Marketing bán hàng - Chapter 8: Retail site location

Chapter 8Retail Site LocationRetailing StrategyRetail Locations Chapter 7Site LocationsChapter 8Human Resource Management Chapter 9Information and Distribution Systems Chapter 10Customer Relationship Management Chapter 11Retail Market and Financial Strategy Chapter 5, 62Location ChaptersChapter 7General Description of the Location TypesAdvantages and Disadvantages of Different LocationChapter 8Considerations in Selecting Area for Locating StoreIssues in Evaluating Specific Sites3Factors Affecting the Demand for a Region or Trade Area4Economic ConditionsIt is important to examine an area’s level and growth of population and employment5CompetitionSome retailers are going urban:Lack of competitionHigh level of disposable incomeLarge, untapped labor forceThe McGraw-Hill Companies, Inc./John Flournoy, photographer6Strategic FitAnn Taylor – High income, dual career familiesHot Topic – teen, pop culture, grungeRoyalty-Free/CORBISREI – outdoor enthusiastsThe McGraw-Hill Companies, Inc./John Flournoy, photographerMcDonald’s – families with kids7Operating Costs Varies across areas Affected by proximity of area considered vs. other areas where retailer operates Local and state legal environment has effectNick Koudis/Getty Images8How Many Stores to Open in an Area?Economies of Scale vs. CannabilizationOne promotional costs for all stores open stores as long as profits increaseJustifies cost of distribution centerIncreases sales per storeTarget needs of regional marketManagement has control of market9Evaluating a SiteWhen evaluating and selecting a specific site, retailers consider:The characteristic of the siteThe characteristic of the trading areaThe estimated potential sales that can be generatedStockbyte/Punchstock Images10Site Characteristics11Traffic Flow and AccessibilityWhen traffic is greater, more customers shopGood for convenience retailersNot necessary for destination retailersToo much can impede access to storeAccessibility to store is as important as traffic flowPhotoLink/Getty Images12Convenience of Going to Site Accessibility Road pattern and condition Natural and artificial barriers Visibility Traffic flow Parking Congestion Ingress/egress©McGraw-Hill Companies/Jill Braaten, photographer13What Should Retailers Consider for Parking?Observe shopping center at various timesEmployee parking availabilityShoppers that use carsParking by non-shoppersTypical length of a shopping tripThe McGraw-Hill Companies, Inc./Andrew Resek, photographer14Adjacent TenantsWhat other retailers would Radio Shack want to be located near?Wal-Mart, Supermarket, Best Buy?In an enclosed mall, what retailers would Abercrombie & Fitch want to be located near?American Eagle Outfitter, Ann Taylor, Body Shop, Electronic BoutiquePrinciple of Cumulative Attractiveness15Grouping Retailers in an Enclosed Mall16Cost and RestrictionsCostsRentCommon Area Maintenance Fee/InsuranceAdvertising FeeRestrictionsSignageTenant MIxOperating hours17Steps in Evaluating Sales Potential of a SiteDefine Trade AreaDrive Time vs. Geographic DistancePrimary, Secondary, TertiaryEstimate Sales PotentialHuff ModelAnalog ApproachRegression Analysis18Zones in a Trade Area19U.S. Geological Survey, ESICTrade AreaPrimary zone - 60 to 65 percent of its customersSecondary zone - 20 percent of a store’s salesTertiary zone - customers who occasionally shop at the store or shopping center20Factors Defining Trade AreasAccessibilityNatural & Physical BarriersType of Shopping AreaType of StoreCompetitionParasite Stores21Measuring Trade AreasCustomer SpottingUse Census DataGeodemographic Information SystemsInformation on CompetitionYellow Pages22Customer SpottingPurpose: to spot, or locate, the residences of customers for a store or shopping center.How to obtain data: credit card or checks customer loyalty programs manually as part of the checkout process automobile license plates23Ryan McVay/Getty ImagesCensus Data of the U.S. Only once in 10 years. Each household in the country is counted to determine the numberof persons per household, household relationships, sex, race, age and marital status.24Geographic Information System (GIS)GIS – a system of hardware