www.bradford.ac.

uk/management
Retail Location
Lecture 4
Lecture Objectives
To ensure you appreciate the importance
of location within retail strategy

To explain how retail location may be
classified

To consider the location decision process
Importance of Location
Location, location and location Sir Charles Core


at least 85% of store performance is
determined by local and external
factors Collins 1992
Importance of Location
Store choice factors - Food and Grocery
Brand choice
Price
Convenience
Customer services
Peripheral services




Location factors
Traffic

Distribution Intensity

Proximity v destination

Strength of proposition

Back to marketing basics understanding and delivering
customer needs better than competition

Location Classification
Incremental v planned

City Centre v out of town

Pre-existing v Brownfield v Greenfield
How do retailers decide?
Intuition and availability

Paper based v computer based

Complex due to saturation/planning laws

Choose location to fit offer or flex offer to
fit location??
How do retailers decide?
Macro location evaluation
Sequential Hurdle
Multi-factor
Micro location evaluation

Site selection
Micro evaluation factors
Population

Infrastructure

Retail outlets (number and type)

Costs
Population
Who are my customers?

Are there enough of them?

Do I need to/can I adapt my offer?
Defining a potential trade area
Central Place Theory
Attractiveness of store
Cost/benefit outcomes
Land Value Theory
Sites go to highest bidder
He who affords wins
Minimum Differentiation
Spatial Interaction
Concentric Zones
Shopper mobility/time constraints
The principle of minimum
differentiation (PMD)
PMD describes the intra-centre agglomeration of
similar retail outlets. It is found that many retailers
choose to locate near similar retailers or
complementary activities, in order to attract a higher
flow of customers jointly.
Assumptions: a retailer would be able to maximize
profits by locating or relocating closer to a
competitor in order to gain a larger market area.
Spatial Interaction
Gravitational model
(Reillys Law)
How competing retail areas affect shoppers in intermediate residential
areas
The selection of a primary trading location is based upon the idea that
consumers are attracted towards one location as opposed to another
by its draw or poll effect.
Assumptions:1) two competing area are equally accessible from a
major road 2) these retailers offers no additional competitive
advantage and are equally effective 3)the areas are similar in terms of
ethnic, civic and general architecture, facilities or parking
More customers will be attracted to the larger city or community to
shop due to the greater amount of store facilities and choice which
make any extra traveling time worthwhile.
An Example of Reillys Law
Concentric Zones
Shopper Mobility/time Constraints
Matrix
The Davies & Clarke Model
(1994)
Infrastructure
Pedestrian flow and entry routes
Public transport
Road networks
Parking
Visibility
Site Access
Retail Outlets
Total stores
Planning applications
Likely disposals
Complementary stores
Competing stores

Summary
To make sales you need shoppers

To get enough shoppers you need to be in
the right place for your customers

Location decisions involve a complex
process of data collection and analysis