unique displays to create a personalized and
immersive shopping experience.
4 Spine Layout: A store layout that features a
central main aisle, often referred to as the
"spine," with smaller aisles branching off from
it. This layout provides a clear focal point and
efficient customer flow, with easy access to
different sections and departments.
STEPS FOR DESIGNING LAOUT
1 Select store layout type
2 Allocating selling space
3 Locating departments within the stores
4 organisations of merchandise within
departments
IMPORTANCE OF STORE LAYOUT
1 Improved customer flow
2 improved sales
3 Enhancing efficiency of store operations
4 increasing revenue
STRATEGIC RETAIL PLANNING PROCESS
1 Business Philosophy, Mission & Corporate
Objectives: Establishing guiding principles,
mission statement, and objectives to provide
a clear direction for the organization's
strategic decision-making.
2 Situation Analysis: Assessing internal and
external factors, including market,
competitors, customer behavior, and
strengths/weaknesses, to identify
opportunities and challenges for the retail
business.
3 Identification & Evaluation of Strategic
Opportunities: Identifying potential
opportunities like market expansion, product

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Jayanti R Pande
email: jayantipande17@gmail.com
line diversification, and technological
advancements, and evaluating them based on
alignment with objectives, feasibility, and
potential returns.
4 Development of Marketing & Positioning
Strategies: Creating marketing strategies,
defining target customer segments,
developing value propositions, setting pricing
strategies, and designing promotional
activities to effectively reach and engage
customers.
5 Evaluation & Control: Monitoring and
evaluating the implementation of the
strategic plan, establishing key performance
indicators (KPIs), conducting regular reviews,
and making necessary adjustments to ensure
the retail business is on track to achieve its
objectives.
TARGET MARKET: Specific group of customers
a retail business aims to serve, understanding
their characteristics and tailoring strategies to
meet their needs.
RETAIL FORMAT: Overall structure and
characteristics of a retail business, including
physical layout, product assortment, pricing,
and customer experience, designed to attract
specific customer segments.
STRATEGY AT DIFFERENT LEVELS OF
BUSINESS
1 Corporate Strategy: Overall direction and
scope of the company, focusing on long-term
goals and decisions for the entire
organization.
2 Business Strategy: Specific strategies for a
business unit or division, outlining how it will
achieve its objectives and contribute to the
corporate strategy.
3 Functional Strategy: Strategies at the
functional level (e.g., marketing, operations)
that support the broader corporate and
business strategies, guiding specific actions
within each department.
ELEMENTS FOR BUILDING SUSTAINABLE
COMPETITION
1 Location: Strategic and accessible location. 2
Merchandise: Unique and diverse product
assortment. 3 Price: Competitive pricing
strategies. 4 Service: Exceptional customer
service. 5 Communications: Effective
marketing and promotional activities.
Differentiation strategy sets a retailer apart
by offering unique products, exceptional
service, appealing store environments, and a
strong brand identity. It aims to create a
competitive advantage and customer loyalty
through unmatched value and experience.
Factors include-
Product Differentiation: Unique and exclusive
products or customized offerings not available
elsewhere.
Service Differentiation: Exceptional customer
service and value-added services.
Store Environment Differentiation:
Memorable in-store ambiance, layout, and
visual merchandising.
Brand Differentiation: Strong and distinctive
brand identity and positioning.
TYPES OF DIFFERENTIATION
1 Price Differentiation: Differentiating based
on competitive pricing strategies.
2 Image Differentiation: Differentiating based
on brand image and reputation.
3 Support Differentiation: Differentiating
based on exceptional customer support and
service.
4 Quality Differentiation: Differentiating
based on superior product quality.
5 Design Differentiation: Differentiating
based on unique product designs or store
aesthetics.
EST MODEL
Norm McMillan's EST theory:
Focus on one proposition: Retailers should
excel in one specific area that is important to
a specific group of customers.
Specific positioning: Strive for a specific and
targeted market position instead of trying to
be everything to everyone.
Long-term success: Prioritize long-term
success over short-term goals by focusing on
building a strong and differentiated position
in the market.
EST MODEL STRUCTURE
Cheap-Est: Focus on offering the lowest prices
in the market, such as Walmart.
Big-Est: Provide the largest assortment of
products in a specific merchandise category.
Hot-Est: Offer the right products as customers
start buying them in large volumes.

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Jayanti R Pande
email: jayantipande17@gmail.com
Easy-Est: Create a shopping experience that is
convenient and easy for customers.
Quick-Est: Organize the store to facilitate
quick and efficient shopping trips.
Black hole: Companies that are no longer
relevant to customers and face decline.
Application of EST Model:
EST MODEL APPLICATION
 Compare with competitors
 Identify growth opportunities
 Establish the strategic foundation of the
company.