huff model for selected retail stores in bangalore

RETAILING MANAGEMENT

ASSIGNMENT

HUFF’S MODEL

GROUP 2

HUFF’S MODEL

Introduction

The concept of a retail trade area has been used by analysts and practitioners in retail site

evaluation and other market studies for a very long time. In fact, retail trade area analysis

and site evaluation are complementary procedures. Retail trade area analysis focuses on

locating and describing the target market. This knowledge is critical for both marketing and

merchandising purposes, as well as for choosing new retail locations. In site evaluation,

trade area analysis is combined with many operational requirements of the retail chain.

It is much easier to analyze trade areas and produce market profiles using GIS. The

majority of GIS software includes functionality for extracting and aggregating data at

various levels of geography. As a result, trade area analysis became one of the most popular

areas of GIS applications in analyzing business problems. The most common definition of a

retail trade area is used for the purpose of this article. According to this definition, a retail

trade area is “that area, typically around the store, from which the store derives most of its

patronage”

Huff’s law of shopper attraction delineates trading areas on the basis of product assortment

(of the items desired by the consumer) carried at various shopping locations, travel times

from the shopper’s home to alternative locations, and the sensitivity of the kind of shopping

to travel time

Huff’s gravity model/ huff’s law of shopper attraction states that consumers will shop

at a store more often if the size of the store is increased and the distance to shopping

area is decreased.

The theory says that because the center is larger, it may have larger/ wider assortment

of goods and services

Distance has the opposite effect on probability of patronage

All things being equal, consumer wants a shopping area close to home

Huff’s Gravity Model (Huff’s Law of Shopper Attraction)

PiJ = (SJ / TiJλ) / ∑ (SJ / TiJλ) Where;

PiJ = Probability of consumer traveling from origin (i) to given shopping center or store (j)

SJ = sq. ft. of selling space in shopping location, expected to be devoted to particular product

being sold

TiJ = travel time

λ = exponent reflecting effect of travel time on different types of shopping trips (i.e. one may

travel more for medical product)

n = no. of shopping locations available

STORE 1: MORE SUPERSTORE, KORMANGALA

Product for Men: Gillette Razor

Product: Gillette Shaving Blade

Store Location: More Superstore (Aditya Birla Retail) in Forum Mall, Bengaluru

Approximate Floor Area:3460 Square feet.

Assuming time taken by consumers as 5 minutes, 10 minutes and 15 minutes.

Taking λ =1 as the product is important for daily use.

By huff law probability of consumers travelling from home to shopping location is given by

P5 = (3460/51)/ (3460/51+3460/101+3460/151) = 54.54%

P10 = (3460/101)/ (3460/51+3460/101+3460/151) = 27.27%

P15 = (3460/151)/ (3460/51+3460/101+3460/151) = 18.18%

Analysis: From the Huff’s model, we have observed that the greater the travel time to the

store, lesser is the probability of a customer shopping from the store. Here, probability of

customers coming to shop to the store (Who lives in travel time less than 5 minutes) is 54.5%

Catchment Analysis of Forum Mall, Bengaluru

More Store in Forum Mall,Bengaluru

Gillete Products at shelves in the store

Product for Women: Veet

Product: Veet

Store Location: More Superstore (Aditya Birla Retail) in Forum Mall Bengaluru

Approximate Floor Area:3460 Square feet.


Taking λ =2 as the product is not so important for daily use.


P5 = (3460/52)/ (3460/52+3460/102+3460/152) = 73.46%

P10 = (3460/102)/ (3460/52+3460/102+3460/152) = 18.36%

P15 = (3460/152)/ (3460/52+3460/102+3460/152) = 8.16%

From the above calculations, we observe that the female oriented product have a greater

probability of selling than the male oriented products. This is perhaps because these female

oriented products are not to be used daily, hence they are purchased with the monthly grocery

shopping, whereas the male oriented products are to be used on a daily basis, so they might

be purchased from the mom and pop stores which are located very near to the residential

areas. Hence we see an increase in the probability of buying female oriented products.

Veet Products at display in the store

Catchment analysis of Forum Mall, Kormangala

Store 2: Village

Location: #1 Bharthi Plaza, 1st cross, Tavarekere Main Road, Sadduguntepalya, Tavarekere,

Bengaluru, Karnataka 560029

Approximate Floor Area:4320 sq. feet

Time taken to reach Village: Assuming time taken by consumers as 5 and 10 minutes.

Catchment Analysis of Village, Tavarekere Bengaluru


Taking λ = 1 as the product is important for daily use.

By Huff Law Probability of consumers travelling from home to shopping location is given by

P5 = (4320/51)/ (4320/51+4320/101) = 66.66%

P10 = (4320/101)/ (4320/51+4320/101) = 33.33%

Gillette Razors in Village


Taking λ = 2 as the product is not so important for daily use.


