chapter 16 location and layout copyright ©2009 pearson education, inc. publishing as prentice hall...

Copyright Copyright ©©2009 Pearson Education, Inc. Publishing as Prentice Hall2009 Pearson Education, Inc. Publishing as Prentice Hall 11Chapter 16 Location and LayoutChapter 16 Location and Layout

Location, Layout, and

Physical Facilities


Choosing a LocationChoosing a Location

The right region of the countryThe right region of the country The right state in the regionThe right state in the region The right city in the stateThe right city in the state The right site in the cityThe right site in the city

Logic of Choosing a Location

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall


Choosing the Region:Choosing the Region:Sources of Sources of InformationInformation

U.S. Census Bureau - U.S. Census Bureau - www.census.gov/www.census.gov/ American Community SurveyAmerican Community Survey Economic CensusEconomic Census

http://www.census.gov/


American DemographicsAmerican Demographics AmeriStatAmeriStat Demographics USADemographics USA Lifestyle Market Analyst Lifestyle Market Analyst Rand McNally's Commercial Atlas Rand McNally's Commercial Atlas

and Marketing Guideand Marketing Guide



Sourcebook of County Sourcebook of County DemographicsDemographics

Sales and Marketing Management’s Sales and Marketing Management’s Survey of Buying Power Survey of Buying Power

Editor and Publisher Market GuideEditor and Publisher Market Guide Small Business Development Small Business Development

CentersCenters



Geographic Information Geographic Information Systems (GIS)Systems (GIS) Computerized programs combining map-Computerized programs combining map-

drawing with database management drawing with database management capabilitycapability

Example: Census Bureau’s TIGER file Example: Census Bureau’s TIGER file Search through a database and then Search through a database and then

plot the results on a mapplot the results on a map Visual display reveals otherwise hidden Visual display reveals otherwise hidden

trendstrends


Selecting the StateSelecting the State

Factors to consider:Factors to consider: Proximity to marketsProximity to markets Proximity to needed raw materialsProximity to needed raw materials Labor supplyLabor supply Wage ratesWage rates Business climateBusiness climate Tax ratesTax rates Internet accessInternet access

Sample State Evaluation MatrixSample State Evaluation Matrix

Location CriterionWeight10-high1-low

Score5-high1-low

Weighted Score (weight x score)

Total Score Florida Georgia South Carolina

Quality of labor forceWage ratesUnion activityEnergy costsTax burdenEducational/ Training AssistanceStart-up incentivesQuality of lifeAvailability of raw materialsOther

Assign to each location criterion a weight that reflects its relative importance (10 high to 1 low). Then score each state on a scale of 1 (low) to 5 (high). Calculate the weighted score (weight x score) for each state. Finally, add up the total weighted score for each state. The state with the highest total weighted score is the best location for your business.

Assign to each location criterion a weight that reflects its relative importance (10 high to 1 low). Then score each state on a scale of 1 (low) to 5 (high). Calculate the weighted score (weight x score) for each state. Finally, add up the total weighted score for each state. The state with the highest total weighted score is the best location for your business.



Selecting the Selecting the CityCity Population trends Population trends Population densityPopulation density CompetitionCompetition

ClusteringClustering CostsCosts Local laws and regulationsLocal laws and regulations

ZoningZoning Compatibility with communityCompatibility with community


Quality of lifeQuality of life Transportation networksTransportation networks Police and fire protectionPolice and fire protection Public servicesPublic services Location’s reputationLocation’s reputation

Selecting the Selecting the CityCity


Retail and Service Retail and Service Location Location ConsiderationsConsiderations

Trade area sizeTrade area size Retail compatibilityRetail compatibility Degree of competitionDegree of competition Transportation networkTransportation network Physical, cultural, or Physical, cultural, or

emotional barriersemotional barriers Political barriersPolitical barriers


Index of Retail Index of Retail SaturationSaturation

A measure of the potential sales per square A measure of the potential sales per square foot of store space for a given product within foot of store space for a given product within a specific trading area a specific trading area

RF

RECIRS

wwhere C = Number of customers in the trading areahere C = Number of customers in the trading area RE = Average expenditure per person for the RE = Average expenditure per person for the productproduct RF = Total square feet of selling space allocated RF = Total square feet of selling space allocated to the to the product product


