Lecture Retailing management (6/e): Chapter 7 - Levy Weitz

Chapter 7
Retail Locations

McGraw­Hill/Irwin
Retailing Management, 6/e

Copyright © 2007 by The McGraw­Hill Companies, Inc. All rights reserved.


7-2

Retailing Strategy
Human Resource
Management
Chapter 9

Retail Market and
Financial Strategy
Chapter 5, 6
Retail Locations
Chapter 7
Site Locations
Chapter 8
Information and
Distribution
Systems
Chapter 10

Customer
Relationship
Management

Chapter 11


Elements in Retail Mix

Location Strategy

Customer Service

Store Display
Merchandise

And Design

Assortment

Communication Mix

Pricing

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What Are the Three Most Important
Things in Retailing?

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Location! Location! Location!
Eddie Tan/Life File/Getty Images

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Why is Store Location Important for a Retailer?
• Location is typically prime
consideration in customer’s store
choice.
• Location decisions have strategic
importance because they can
help to develop sustainable
competitive advantage.
• Location decisions are risky:
invest or lease?
F. Schussler/PhotoLink/Getty Images


Types of Retail Locations

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• Free Standing Sites
• City or Town Locations
– Inner City
– Main Street

• Shopping Centers
– Strip Shopping Centers
– Shopping Malls

• Other Location Opportunities
PhotoLink/Getty Images


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Types of Locations


7-8

Unplanned Retail Locations
Freestanding Sites – location for individual
store unconnected to other retailer

Advantages:
Convenience
High traffic and visibility
Modest occupancy cost
Separation from competition
Few restrictions
The McGraw-Hill Companies, Inc./Andrew Resek, photographer

JCPenney, Sears, Walgreens are shifting to stand alone locations


7-9

Unplanned Retail Locations
Merchandise Kiosks – small temporary

selling stations located in walkways of
enclosed malls, airports, train stations or
office building lobbies.

Kent Knudson/PhotoLink/Getty Images


City or Town Locations

710

Gentrification is bringing population back to the cities.

Advantage to Retailers:
•Affluence returned
•Young professionals
•Returned empty-nesters
•Incentives to move provided by cities
•Jobs!
•Low occupancy costs
•High pedestrian traffic

The McGraw-Hill Companies, Inc./Andrew Resek, photographer


Advantages

•
•
•

•

Draws people into areas during business hours
Hub for public transportation
Pedestrian traffic
Residents

Disadvantages

Central Business District

•
•
•
•

High security required
Shoplifting
Parking is poor
Evenings and weekends are slow

711

Spike Mafford/Getty Images


Main Streets vs. CBDs
•
•
•

•
•
•

Occupancy costs lower than CBDs
They don’t attract as many people
There are not as many stores
Smaller selections offered
Not as much entertainment
Some planners restrict store operations

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The Most Expensive Shopping
Streets in the World
Street

Location

Cost / sq foot / year

Fifth Avenue (48th to
58th St.)

New York City

$580

57th Street (5th Ave.

to Madison Ave.)

New York City

$500

Oxford Street

London

$400

Madison Avenue (57th New York City
to 72nd St.)

$375

Ave. des Champs
Elysee

$360

Paris

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714

Unmet demand tops

25% in many inner city
markets

(c) Brand X Pictures/PunchStock

Inner City

Inner city customer
wants branded
merchandise

Inner city retailers achieve high sales
volume, higher margins and higher profits


Shopping Centers

715

Shopping Center Management Controls:
Parking
•Security
•Parking lot lighting
•Outdoor signage
•Advertising
•Special events for customers

The McGraw-Hill Companies, Inc./Andrew Resek, photographer

Types of Shopping Centers
• Neighborhood and Community Centers
(Strip Centers)
• Power Centers
• Enclosed Malls
• Lifestyle Centers
• Fashion Specialty Centers
• Outlet Centers

716


717

Neighborhood and Community Centers

Attached row of stores

Onsite parking

The McGraw-Hill Companies, Inc./Andrew Resek, photographer

Managed as a unit


718

Power Centers

Open air set up

Big box stores

Many located near
enclosed malls

Available parking
Free-standing stores

Limited small
specialty stores

PhotoLink/Getty Images

Low occupancy costs

Large trade areas

Modest vehicular and
pedestrian traffic

Convenient
Desirable
shopping
experience


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The Largest North American Shopping Malls

Mall of America

720

• Located near Minneapolis, MN
• Largest mall in the US
• Enough people to qualify as the
third largest city in Minnesota
• Has more than 42 million
visitors a year
• More people visit than Disney
World, the Grand canyon and
Graceland combined
Digital Vision/Getty Images


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Advantages and Disadvantages of Shopping Malls

Many different types of stores
Many different assortments available
Attracts many shoppers
Main Street for today’s shoppers
Never worry about the weather
Comfortable surrounding to shop
Uniform hours of operation

PhotoLink/Getty Images

Advantages:

Disadvantages:
Occupancy costs are high
Tenants may not like mall management control of operations
Competition can be intense


Challenge to Malls

722

• Time pressured society makes it impractical to
wander malls
• Fashion apparel sold in malls experiencing
limited growth
• Malls are getting old and rundown – unappealing
to shop
• Anchor tenants are decreasing due to retail
consolidation


Lifestyle Centers

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Photo provided by ICSC and used with permission of Aspen Grove Lifestyle Center

Courtesy of General Growth Properties


Stores and Restaurants at Lifestyle Centers
Williams-Sonoma

724

Victoria’s Secret
Restoration Hardware

Barnes & Noble/Borders

Coldwater Creek
Pottery Barn

The Gap

Eddie Bauer

Banana Republic
Bed Bath & Beyond
Panera Bread
Ann Taylor

Starbucks
Aeropostale

Dick’s Sporting Goods
Hallmark

Johnny Rockets


Lifestyle Centers

725

Usually located in affluent residential neighborhoods
Includes 50K sq. ft. of upscale chain specialty stores
Open-air configuration
Design ambience and amenities
Upscale stores
Restaurants and often a cinema or other entertainment
Small department store format may be there