Retail Layouts

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Date of submission: 20-09-2012
RETAIL LOCATION
Location is the most important ingredient for any business that relies on customers. It is also one of the most difficult to plan for completely. Location decisions can be complex, costs can be quite high, there is often little flexibility once a location has been chosen, and the attributes of location have a strong impact on a retailer’s overall strategy. In India, most retailers prefer to own the property rather than avail of the desired property through lease or rental. This makes the location decision even more critical. Choosing the wrong site can lead to poor results and, in some cases, insolvency and closure. For several reasons, store location is often the most important decision made by a retailer. First, location is typically the prime consideration in a customer’s store choice. For instance, when choosing where you’re going to have your car washed, you usually pick the location closest to your home or work. Second, the location decisions have strategic importance because they can be used to develop a sustainable competitive advantage. However, location decisions are harder to change because retailers frequently have to either make substantial investments to buy and develop real estate or commit to long-term leases with developers.

Many types of locations are available for retail stores-each with its own strengths and weaknesses. Choosing a particular location type involves evaluating a series of trade-offs. These trade-offs generally concern the cost of the location versus its value to customers.

Importance of Location Decision
The importance of the location decision is due to the following factors: 1) Location is a major cost factor because it
a) Involves large capital investment
b) Affects transportation costs
c) Affects human resources cost, e.g., salaries

2) Location is the major revenue factor because it
d) Affects the amount of customer traffic
e) Affects the volume of business
The traditional inclination of Indian retailers to own property further increases capital investment and this along with the penchant of Indian retailers to continue their business at the same location makes the location decision even more important. Levels of Location Decision

A retailer has to take the location decision based on the following three aspects: 1) Selection of a city
2) Selection of an area or type of location within a city 3) Identification of a specific site
Levels of Location Decision

Area within city
Site Decision
Selection of city

* Adequacy and potential traffic
* Complementary nature of adjacent store
* Adequacy of parking
* Customer attraction of shopping district
* Qualitative & quantitative nature of competition
* Availability of access route
* Nature of zoning regulation
* Direction of the area expansion
*
* Size of the city’s trading area
* Population & growth trends
* Purchasing power & its distribution
* Trade potential
* No., size, quality of competition

Selection of a City
The following factors play a significant role in the selection of a particular city for starting or relocating an existing retail business: * Size of the city’s trading area: A city’s trading area is the geographic region from which customers come to the city for shopping. A city’s trading area would comprise its suburbs as well as neighbouring cities and towns. Cities life Mumbai and Delhi have a large trading area as they draw customers from far off cities and towns. * Population or population growth in the trading area: The larger the population of the trading area, the greater the potential of the city as a shopping location. A high growth in a population in the trading area can also increase the retail potential. * Total purchasing power and its distribution: The retail potential of a city also depends on the...
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