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Location Criteria
Population size, traits, competition, transportation access, parking availability, nature of nearby stores, property costs, length of agreement, legal restrictions.
Choosing a Store Location
Step 1: Evaluate alternate geographic trading areas in terms of residents and existing retailers. Step 2: Determine whether to locate as an isolated store or in a planned shopping center. Step 3: Select the location type. Step 4: Analyze alternate sites contained in the specific retail location type.
Trading Area Analysis
A geographic area containing the customers of a particular firm or group of firms for specific goods or services. Benefits include discovery of consumer demographics, opportunity to determine focus of promotional activities, assessment of effects of trading area overlap, and discovery of ideal number of outlets and geographic weaknesses.
GIS Software
Geographic Information Systems: Digitized mapping with key location specific data used to graphically depict trading area characteristics such as population demographics, data on customer purchases, listings of current, proposed, and competitor locations.
The Size and Shape of Trading Areas
Primary trading area (50-80% of a store's customers), Secondary trading area (15-25% of a store's customers), Fringe trading area (all remaining customers).
Destination Versus Parasite Stores
Destination stores have a better assortment, promotion, and image, generating trading areas much larger than competitors. Parasite stores do not create their own traffic and have no real trading area of their own, depending on people drawn to the area for other reasons.
Trading Areas and Store Types
Department stores (largest trading areas), Supermarkets, Apparel stores, Gift stores, Convenience stores (smallest trading areas).
The Trading Area of a New Store
Different tools must be used when an area is evaluated in terms of opportunities rather than current patronage and traffic patterns, such as trend analysis, consumer surveys, and computerized trading area analysis models.
Computerized Trading Area Analysis Models
Analog Model, Regression Model, Gravity Model.
Reilly's Law
Traditional means of trading area delineation, establishing a point of indifference between two cities or communities to determine the trading area of each.
Limitations of Reilly's Law
Distance measured by major thoroughfares, travel time may not reflect distance traveled, actual distance may not correspond with perceptions of distance.
Huff's Law
Delineates trading areas based on product assortment, travel times, and the sensitivity of the kind of shopping to travel time.
Chief Factors to Consider in Evaluating Retail Trading Areas
Total size and density, age distribution, average educational level, percentage of residents owning homes, total disposable income, per capita disposable income, occupation distribution, trends.
Availability of Labor
Management trainees, clerical.
Closeness to Sources of Supply
Delivery costs, timeliness, number of manufacturers, number of wholesalers, availability and reliability of product lines.
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A guide covering key aspects of choosing a retail store location, including trade area analysis, GIS software, store types, and trading area models.
Location Criteria
Store Location
Trading Area Analysis
Gis Software
Size And Shape Of Trading Areas
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