Trade Area Analysis and Site Selection in Retail Management

 
Retail Management
 
Module 6: Trade-Area Analysis and Site Selection
 
Selecting a Store Location
 
Learning Outcomes: Selecting a Store Location
 
6.1 Explain the significance of selecting a store location
6.1.1 Define environmental analysis
6.1.2 Discuss why location selection needs to involve significant analysis of
data
6.1.3 Explain the effects of location choice on short and long run planning
 
Activity
 
D
o an environmental analysis 
of a business of your choice
:
Complete 
an analysis of 
economic factors
Consider d
emographic and social factors
Research Brand Profusion
In
clude the 
Four ”P’s” of retail sales
 
Take notes on your research and discuss with a partner where you
would choose t
 
Data Analysis for Location Selection
 
A retailer with excellent location has strategic advantage.
 
When considering location, you’ll want to
 evaluate:
alternative geographic trading areas
determine type of location (population, density)
literacy level and educational level of populations
languages spoken
 
Are there other similar stores?
What do they stock and what is their reputation?
 
 
Location Effects on Planning
 
Knowing demographic of location is important
 
Preparing for 
ebbs and flows 
of 
demographic changes is another
planning option
 
Looking at history of planned location can tell a story of the
market
 
Having ability to grow or change with the community will be
important component
 
Retail Trading Area
 
Learning Outcomes: Retail Trading Area
 
6.2 Analyze the characteristics of a retail trading area
6.2.1 List the types of demographic data a retailer can obtain from the U.S.
census bureau
6.2.2 Describe the types of data a retailer can obtain from geographic
information system software (GIS)
6.2.3 Identify the main factors to consider when analyzing a retail trading
area
 
U.S. Census Bureau and Demographic Data
 
U.S. Census Bureau data includes
Number of people in household
Household relationships
Age, sex, race
Number household units
Status of plumbing facilities
Owner occupied or rental
Value of home and vacancy status
 
GIS and Location Decisions
 
Geographic information system (GIS): system that can store,
retrieve, map, & analyze geographic data
 
GIS helps visualize information about customer buying behaviors
and demographics
 
GIS has a fee, but is updated frequently
 
Nielsen is company that offers wide range of useful tools
 
Factors in Analyzing Trading Area
 
Types of Trading 
Areas
Primary
Secondary
Fringe
 
Make sure that area surrounding location has
Enough customers
Enough money to spend
Need for product or service you are bringing
Competition in trading area
 
Available Retail Locations
 
Learning Outcomes: Available Retail Locations
 
6.3 Examine the variety of locations available to retailers
6.3.1 Compare and contrast the benefits of various retail locations
 
Comparing Location Benefits
 
Unplanned shopping areas: spaces that developed over time
Downtown areas, strip malls
 
Planned shopping areas:
Omni-centers: large planned centers with variety of retail formats
Lifestyle centers: located in upscale areas with specialty chain
stores, restaurants, and theatres
Outlet centers: place that sells damage, discontinued, or surplus
merchandise
Mixed use developments: shopping, restaurants, hotels, residential
spaces
 
Practice Question
 
Compare and contrast unplanned and planned locations. What the
benefits? What are the disadvantages?
 
Site Selection Decisions
 
Learning Outcomes: Site Selection Decisions
 
6.4 Summarize the factors considered in site selection decisions
6.4.1 Create a summary of the essential site characteristics to be evaluated
6.4.2 Explain why a retailer should also evaluate societal views when
selecting a location
6.4.3 Use the Huff gravity model to estimate potential sales for a site
6.4.4 Outline the characteristics of the most common lease types
 
Evaluating Site Characteristics
 
The s
tyle of operation must match area
 
Demographics: Who are your customers?
 
Foot traffic: 
C
an you people get to the door?
 
Accessibility and parking
 
Competition
 
Influence of Societal Views
 
Using data from U.S. Census Bureau and GIS analysis to determine if
space you are thinking of is a good decision
 
Societal environment is another component of a successful business
location
 
Make sure to do your location and find space that has right
population to help business grow
 
Huff Gravity Model
 
Huff’s model is mathematical model that recognizes correlation
between patronage and distance from location to store.
 
The further a consumer is from location, the less likely they will be to
shop there.
 
The model doesn’t account for factors that would affect a
customer patronizing the store.
 
Common Lease Types
 
Percentage (retail business, mall)
Net (any commercial lease)
Double net (any commercial lease)
 
Triple net (any commercial lease)
 
Fully serviced (offices, industrial, and retail leases)
 
Quick Review
 
Location, demographics of the population, how many people
live within trading area, etc. need to be evaluated
There are different facets to retail operations and location
chosen to open business is most important
Knowing your competition and businesses that may help your
business thrive are important as well
U.S. Census is good place to start, but you may need more
current and detailed information obtained through GIS
Building new business is tough, so use all available resources to
help find perfect location and customers
Slide Note

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Cover Image: "Hangers in a clothes store." Authored by: Artificial Photography. Provided by: Upsplash. Located at: https://unsplash.com/photos/vB5qtt8X4NA. Content Type: CC Licensed Content, Shared Previously. License: CC0: No Rights Reserved.