Reilly’s Law of Retail Reilly’s Law of Retail GravitationGravitation

An estimate of a site’s ability to attract An estimate of a site’s ability to attract customers customers

a

b

PP

dBP

1

wwhere BP = Distance in miles from location A to break here BP = Distance in miles from location A to break pointpoint d = Distance in miles between locations A and B d = Distance in miles between locations A and B P Paa = Population surrounding location A = Population surrounding location A

P Pbb = Population surrounding location B = Population surrounding location B


Retail and Service Retail and Service Location Location ConsiderationsConsiderations

Customer trafficCustomer traffic Adequate parkingAdequate parking Expansion potentialExpansion potential VisibilityVisibility

ContinuedContinued


Retail and Service Retail and Service Location OptionsLocation Options

Central Business Districts (CBDs)Central Business Districts (CBDs) Neighborhood locationsNeighborhood locations Shopping centers and mallsShopping centers and malls


Shopping Centers and Shopping Centers and MallsMalls

Neighborhood Shopping CentersNeighborhood Shopping Centers 3 to 12 Stores; anchor is supermarket or 3 to 12 Stores; anchor is supermarket or

drugstoredrugstore Community Shopping CentersCommunity Shopping Centers

12 to 50 stores; anchor is supermarket, 12 to 50 stores; anchor is supermarket, super-drugstore, or discount department or super-drugstore, or discount department or variety storevariety store

Power CentersPower Centers Combines drawing power of a mall with Combines drawing power of a mall with

convenience of neighborhood shopping convenience of neighborhood shopping centercenter

Theme/Festival CentersTheme/Festival Centers Employ unifying theme (often Employ unifying theme (often

entertainment) and frequently target touristsentertainment) and frequently target tourists


Shopping Centers and Shopping Centers and MallsMalls

Outlet CentersOutlet Centers Rather than use anchor stores, rely on Rather than use anchor stores, rely on

manufacturer’s and retailers’ outlet manufacturer’s and retailers’ outlet stores to draw shoppers stores to draw shoppers

Lifestyle CentersLifestyle Centers Anchor is upscale specialty chain store; Anchor is upscale specialty chain store;

designed to emulate a village main streetdesigned to emulate a village main street Regional Shopping MallsRegional Shopping Malls

50 to 100 stores; anchor is one or more 50 to 100 stores; anchor is one or more major department storesmajor department stores

Super-regional Shopping MallsSuper-regional Shopping Malls Trade area stretches up to 25 milesTrade area stretches up to 25 miles


Retail and Service Retail and Service Location OptionsLocation Options

Near competitorsNear competitors Outlying areasOutlying areas Home-based businessesHome-based businesses

49% of U.S. businesses are run from 49% of U.S. businesses are run from home home

continuedcontinued


Manufacturing Manufacturing LocationsLocations Foreign trade zonesForeign trade zones

Figure 16.2. How a Foreign Trade Zone (FTZ) Figure 16.2. How a Foreign Trade Zone (FTZ) Works Works

Without FTZ

Imported Parts Imported Parts and Materialsand Materials

Store

Assemble

Package

Manufacture

Process

Mix

With FTZ

DutyDutyPaidPaid

NoNoDutyDutyPaidPaid

U.S.U.S.SalesSales

ExportsExports

U.S.U.S.SalesSales

ExportsExports

Small Company

No Duty Paid

No Duty Paid

Duty Paid

Duty Paid

Duty PaidDuty Paid

No Duty Paid

No Duty Paid



Manufacturing Manufacturing LocationsLocations Foreign trade zonesForeign trade zones Enterprise and empowerment Enterprise and empowerment

zoneszones Business incubatorsBusiness incubators


Business IncubatorsBusiness Incubators

Locations that combine low-cost, Locations that combine low-cost, flexible rental space with a flexible rental space with a multitude of support services for multitude of support services for their small business residentstheir small business residents

1,400 incubators operate across the 1,400 incubators operate across the U.S.U.S.

