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