chapter 8 site locations and selection. why is selecting a location for your business important?

CHAPTER 8 SITE LOCATIONS AND SELECTION

WHY IS SELECTING A LOCATION FOR YOUR BUSINESS IMPORTANT?

DO YOU THINK A STORE HAS A GREATER CHANCE OF SUCCEEDING IN A MALL OR IN A STOREFRONT ON “MAIN STREET”?

TYPES OF STORE LOCATIONS• LOCATION RELATED TO THE STORE IMAGE AND THE

TYPES OF MERCHANDISE AND SERVICES THE STORE OFFERS

• CONSIDER TARGET MARKET AND CONVENIENCE

SHOPPING CENTERS• SHOPPING CENTER IS MADE UP OF A GROUP OF

RETAIL STORES AND SERVICE BUSINESSES.

• BUILT, OWNED, AND MANAGED BY ONE PERSON OR BUSINESS

• OWNER OPERATES CENTER AS A BUSINESS

• RETAILER (TENANT) RENTS FROM OWNER OR MANAGEMENT COMPANY

STRIP MALL• (ALSO CALLED A SHOPPING PLAZA, SHOPPING

CENTRE, OR MINI-MALL)• AN OPEN-AIR SHOPPING MALL WHERE THE

STORES ARE ARRANGED IN A ROW, WITH A SIDEWALK IN FRONT.

• TYPICALLY DEVELOPED AS A UNIT AND HAVE LARGE PARKING LOTS IN FRONT.

• FACE MAJOR TRAFFIC ARTERIALS AND TEND TO BE SELF-CONTAINED WITH FEW PEDESTRIAN CONNECTIONS TO SURROUNDING NEIGHBORHOODS.

STRIP CENTER ADVANTAGES• FEATURES BUSINESSES THAT CUSTOMERS OFTEN

VISIT

• CUSTOMERS CAN RUN SEVERAL ERRANDS IN ONE STOP

• RENT USUALLY LESS EXPENSIVE THAN AT MALLS

• CENTER MIGHT HAVE GROCERY STORE, DRUGSTORE, FAST-FOOD, DRY CLEANERS, PET STORE

MALL• SHOPPING AREA USUALLY ENCLOSED AND HAS

CUSTOMER PARKING NEAR THE MALL BUILDING.

• MANY TYPES OF STORES.

• DEPARTMENT STORES AS ANCHOR STORES AND ASSORTMENT OF SPECIALTY STORES AND FAST-FOOD RESTAURANTS

MALL ADVANTAGES• CUSTOMERS SHOP FOR SAME MERCHANDISE AT

SEVERAL STORES

• ONE-STOP SHOPPING

• LARGE SELECTION OF MERCHANDISE AND SERVICES

• CONVENIENCE OF CLIMATE CONTROL

KIOSKS • FREESTANDING, SMALL SHOPPING SPACE• VARY IN SIZE, 40 TO 500 SQUARE FEET• CARRIES ONE TYPE OF MERCHANDISE • OFFERS RETAILER OPPORTUNITY TO HAVE A

PRESENCE IN A MALL AND BENEFIT FROM CUSTOMER TRAFFIC

• RENT IS LOWER COMPARED TO A STORE

• “The upfront investment for a kiosk or a cart ranges from just $2,000 to $10,000, ….And today, carts and kiosks are a $10 billion industry.”

• “Flexibility is another advantage to staying small. License agreements for carts and kiosks are shorter and are usually renewed every month up to one year depending on the location. This arrangement makes it easy for entrepreneurs to "come in, try it out for a month, and if their product isn't working, shift to a new product line or close up shop and move to a new location,"

CENTRAL BUSINESS DISTRICT • AN EXTERIOR SHOPPING AREA THAT HAS

DEVELOPED WITHOUT VERY MUCH PLANNING

• MIX OF STORES IS VARIED

FREESTANDING LOCATIONS• A STORE THAT IS NOT ATTACHED TO OTHER

RETAILERS. • LOWER RENT• MORE PARKING• BETTER VISIBILITY• NO DIRECT COMPETITION• CONVENIENCE• FEW REGULATIONS ON SIGNS, HOURS, OR MERCHANDISE • ABILITY TO EXPAND

• HOME DEPOT, TARGET, COSTCO, BJ’S

BUSINESS CLIMATE• AFTER LOCATION, RETAILER DETERMINES

BUSINESS CLIMATE = EVALUATE DEMOGRAPHICS

• POPULATION OF TOWN, EMPLOYMENT TRENDS

• WILL TOWN ACCEPT NEW BUSINESS/ TYPE OF STORE?

• DOES STORE HAVE COMPETITION IN THE SURROUNDING AREA?

TRADE AREA• THE GEOGRAPHIC AREA FROM WHICH THE STORE

DRAWS MOST OF ITS CUSTOMERS.

• MAPPING OUT AN AREA WILL BENEFIT YOU AND MERCHANDISE BEING SOLD.

• http://www.lsmguide.com/trade-area-mapping-tool/

TRAFFIC• REFERS TO THE NUMBER OF PEOPLE WHO PASS A

RETAIL LOCATION DURING A GIVEN PERIOD OF TIME

• RETAILERS WILL COUNT TRAFFIC BEFORE MAKING FINAL DECISION ABOUT SITE

EASE OF TRAFFIC• REFERS TO THE ABILITY OF CUSTOMERS TO GET IN

AND OUT OF THE STORE SITE EASILY

• EASY TO GET TO OFF HIGHWAY, STREET LIGHT

PARKING• A PARKING AREA FOR CUSTOMERS IS A BIG

CONSIDERATION ESPECIALLY IF AREA IS HEAVILY POPULATED

• LOT SHOULD BE WELL LIT, MAINTAINED, AND WITH SECURITY

VISIBILITY • THE ABILITY OF THE SITE TO BE EASILY SEEN BY

CUSTOMERS

• ALSO HOW TO GET IN AND OUT OF STORE

COMPETITION• BENEFICIAL TO HAVE SOME TO COMPARE QUALITY

AND VALUE

• RETAILER SHOULD CONSIDER PROXIMITY OF LOCATION TO NEAREST MALL/SHOPPING AREA

ZONING• LAWS RESTRICTING TYPES OF BUSINESSES

LOCATED IN AN AREA

LEASE • A RENTAL AGREEMENT BETWEEN A LANDLORD AND

A RENTER FOR A PROPERTY

• CAREFULLY READ AND CLEARLY STATED

• CONSIDER HIRING ATTORNEY FOR REVIEW

• LEASE TO INCLUDE AMOUNT OF RENT, SERVICES PROVIDED, LENGTH OF LEASE, RENEWAL TERMS

LEASE TERMS• PERCENTAGE:

• MOST COMMON• RENT BASED ON % OF STORE’S SALES• RETAILER MAY ALSO PAY A MAINTENANCE FEE• MALLS USUALLY USE THIS TYPE

• DECEMBER: SALES $150,000 RENT BASED ON 6% = $9,000

• FIXED-RATE LEASE:•  • FIXED AMOUNT PER MONTH • USUALLY USED BY COMMUNITY AND

NEIGHBORHOOD CENTERS• ADVANTAGE = STABLE EXPENSES