Retail LocationRetail Location

The Retail Property Developer’s

Simple Truths!

Value Creation!

The Single Purpose of

Retail Property Development

=

To Start the Value To Start the Value Creation Process you Creation Process you

need 3 things:need 3 things:

11 A Good LocationA Good Location

2 A Good Location

3 A Good Location

1.Importance of store location

2.Types of locations

3.Steps involved in choosing a location

4. How to evaluate retail location?

1.Importance of store location

Location decision cannot be changed easily once store is open

Remember that:

A Customer sees more in an hour

Than Management sees in one year!

Retailing: Location

2 Type of location

• Freestanding /isolated store

• Part of business district

• Part of shopping center

Free Standing/Isolated Free Standing/Isolated StoresStores

Normally located along major traffic artery For eg:-For eg:-

Gas stations,Gas stations, Fast food & hotels Fast food & hotels

on highways.on highways. Large-store Large-store

formatsformats Wal-MartWal-Mart

Convenience Convenience storesstores 7-Eleven7-Eleven

Retailing: Type of Location

Isolated StoresIsolated Stores

AdvantagesAdvantages* No No

competitioncompetition* Low rental Low rental

costscosts* Good for Good for

convenience convenience storesstores

* Easy parkingEasy parking

DisadvantagesDisadvantages* Difficulty Difficulty

attracting attracting customerscustomers

* Travel distanceTravel distance* High advertising High advertising

expensesexpenses

Retailing: Type of Location

2 Part of business district

Place of commercial activity in the city

Central business district CBD:•High rent /cost , less parking area

•Good accessibility ,no need to draw customers

•For e.g.

•Mumbai : Nariman point / Delhi: Connaught place,•Pune “ Lakshmi Road”

Secondary business districtSecondary business district: : It has evolved over a period of time It has evolved over a period of time

with the spread of population.with the spread of population.

God mix of retailersGod mix of retailers

Stores are smaller than CBD with Stores are smaller than CBD with adequate transportationadequate transportation

: Parihar Chowk in Aundh: Parihar Chowk in Aundh

Neighborhood business districtNeighborhood business district : :

Unplanned shopping area to serve Unplanned shopping area to serve the needs of the neighbourhoodthe needs of the neighbourhood

For e.g.For e.g.

Super markets/ small shopsSuper markets/ small shops

Stationery storesStationery stores

Medical shopsMedical shops

3- Part of Shopping Center

A group of retail and other commercial establishments that is planned , developed , owned and managed by single propertyShopping centers

Steps involved in choosing Steps involved in choosing a a

retail locationretail location

Retailing: Choosing retail location

First decide region …City , State, International Market.

Steps to be followed after identification ofregion

• Identify market • Evaluate demand/ supply ..market potential• Identify most attractive site• Select best site

Retailing: Choosing retail location

Step 1: Identify market in which to locate the storeMarket attractive nessShould understand the market well.For eg:-

India is a country with its own needs and peculiarities and needs.

Markets of Europe are different from that of America and far East.

Retailing: Choosing retail location

Step 2: Determining the market potentialElements to be considered

A) Demographic features :

• Only knowing the size of population is not enough.

• Rural and urban breakup is to considered.

• Level of literacy, education in population

b) Characteristic of house hold b) Characteristic of house hold areaarea

Household income and Household income and distribution of income in area, distribution of income in area, age, employment levelage, employment level

For eg:For eg: High fashion apparel retail store High fashion apparel retail store

may not succeed in low income may not succeed in low income households.households.

c) Competition and compatibility: c) Competition and compatibility:

For eg:-For eg:-

Gift shop may be situated near a Gift shop may be situated near a department store, restaurant, theatredepartment store, restaurant, theatre

Bad idea- high fashion boutique next Bad idea- high fashion boutique next to bakery or hardware store.to bakery or hardware store.

area / business income analysis i.e. area / business income analysis i.e. strength and weakness of the strength and weakness of the competitorscompetitors

Retailing: Choosing retail location

d) Laws and regulations: Number of working hours the store can operate

min wages and holidays to be given to the persons working.

Parasite : Depends on other Parasite : Depends on other storesstores

for e.g. Pan walas near for e.g. Pan walas near restaurants, snack bar in a restaurants, snack bar in a shopping center.shopping center.

Destinations versus Destinations versus ParasitesParasites

Destination storesDestination stores have a better have a better assortment, better assortment, better promotion, and/or promotion, and/or better imagebetter image

It generates a It generates a trading area much trading area much larger than that of larger than that of its competitorsits competitors

Dunkin’ Donuts: Dunkin’ Donuts: “It’s worth the “It’s worth the trip!”trip!”

Parasite storesParasite stores do do not create their not create their own traffic and own traffic and have no real have no real trading area of trading area of their owntheir own

These stores These stores depend on people depend on people who are drawn to who are drawn to area for other area for other reasonsreasons

Retailing: Consumer Behavior

Step 3 and 4 : Identify alternate sites and select the site

A retailer strives to find the 100% location.

Factors which affect his decision are:-

Traffic: Vehicular/pedestrian

Traffic for high fashion apparel is different from that of hypermarket.

Accessibility of the marketAccessibility of the market : Public : Public transport / road /train connectiontransport / road /train connection

For e. g :For e. g :

Colaba or Linking Road in Mumbai Colaba or Linking Road in Mumbai are more accessible than Kamala are more accessible than Kamala Nagar & PowaiiNagar & Powaii

Total number of stores and type of Total number of stores and type of stores in the areastores in the area..

More the stores more the people More the stores more the people visiting, type of store is important. visiting, type of store is important.

Medical shop on Lakshmi road a misfitMedical shop on Lakshmi road a misfit

Amenities availableAmenities available: parking: parking

Facilities like free & ample Facilities like free & ample parking is important.parking is important.

Buy /lease decision: Buy /lease decision: long, long, medium , shortmedium , short

Paying high rent is not feasiblePaying high rent is not feasible

Product mix offered : Product mix offered :

super market vs high fashion super market vs high fashion garmentsgarments

Grocery in commercial area may Grocery in commercial area may be a misfit.be a misfit.

It should be located in some It should be located in some residential areas.residential areas.

What Is One Of the What Is One Of the Most Important Things Most Important Things in Retailing?in Retailing?

Location! Location! Location!