Stephanie Wilson, a municipal government employee wants to open her own ready-to-wear

Boutique. For establishing her business, she is considering three locations. Each location has
their own positive and negative points.

First location:
The Downtown Arcade:
Positive Points:
1. Accessibility. Downtown Arcade locates at the city’s central business district. So the
transportation is easily available at that location.
2. Opportunity of bigger footfall. The proposed renovation of the building includes a
three level shopping facility, low rate garage with validated parking and convention
centre complex. Total 68 shops are planned for 1st and 2nd floor and a series of
restaurant on the 3rd.

Negative Points:
1. It will take six years to complete this complex. But Stephanie considering to start her
Boutique for a long time. Waiting another six years may not be a wise decision.
2. The Arcade once a centre of downtown trade, but it’s been vacant for the last 15 years
and right now this location has no consumer push. So opening her new Boutique shop
in this location would be a bit of gamble.
3. The rent of the location is on a higher side. For 900 sq. ft. the rent is $18,000 per
annum ($20/sq. ft.). If sales exceed $225,000, rent will be calculated at 8% of sales.
So there is a chance of even higher rent than $18,000. And more over she has to sign a
three-year lease for her shop. Which is a big commitment for a new business owner.

Second Location:
Tenderloin village:
Positive Points:
1. Stephanie Wilson lives in this urban location called Tenderloin Village. It is very
trendy village thanks to it’s neat, well-kept brownstones and comfortable
neighbourhood.
2. Being a resident of Tenderloin village everybody knows Stephanie personally.
Knowing her customers personally would be big help for her.
3. For the 900 sq. ft. of location the annual rent is $15,000 and no extra charges based on
the level of sales. The landlord also knows Stephanie personally so the rent can be
negotiable.
4. It is secure neighbourhood for her children, and she can also spend more time with her
family.
Negative Points:
1. Tenderloin village already have 3 small women’s speciality clothing store. For a
location like Tenderloin it would be big competition for a new Boutique business.
2. Neighbourhood preconception about her. As a municipal government employee
Stephanie may have lesser appeal as a businesswoman to the village residents.

Third Location:
Appletree Mall:
Positive Points:

1. The mall located at a sub urban area just off a major interstate highway about 8 miles
from downtown. So transportations accessibility would be big help.
2. The mall has been open for 8 years. It already captured the retail business in the city’s
southwest quadrant. So it’s reputation would be a big help
3. The space available in this location is bigger than the previous two.
4. The mall’s sales are still 12 % better than last year. So there would be a constant
growth in sales.
5. First mover advantage.

Negative Points:
1. The mall already has 9 women’s clothing stores. Among them 3 stores are
considerably in higher price category than what Stephanie has in mind, and the other
6 stores falls in same domain as Stephanie’s Boutique. So the competition is much
higher than the other two locations.
2. The rent of this place is very high, $28,000 annually for 1,200 sq. ft.($24/ sq. ft.) and
in addition if sales exceeds $411,500 then the rent would be also increase (8% of total
sales). There’s an additional charge of 1% of sales to cover common-area
maintenance and mall promotions.

From the above discussion we can conclude that Stephanie should go with the 2nd location.
For opening a new business Tenderloin village would be perfect for her because of her
personal connection with the local customers and low rent of the shop. And after few years if
the downtown arcade shows some promise then she can move her Boutique at that location.