All text in these slides is taken from https://courses.lumenlearning.com/wm-retailmanagement/ where it is published under one or more open licenses.

All images in these slides are attributed in the notes of the slide on which they appear and licensed as indicated.

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This module delves into the importance of selecting a store location in retail management, covering topics such as environmental analysis, data analysis for location selection, and the effects of location choice on planning. It also includes activities like conducting an environmental analysis of a business and analyzing retail trading areas. Understanding the significance of location selection and its impact on short and long-term planning is emphasized throughout the content.


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  1. Retail Management Module 6: Trade-Area Analysis and Site Selection

  2. Selecting a Store Location

  3. Learning Outcomes: Selecting a Store Location 6.1 Explain the significance of selecting a store location 6.1.1 Define environmental analysis 6.1.2 Discuss why location selection needs to involve significant analysis of data 6.1.3 Explain the effects of location choice on short and long run planning

  4. Activity Do an environmental analysis of a business of your choice: Complete an analysis of economic factors Consider demographic and social factors Research Brand Profusion Include the Four P s of retail sales Take notes on your research and discuss with a partner where you would choose t

  5. Data Analysis for Location Selection A retailer with excellent location has strategic advantage. When considering location, you ll want to evaluate: alternative geographic trading areas determine type of location (population, density) literacy level and educational level of populations languages spoken Are there other similar stores? What do they stock and what is their reputation?

  6. Location Effects on Planning Knowing demographic of location is important Preparing for ebbs and flows of demographic changes is another planning option Looking at history of planned location can tell a story of the market Having ability to grow or change with the community will be important component

  7. Retail Trading Area

  8. Learning Outcomes: Retail Trading Area 6.2 Analyze the characteristics of a retail trading area 6.2.1 List the types of demographic data a retailer can obtain from the U.S. census bureau 6.2.2 Describe the types of data a retailer can obtain from geographic information system software (GIS) 6.2.3 Identify the main factors to consider when analyzing a retail trading area

  9. U.S. Census Bureau and Demographic Data U.S. Census Bureau data includes Number of people in household Household relationships Age, sex, race Number household units Status of plumbing facilities Owner occupied or rental Value of home and vacancy status

  10. GIS and Location Decisions Geographic information system (GIS): system that can store, retrieve, map, & analyze geographic data GIS helps visualize information about customer buying behaviors and demographics GIS has a fee, but is updated frequently Nielsen is company that offers wide range of useful tools

  11. Factors in Analyzing Trading Area Types of Trading Areas Primary Secondary Fringe Make sure that area surrounding location has Enough customers Enough money to spend Need for product or service you are bringing Competition in trading area

  12. Available Retail Locations

  13. Learning Outcomes: Available Retail Locations 6.3 Examine the variety of locations available to retailers 6.3.1 Compare and contrast the benefits of various retail locations

  14. Comparing Location Benefits Unplanned shopping areas: spaces that developed over time Downtown areas, strip malls Planned shopping areas: Omni-centers: large planned centers with variety of retail formats Lifestyle centers: located in upscale areas with specialty chain stores, restaurants, and theatres Outlet centers: place that sells damage, discontinued, or surplus merchandise Mixed use developments: shopping, restaurants, hotels, residential spaces

  15. Practice Question Compare and contrast unplanned and planned locations. What the benefits? What are the disadvantages?

  16. Site Selection Decisions

  17. Learning Outcomes: Site Selection Decisions 6.4 Summarize the factors considered in site selection decisions 6.4.1 Create a summary of the essential site characteristics to be evaluated 6.4.2 Explain why a retailer should also evaluate societal views when selecting a location 6.4.3 Use the Huff gravity model to estimate potential sales for a site 6.4.4 Outline the characteristics of the most common lease types

  18. Evaluating Site Characteristics The style of operation must match area Demographics: Who are your customers? Foot traffic: Can you people get to the door? Accessibility and parking Competition

  19. Influence of Societal Views Using data from U.S. Census Bureau and GIS analysis to determine if space you are thinking of is a good decision Societal environment is another component of a successful business location Make sure to do your location and find space that has right population to help business grow

  20. Huff Gravity Model Huff s model is mathematical model that recognizes correlation between patronage and distance from location to store. The further a consumer is from location, the less likely they will be to shop there. The model doesn t account for factors that would affect a customer patronizing the store.

  21. Common Lease Types Percentage (retail business, mall) Net (any commercial lease) Double net (any commercial lease) Triple net (any commercial lease) Fully serviced (offices, industrial, and retail leases)

  22. Quick Review Location, demographics of the population, how many people live within trading area, etc. need to be evaluated There are different facets to retail operations and location chosen to open business is most important Knowing your competition and businesses that may help your business thrive are important as well U.S. Census is good place to start, but you may need more current and detailed information obtained through GIS Building new business is tough, so use all available resources to help find perfect location and customers

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