P5 = (4320/52)/ (4320/52+4320/102) = 80%

P10 = (4320/102)/ (4320/52+4320/102) = 20%

Veet product placement in Village

During our observation period in Village and after speaking to the store manager and the

sales people, it was seen that the male oriented product or Gillett razor in our case was sold

more than Veet. This can be attributed to factors in favour of the more sold product. The

placement of Gillett in Village is in a very strategic position, being very close to the entrance

and also it occupies one whole rack. This gives it maximum visibility and also it acts as a

trigger for men to buy the product as soon as they enter the store also because it is a

frequently used product. Also, connecting it back to the Huff’s model customers for whom

the travel time is 5 minutes have a high probability of entering the shop and due to the other

above mentioned factors the product is sold more frequently.

For Veet although the travel time of 5 minutes guarantees a higher probability of women

entering the store, yet there are other factors that act as impediments to its sale. The

placement of the product is moderately far from the entrance and it is on the fourth shelf of

the rack which is lower with respect to the customer’s view. Thus, the product doesn’t

receive much eye balls as compared to Gillett. Also, all the variants of Veet are not available

in the store and the presence of affordable parlours in the catchment area of Village, makes

the product Veet a less frequently bought item than Gillett. Thus, although larger store time

and lesser travel time acts in favour of both the products, but other factors like shelf space,

product placement, visibility, importance and frequency of the product do have a

considerable impact on the sales of the product from the respective store.

Store 3: Nilgiri’s

Catchment Analysis of the store, Bengaluru


Product: Gillette Shaving Blade

Store Location: Nilgiri’s: Kormangla,Bengaluru

Approximate Floor Area: 1400 Square feet approx.


Taking λ =1 as the product is important for daily use.


P3 = (1400/31)/ (1400/31+1400/71+1400/151) = 61%

P7 = (1400/71)/ (1400/31+1400/71+1400/151) = 26%

P15 = (1400/151)/ (1400/31+1400/71+1400/151) = 12%

Gillette Products at shelves in the store


Product: Veet

Store Location: Nilgiri’s-Kormangla,Bengaluru

Approximate Floor Area: 1400 Square feet approx.


Taking λ =2 as the product is not so important for daily use.


P3 = (1400/32)/ (1400/32+1400/72+1400/152) = 81%

P7 = (1400/72)/ (1400/32+1400/72+1400/152) = 15%

P15 = (1400/152)/ (1400/32+1400/72+1400/152) = 3%

Catchment analysis of the store, Kormangala

Veet Products at display in the store

STORE 4: MORE SUPERMARKET, BTM LAYOUT


Location: Maruthi Nagar Main Road, Near MR Bakery, Bengaluru, Karnataka 560029

Approximate Floor Area: 2050 sq. feet

Time taken to reach more at BTM: Assuming time taken by consumers as 5 and 10

minutes.

Catchment Analysis of more Supermarket, BTM 1st stage


SKU size in more: 3.10 sq m (data according to store manager, Mr. Naveen)

Average weekly sale: 1-2 items (data according to store manager, Mr. Naveen)

Taking λ = 1 as the product is important for daily use.


P5 = (2050/51)/ (2050/51+2050/101) = 66.66%

P10 = (2050/101)/ (2050/51+2050/101) = 33.33%

Gillette Razors in more


SKU size in more: 8.10 sq. m (data according to store manager, Mr. Naveen)

Sale on weekdays: 3-4 items on average (data according to store manager, Mr. Naveen)

Sale on weekdays: 10-12 items on average (data according to store manager, Mr. Naveen)

Taking λ = 2 as the product is not so important for daily use.


P5 = (2050/52)/ (2050/52+2050/102) = 80%

P10 = (2050/102)/ (2050/52+2050/102) = 20%

Veet product placement in more

During our visit we noted that there exists very less Gillette razors in the store, and we were

pretty confused about the lesser availability of the same. We spoke to the Store manager of

the particular outlet, Mr. Naveen and from the conversation we came to know that Gillette

razors are slow moving items in the store and the same results to about 1-2 items sale.

Veet on the other hand was pretty fast moving item despite the fact that it is not a product for

regular usage. The same may be due to the fact that the area is dominated by PG for Women

rather than gents PG.

Conclusion:

By this model we noticed that sales of the product depends upon the place of store and

availability of product for example if we see sale of Gillette is more in village, on other hand

sale of Veet in More(BTM) is high and Gillette is less because of more ladies PG. So

according to the place of a store and based on walk-ins manager has to find out what are the

key areas to increase sales and has to concentrate more on those areas.

huff model for selected retail stores in bangalore

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