and software used to store, retrieve, map and analyze geographic data along with the operating personnel and the data that goes into the system. coordinate system (latitude and longitude) spacial features (rivers and roads) some firms offer services combine GIS with updated census data, consumer spending patterns and lifestyles25GIS Map for a Store Trading Area in an MSA26Data from GIS on Retail Expenditures in Trade Area27Metro RentersYoung – 20’sWell educatedProfessionalLarge citiesMedian income $50,000Spend on themselvesSurf Internet28Geodemographic ProfileWhat is the geodemographic profile for your neighborhood? of Target Customers in Shopping Center Trade Area30Indices for Assessing Sales PotentialMarket Potential Index (MPI)Number of Households Purchasing a Product or Service in a Trade AreaSpending Potential Index (SPI)Average Amount Spent on a Product or Service by a Household in a Trade Area31Sources for Measuring Competition The Internet - lists current locations and future sites. Yellow Pages PhotoDisc/Getty ImagesOther Sources: Directories published by trade associations, chambers of commerce, Chain Store Guide, International Council of Shopping Centers, Urban Land Institute, local newspaper advertising departments, municipal and county governments, specialized trade magazines, list brokers32Methods for Estimating DemandHuff’s Model Analog ApproachRegression AnalysisRoyalty-Free/CORBIS33Huff’s Gravity ModelBased on the premise that the probability that a given customer will shop in a particular store or shopping center becomes larger as the size of store or center grows and distance or travel time from customer shrinks 34Huff’s Gravity ModelP = S / T ijjijλΣjijλTS/35Huff’s Gravity ModelPRC = 10,000/5 2 = .889 10,000/52 + 5,000/52POH = 10,000/152 = .182 10,000/152 + 5,000/52.889 x $3 million + .182 x $5 million = $4,910,00036Application of Huff Gravity Model37Regression Analysis and Analog ApproachMRA = Factors affecting the sales of existing stores in a chain will have the same impact on the stores located at new sites being considered.Analog Approach = retailer describes the site and trade area characteristics for its most successful stores and attempts to find a similar site.38Regression Model for Estimating Store SalesStores sales = 275 x number of households in trade area (15 minute drive time)+ 1,800,000 x percent of household in trade with children under 15+ 2,000,000 x % of households in trade area in Tapestry segment “aspiring young ”+ 8 x shopping center square feet+ 250,000 if visible from street+ 300,000 if Wal-Mart in center39Edward Beiner OpticalAnalog ApproachDo a comp analysisDefine present trade areaAnalyze trade area characteristicsMatch characteristics of present area with potential sites40Competitive Analysis of Potential Locations41Competitive Analysis for Edward Beiner Optical42Trade Area for Edward Beiner Optical43Potential Locations for Edward Beiner Optical44Types of Leases Percentage Fixed - Rate Percentage leases – lease based on a % 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.45Variations of Percentage LeasesPercentage 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 salesPercentage 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.46Fixed Rate LeasesFixed 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 leasesGraduated Lease - a variation of the fixed rate lease-Rent increases by a fixed amount over a specified period of time.47Prohibited Use ClauseLimits the landlord from leasing to certain tenants.Some tenants take up parking spaces and don’t bring in shoppers: bowling alley, skating rink, meeting hall, dentist, or real estate office.Some tenants could harm the shopping center’s wholesome image: bars, pool halls, game parlors, off-track betting establishments, massage parlors and pornography retailers.48Exclusive Use Clause Prohibits the landlord from leasing to retailers selling competing merchandiseSpecify no outparcelsSpecify if certain retailer leaves center, they can terminate lease. Escape Clause Allows the retailer to terminate its lease if sales don’treach a certain level after a specified number of years, or if a specific co-tenant in the center terminates its lease.49