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Exercise to do
Think Yourself as a Shoe Retail Merchant. You are thinking to open chain of your retail offering in different part of country. What factors will you be considering before the selection of Location. How will you estimate the demand and supply of shoe in that location.?
Agglomeration
Agglomeration captures the countervailing effects of complementarity and competition among retailers Intra-type - Stores of the same type locating near one another
Facilitates multi-purpose shopping, virtual one-stopshopping, and offers a wider variety of goods to choose from Examples: shopping centers and shopping malls
Agglomeration
Trip chaining Make unrelated purchases on the same trip Price search Search until you find an attractive price Cherry picking Visit multiple stores for their bargain prices
Agglomeration
RETAIL LOCATION
Relative to customers
Retail Competition
Destination Effect
Business District
Shopping Centers/Malls
Freestanding
Nontraditional
Mail-Order
Internet
Estimating Demand Data Source Trade Area Govt Agencies or Assumption Marketing Data Collectors PPI Index PPI is calculated by trade areas per capita income divided by Indias Per capita income. Indias Per capita Based on Censes Sales by Shoe Data Category. Calculate Spending in the particular store category plus spending in that category in general merchandise outlet.
Illustration Trade Area Population : 19,065. PPI = 100*(Rs 22,427/ Rs. 21,587) = 104.
Sales per capita : shoe store Rs 79.87 Shoe department of general Merchandise stores Rs 36.41
Estimating Demand Data Source Trade area per Calculation based capita sales by store on above data category
General Merchandise Store: Rs.36.41* 104/100 = Rs 37.82. Total = Rs 120.80 Trade area demand Calculations based Sales demand in sales on above data Rs.82.98* 19,065 = Rs 1,582,000. General Merchandise Rs.37.82* 19,065 = Rs 721,000.
Illustration Bata- 1000 Sq feet Khadim 2000 sq feet Total 3000 Sq feet.
Discount Store 4000 Sq Ft. Department Store 4000 Sq ft. Total 8000 Sq ft. (3000 +8000) Sq ft.= 11000 Sq Ft.
Retail gravity theory suggests that there are underlying consistencies in shopping behavior that yield to mathematical analysis and prediction based on the notion or concept of gravity.
Huffs Law
Assumptions: The proportion of consumers patronizing a given shopping area varies with the distance from the shopping area The proportion of consumers patronizing various shopping areas varies with the breadth and depth of merchandise offered by each shopping area The distance that consumers travel to various shopping areas varies for different types of products purchased The pull of any given shopping area is influenced by the proximity of competing shopping areas
Probability = .43 .43 x 12,000 students = 5,160 customers 5,160 customers x $150 = $774,000
Repeat steps 1 to 3 for the remaining areas and then sum them.
Saturation theory examines how the demand for goods and services of a potential trading area is being served by current retail establishments in comparison with other potential markets.
IRS = (H X RE)/RF
where IRS is the index of retail saturation H is the number of households in the area RE is the annual retail expenditures for a particular line of trade per household in the area RF is the square footage of retail facilities of a particular line of trade in the area (including square footage of the proposed store)
BPI = 0.5(the areas percentage of Indian effective buyin + 0.3(the areas percentage of Indian retail
sales)