LOCATION

INTRODUCTION
Location plays an very important role in retail Selecting a location the process of determining a geographic site for a firms operation. Location decisions profound effect on a firms competitive advantage.

They are crucial because they affect the firms long term financial, employment & distribution patterns.

Criteria to be considered:
Size & characteristics of population Level of competition Access to transportation Availability of parking Attributes of nearby stores Property costs Legal restrictions

Types of Retail Locations

Freestanding/ Isolated Store Part of a Business District/ High Street Location Part of Shopping Centre/Mall

Central Business District (CBD)

Advantages Disadvantages

Draws people into areas during business hours Hub for public transportation Pedestrian traffic Residents Array of retail stores in small sizes

High security required Shoplifting Parking is poor Evenings and weekends are slow High rents and taxes

Spike Mafford/Getty Images

7-5

Shopping Centre/ Mall Location

Advantages of shopping centers

Heavy traffic resulting from the wide range of product offerings Cooperative planning and sharing of common costs Access to highways and available parking Lower crime rate Clean and neat environment

Disadvantages of shopping centers

Inflexible store hours Medium to High rental cost Potentially too much competition and much of the traffic is not interested in a particular product offering

Neighborhood and Community Centers

Managed as a unit
Advantages
The McGraw-Hill Companies, Inc./Andrew Resek, photographer

Convenient locations Easy parking Low occupancy costs

Disadvantages Limited trade area Lack of entertainment No protection from weather

Attached row of stores Onsite parking

7-7

Steps Involved in Choosing a Retail Location

Market Identification

Determining the Market Potential

Identification of site & site selection

I. Market Identification

II. Determining the Market Potential

Demographic features Characteristics of households Competition & compatibility Laws & regulations Trade area analysis

III. Identification of site & Site selection

Accessibility of market Total no. of stores & type of stores in that area Amenities available To buy or lease

Retailer Formats for AccessingYour Target Market

Retail Formats

Store-Based

Nonstore-Based

Business District

Shopping Centers/Malls

Freestanding

Nontraditional

Street Peddling

Mail-Order

Automated Merchandising Systems

Direct Selling

Interactive TV

Internet

Types of Leases
Percentage Fixed - Rate Percentage leases - rent is based on a percentage of sales.

Retailers also typically pay a maintenance fee based on a percentage of their square footage of leased space. Most malls use some form of percentage lease.

Variations of Percentage Leases

Percentage lease with specified maximum percentage of sales up to a maximum amount.
Rewards retailer performance by allowing retailer to hold rent constant above a certain level of sales

Percentage lease with specified minimum - retailer

must pay a minimum rent no matter how low sales are.

Sliding scale - percentage of sales as rent decreases as

sales go up.

Fixed Rate Leases

Fixed rate leases - used by community and
neighborhood centers. Retailer pays a fixed amount per month over the life of the lease. Not as popular as percentage leases

Graduated lease - a variation of the fixed rate lease

Rent increases by a fixed amount over a specified period of time.

Percentage or Fixed Rate Leases

Maintenance-increase-recoupment lease used with either a percentage or fixed rate lease. Rent increases if insurance, property taxes, or utility bills increase beyond a certain point.

Net lease - retailer is responsible for all maintenance

and utilities.

Checklist for Store Location

City/Town: Street/Address: Type of location: Freestanding/Mall/Shopping Complex Area of the store: No. of stores: Types of stores: Size/Area: Demographics of people surrounding the location: Socio-Economic Profile: Name & Address of the property owner Lease Rent/rate: Photograph of store/surrounding area

Our requirements We require property at Delhi, Mumbai, Bengalooru, Chennai, Hyderabad or Ahmedabad. 1500-2500 sq.ft. carpet area Single level, preferably ground floor Easily visible & accessible Heart of prime residential catchment/high street/mall/ down town locations Property should have a clear title with approved plans for commercial and retail activity Complete as-built plans of the premises

conclusion