1. Chapter 10
Site Selection
Dr. Pointer Notes

2. Chapter Objectives
To thoroughly examine the types of locations available to a retailer: isolated store, unplanned business district, and planned shopping center
To note the decisions necessary in choosing a general retail location
To describe the concept of one-hundred percent location

3. Chapter Objectives_2
To discuss several criteria for evaluating general retail locations and the specific sites within them
To contrast alternative terms of occupancy

4. Overview Step 1: investigate alternative trading areas (Chapter 9)
Step 2: type of location is desirable determine what
Step 3: select the general location
Step 4: evaluate alternative specific store sites
Chapter 10 discusses steps 2-4

5. 3 Types of Locations Planned Isolated Shopping Store Center Unplanned
Business
District

6. Isolated Site
An isolated site is a freestanding retail outlet located on either a highway or a street. No adjacent retailers to share traffic
In the past, the mass merchandisers were forced to use this type of site.
Today, diverse retailers elect this site type—Krispy Kreme Donuts, Target, McDonald’s,

7. Isolated Stores Advantages No competition Low rental costs Flexibility
Good for convenience stores
Better visibility
Adaptable facilities
Easy parking
Disadvantages
Difficulty attracting customers
Travel distance
Lack of variety for customers
High advertising expenses
No cost sharing
Restrictive zoning laws

8. Unplanned Business District
Unplanned business district is a type of retail location where 2 or more stores are situated together (close proximity) in such a way that the total arrangement or mix of stores is not due to prior long-range planning.

9. Unplanned Business Districts
Secondary
Business
District
Central Business
District
Neighborhood
Business
District
String
District

10. Secondary Business Districts
SBD is an unplanned shopping area in a city or town that is usually bounded by the interception of 2 major streets.
Usually the same type of goods and services are sold as in the central business district
Major strengths is good product selection and access to major thoroughfares and public transportation.

11. Neighborhood Business Districts
NBD is an unplanned shopping area that appeals to the convenience shopping and service needs of a single residential area
Usually has several small stores, dry cleaner, stationery store, a barbershop/beauty salon, liquor store, and restaurant.
Advantages are good location, store hours, parking less hectic atmosphere.

12. String Shopping Area
A string is an unplanned shopping area comprising a group of retail stores, often with similar or compatible product lines located along a major street
example – group of auto dealers located side by side

13. Central Business District
A central business district (CBD) is the hub of retailing in a city, same as downtown.
Greatest density of office building and no more than a 1 sq mile, with cultural and entertainment facilities surrounding it.
Reasons for popularity- good product assortment, access to transportation, variety of customers and stores.
Weaknesses – poor parking, traffic and delivery congestion, relatively poor image, high rent and taxes for most popular cites.

14. The Planned Shopping Center
A planned shopping center consists of a group of architecturally unified commercial establishments on a site which is centrally owned and managed. Galleria, Memorial City Mall, Willowbrook Mall
Uses concept of balanced tenancy – stores complement each other as to quality and variety of product offerings-

15. Planned Shopping Centers
Advantages
Well-rounded assortments
Strong suburban population
One-stop, family shopping
Cost sharing
Transportation access
Pedestrian traffic
Disadvantages
Limited flexibility
Higher rent
Restrictions on offerings
Competitive environment
Requirements for association memberships
Too many malls
Domination by anchor stores

16. Types of Planned Shopping Centers
Regional shopping Center- mega malls – Mall of American in Minnesota
Community Shopping Center including a power center –is shopping center with up to 6 –12 category killers and mix of smaller stores most are complementary stores lifestyle centers open air shopping center with a upscale specialty stores,
Neighborhood Shopping Center

17. How Important are Planned Shopping Centers
46,000 U.S. Shopping Centers
1200 are fully enclosed
Shopping center revenues exceed $1.2 trillion annually
Employee 11 million people
94% of Americans over 18 yrs of age visit average of once a month
Many older shopping centers are being renovated, expanded or repositioned

18. Renovations to Sustain Growth
The Florida Mall, Orlando, Florida
King of Prussia, Pennsylvania
Park Place, Tucson, Arizona
Roosevelt Field, Long Island, New York
University Towne Center, San Diego, California

19. Table 10.1 A Characteristics of Centers

20. Table 10.1 B Characteristics of Centers

21. Table 10.1 C Characteristics of Centers

22. Location and Site Evaluation
One-hundred
Percent
Location
The
optimum site
for a
particular store

23. Location and Site Evaluation
One –hundred percent locations – optimum site for the particular store type
The requirements for a one hundred percent location will vary by retail type

24. Location Evaluation Checklist
Pedestrian Traffic- number and type of people
Vehicular traffic- number &type of vehicles, congestion level
Parking Facilities
Transportation
Store composition
Specific Site
Terms of Occupancy
Overall rating

25. Pedestrian Traffic
The most crucial measures of a location’s and site’s value are the number and type of people passing by.
Proper pedestrian traffic count should include
age and gender (exclude very young children)
count by time of day
pedestrian interviews
spot analysis of shopping trips

26. Vehicular Traffic Important for convenience stores
outlets in regional shopping centers
car washes
suburban areas with limited pedestrian traffic

27. Parking Considerations
Number and quality of spots
Distance of spots from stores
Availability of employee parking
Price to charge customers for parking

28. How Many Parking Spaces?
Shopping centers = 4-5 spaces per 1000 square feet of gross floor space
Supermarkets = spaces per 1000 square feet of gross floor space
Furniture stores = 3-4 spaces per 1000 square feet of gross floor space

29. Terms of Occupancy Considerations
Ownership versus Leasing- with adequate funding ownership could be good option,
Type of Lease
Operations and Maintenance Costs
Taxes
Zoning Restrictions
Voluntary regulations

30. Advantages of Ownership
Lease renewal is not an issue
Monthly mortgage rate is stable
Operations are flexible
May be able to take advantage of site appreciation
Other ownership issues – construct new facility or renovate existing property

31. Disadvantage of Ownership
Might require more upfront capital
Long term commitment
Inability to readily change sites
Most facilities are leased
Leasing minimizes initial investment, reduces risk, reduces long term commitment and allows access to prime site and occupancy time may be immediate.

32. Types of Leases Straight Lease Percentage Lease Graduated Net Lease
Maintenance-
increase
recoupment
lease
Percentage
Lease
Graduated
Lease
Net Lease

33. Types of Leases
Straight lease – retailer pays a fixed amount per month over life of lease
Percentage Lease – rent is related to sales or profits
Graduated lease – precise increase in amount over a stated period of time
Maintenance-increase-recoupement lease – has a provision allowing rent to increase if property owners expenses increases
Net lease – Calls for all maintenance costs such as lighting, heating, insurance etc be paid by retailer

34. Other Considerations
Need to calculate the total costs of operating and maintenance for a site.
Differences in sales taxes by locations could be a factor

35. Questions
Please read chapter