They work!! Firms that “graduate” They work!! Firms that “graduate” from incubators have a success rate from incubators have a success rate of 87%of 87%

Source: National Business Incubation Association

4%

6%

7%

37%

47%

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%

Percentage

Other

Service

Manufacturing

Technology

Mixed Use

Business Incubators by Category


Layout:Layout:External FactorsExternal Factors Size and adaptabilitySize and adaptability External appearanceExternal appearance

Create proper image or Create proper image or “personality” in customers’ eyes“personality” in customers’ eyes

Entrances Entrances InviteInvite customers to come in customers to come in

Americans with Disabilities ActAmericans with Disabilities Act SignageSignage


A Business SignA Business Sign

Tells potential customers who you are Tells potential customers who you are and what you're sellingand what you're selling

Must comply with local sign ordinancesMust comply with local sign ordinances Should be visible, simple, and clearShould be visible, simple, and clear Should be changed periodically to avoid Should be changed periodically to avoid

becoming part of the backgroundbecoming part of the background Should be legible both day and nightShould be legible both day and night Must be maintained properlyMust be maintained properly


Building InteriorsBuilding Interiors

ErgonomicsErgonomics is an integral part of any is an integral part of any designdesign

Proper layout and design pays off in Proper layout and design pays off in higher productivity, efficiency, or higher productivity, efficiency, or salessales

Careful selection of colors can create Careful selection of colors can create the desired impressions among the desired impressions among customers and employeescustomers and employees

Proper lighting is measured by what Proper lighting is measured by what is ideal for the job being doneis ideal for the job being done


Building InteriorsBuilding Interiors

Scents can have a powerful Scents can have a powerful impact in retail stores impact in retail stores Scent marketingScent marketing

SoundSound Background music can be a selling Background music can be a selling

tooltool Classical music encourages Classical music encourages

shoppers to slow down and makes shoppers to slow down and makes them feel more affluent them feel more affluent


Layout for RetailersLayout for Retailers

The arrangement of merchandise The arrangement of merchandise and fixtures and fixtures

““The stage on which a retail The stage on which a retail company functions” – Paco company functions” – Paco UnderhillUnderhill

Well-designed layout takes Well-designed layout takes customers past plenty of displays of customers past plenty of displays of items they may buy on impulseitems they may buy on impulse 65% to 70% of purchase decisions are 65% to 70% of purchase decisions are

made after a customer enters a storemade after a customer enters a store


Three Layout Three Layout PatternsPatterns GridGrid

Rectangular with parallel aisles; Rectangular with parallel aisles; formal; controls traffic flow; formal; controls traffic flow; uses selling space efficientlyuses selling space efficiently

Supermarkets and self-service Supermarkets and self-service discount storesdiscount stores

Grid LayoutGrid Layout



Free-FormFree-Form Free-flowing; informal; creates Free-flowing; informal; creates

“friendly” environment; flexible“friendly” environment; flexible Small specialty shopsSmall specialty shops

Three Layout Three Layout PatternsPatterns

Free-form Free-form LayoutLayout



BoutiqueBoutique Divides store into a series of Divides store into a series of

individual shopping areas, each individual shopping areas, each with its own theme; unique with its own theme; unique shopping environmentshopping environment

Small department storesSmall department stores

Three Layout Three Layout PatternsPatterns

Boutique Boutique LayoutLayout



Layout Layout GuidelinesGuidelines Know your customers buying habits Know your customers buying habits

and plan your layout accordinglyand plan your layout accordingly Display merchandise as attractively Display merchandise as attractively

as your budget will allowas your budget will allow Display complementary items Display complementary items

togethertogether Use music to set the mood Use music to set the mood Recognize the value of floor space; Recognize the value of floor space;

never waste valuable selling space never waste valuable selling space with non-selling functionswith non-selling functions

Space Values for a Small StoreSpace Values for a Small Store



Factors to Consider in Factors to Consider in Manufacturing LayoutsManufacturing Layouts

Type of productType of product Type of production processType of production process Ergonomic considerationsErgonomic considerations Economic considerationsEconomic considerations Space availability within the Space availability within the

facilityfacility


Manufacturing Manufacturing LayoutsLayouts

Product layoutProduct layout

Product LayoutProduct Layout




Product layoutProduct layout Process layoutProcess layout

Process LayoutProcess Layout




Product layoutProduct layout Process layoutProcess layout Fixed position layoutFixed position layout


All rights reserved. No part of this publication may All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, electronic, mechanical, photocopying, recording, or otherwise, without the prior written or otherwise, without the prior written permission of the publisher. Printed in the United permission of the publisher. Printed in the United States of America.States of America.

Copyright ©2009 Pearson Education, Copyright ©2009 Pearson Education, Inc. Publishing as Prentice HallInc. Publishing as Prentice Hall

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