A research showed that location A(The two) is located in Tsim Sha Tsui which is near major office towers, hotels and retail complexes while location B(Hyyan Centre) is located in Causeway Bay which is vibrant district with large pedestrian flow.
For location B, the lease terms was more attractive ($16.3/sq ft) compared with that of location a ($19.5/sq ft) and a 16.5% rent difference was shown.
Two types of competition were reflected by the research results. We will compete with 3 small retails if the new branch is opened in location A or we will face a flagship store for new branch opening in location B.
The research also revealed that the parking service were comparable for both location A (380 parking spaces) and location B (420 car parking spaces). The main difference was that there were a valet parking with 2 car parks for location A and an onsite parking for location B.
Conclusion and Recommendation
To conclude, location B---Hyyan Centre is recommended for some reasons based on the above findings. Although both locations were crowded and easily accessible with sufficient parking services, there was a better lease terms of $16.3/sq ft and that of location B contradicted with the consideration which stated the rent should be below $18/sq ft. It was a crucial point since the rent affected the fix cost and profit margin directly and it was controllable.
Another vital issue for the recommendation was the competition in the neighborhood. Because of the 3 small retailers in location A, their target customers, product lines and pricing strategies may differ having their own competitive advantages and form a more complicated completion environment. It may be hard for us to get the relevant data and anticipate our market in this complex situation due to the rapid changes by 3 small retails.
Lastly, a joint promotion scheme could be organized with the flagship store if we opened a new branch in location B since we should have different...
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