1. Retail Location Strategy
Dr. Shilpa Sindhu

2. Location Decision
A retailer has to take the location decision, taking into account three aspects:
Selection of a city
Selection of an area or type of location within a city
Identification of a specific site

3. Location
The selection of the store site can be a non-systematic process, which is based on ‘gut feeling’ or ‘environmental observation’ or an imitation of competitors.
Steps involved in choosing a retail location
Step 1: Market identification
Step 2: Determining the market potential
Step 3&4: Identify alternate sites and select the site

4. Step 1: Market identification
The first step in arriving at a decision a decision on retail location is to identify the markets attractive to a retailer. This is important as he needs to understand the market well, especially in a country like India, where every region has its own peculiarities and needs.
Step 2: Determining the market potential
In order to determine the market potential, the retailer needs to take into consideration various elements. The chief among them are:
Demographic features of the population
The characteristics of the households in the area
Competition and compatibility
Laws and regulations
Trade area analysis

5. Demographic features of the population
Understanding the features of the population is integral to developing a retail marketing strategy. The retailer also needs to understand the level of literacy and the level of education in the population.
The characteristics of the house holds in the area
The retailer needs to have a clear understanding of the average household income and the distribution of this income in the area. This is very essential as the level of income largely determines the kind of retail facilities required.

6. Competition and compatibility
While determining the market potential, it is necessary to check the compatibility of the retailer store with the other retailer outlets in an area. It is necessary to try and evaluate their strengths and weaknesses, to know the square foot area of the various stores in the area and the kind of returns that they are able to obtain per employee per square foot.
Laws and regulations
Before opening a retail store in a region, it is essential to have a good understanding of the laws and regulations for opening a retail shop in the area. Various permissions which are needed, the hours for which the store can operate, the minimum wages to be offered to the persons working, the holidays required, etc. can affect the profitability of the store.

7. Trade area analysis
An integral part of determining the market potential is the analysis of the trade areas. A trade area is the geographic area that generates the majority of the customers for the stores.
Tertiary trading area
Secondary trading area
Primary trading area
Retail store
Types of trade areas

8. Step 3&4 : identify alternate sites and select the site
After having determined the market potential and taking a decision on the store, a retailer has to select the site to locate the store. Though each retailer strives to find the 100% perfect location, there are various factors which affect his decision. The chief among them are:
Traffic
Accessibility of the market is also a key factor
Amenities available
To buy or to lease
The product mix offered

9. Traffic
This refers to both pedestrian and vehicular traffic. The traffic that passes the site is an important determinant of the potential sales that can be generated from that store.
Accessibility of the market is also a key factor
Accessibility of the market is defined in terms of availability of public transport and road/local transport train connections to reach the market.
Amenities available
Depending on the type of product to be retailed, facilities like free and ample parking become important.

10. To buy or to lease
An important factor to be considered before taking the decision on the site the decision to buy the store or to lease it. if the store is to be leased, then the terms of lease will have to be studied carefully.
The product mix offered
The kind of product mix to be offered by the retailer by the retailer also affects his choice of location.

11. Factors effecting the attractiveness of a site
Local Demographics
Traffic Flow and Accessibility
Retail Competition
Site Characteristic
Cost Factors

12. Local Demographics
Population and/or household base
Population growth potential
Lifestyles of consumers
Income potential
Age makeup
Population of nearby special markets, that is, daytime workers, students, and tourists, if applicable
Occupation mix

13. Traffic Flow and Accessibility
Number and type of vehicles passing location
Access of vehicles to location
Number and type of pedestrians passing location
Availability of mass transit, if applicable
Accessibility of major highway artery
Quality of access streets
Level of street congestion
Presence of physical barriers that affect trade area shape

14. Retail Competition
Number and types of stores in area
Analysis of “key” players in general area
Competitiveness of other merchants
Number and location of direct competitors in area
Possibility of joint promotions with local merchants

15. Site Characteristic
Number of parking spaces available
Distance of parking areas
Ease of access for delivery
Visibility of site from street
History of the site
Compatibility of neighboring stores
Size and shape of lot
Condition of existing building
Ease of entrance and exit for traffic
Ease of access for handicapped customers
Restrictions on sign usage
Building safety code restrictions
Type of zoning

16. Cost Factors
Terms of lease/rent agreement
Basic rent payments
Length of lease
Local taxes
Operations and maintenance cost
Restrictive clauses in lease
Voluntary regulations by local merchants

17. Types of Retail Location
Free Standing Locations
Neighbourhood stores
Highway stores
Unplanned Business District
Downtown or central business district
Secondary business district
Suburban business district
Strip Centre
Planned shopping centres
Regional shopping centres or malls
Neighbourhood/community
Specialist market
Periodic markets/weekly

18. Free standing location
Neighborhood stores
Convenience products
Away from major markets
Inside neighborhood
Less competition, low rent, easy parking, better visibility.
Difficulty in attracting customer

19. Free standing location contd…
Highway stores
Attract customer passing highways
- Fast food restaurant, dhaba

20. Unplanned business districts
Downtown or central business district
A hub of retailing activity
Draws customer from across city and suburbs
Metro CBDs attract customers outside city
commercial street in Bangalore serve as upmarket for upper and upper middle class customer.
Chandni chowk in delhi, chick in Bangalore and new market in calcutta serve middle and lower middle class customers.

21. Secondary business districts
Unplanned cluster of stores located on a major intersection of cities.
Attract customers from many parts of cities.
Dadar in Mumbai, Karol bagh in Delhi.

22. Suburban Business Districts
Stores located in town’s periphery.
Rely on traffic of downtown.
Growing market in Gurgaon and Noida.

23. Planned Shopping Centres
Architecturally designed with parking facilities designed and operated as a unit. In Chandigarh various sector markets are planned.

24. Regional Shopping Centre or Malls
Largest planned shopping centres .
Major departmental stores, large trading area, high rent .
Cross roads-Mumbai, Spenser plaza-Chennai, metropolitan mall-Gurgaon.

25. Neighborhood/Community Shopping Centres
Usually have a balance mix of stores, grocery, chemist, variety store, few other stores combinedly.
Sector market complex in Chandigarh.

26. Specialized market
Specialized market for a particular product category.
Ahmadabad for plastic material
Ludhiana for machinery.
Godown street in Chennai for clothes.

27. Periodic market Peculiar market
Meet at particular places on a particular day in a week.
Retailers move from place to place.
Limited credit transaction.
Low overhead
Hats, Som bazar.