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retailing_principles_2e_ch09.pptx

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Retailing Principles: Global, Multichannel, and Managerial Viewpoints

Linda Rose Poloian

All rights reserved. No part of this presentation covered by the copyright hereon may be reproduced or used in any form or by any means—graphic, electronic, or mechanical, including photocopying, recording, taping, or information storage and retrieval systems—without written permission of the publisher.

ISBN: 978-1-56367-7441

Unit 3

Store Location and Planning

Learning Objectives

After completing this chapter you should be able to:

List the key factors involved in choosing a specific retail site

Explain what a trading area is and how it is determined

Discuss how optimal locations are selected using research and analysis based on geographic information systems

Identify the principal types of commercial locations used for retail development

Delineate various alternative locations that have grown in popularity

Compare the advantages and disadvantages of owning retail property versus leasing it

Discuss how retail leasing costs are derived and what affects different rates

Assess trends in leasing strategy during an economic downturn and examine the role of real estate investment trusts in retail development

Poloian Chapter 9

Site Selection

Chapter 9

Introduction

An ideal site for a lifestyle center is this one in Ranch Cucamonga, California

Views of the mountains and the warm climate add to the enjoyment of shoppers frequenting the broad array of trendy retailers at Victorian Gardens, where a trolley bus for transportation within the multi-acre shopping center lends an experiential touch

Poloian Chapter 9

Criteria for Site Selection

Choice of location hinges on:

Pedestrian traffic

Vehicular traffic

Parking

Infrastructure

Placement and visibility

Poloian Chapter 9

Criteria for Site Selection

Corner locations are highly desired by brick-and-mortar retailers because they present two faces to the public and capitalize on heavy foot traffic

Retailers frequently look for compatible neighbors when they choose locations

Poloian Chapter 9

Researching the Trading Area

Sources of information

Using secondary data

Collecting primary data

Types of trading areas

Primary trading area

Secondary trading area

Tertiary trading area

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Researching the Trading Area

Determining a trading radius

Ring analysis

Polygon method

Market share-weighted trade areas

Determining economic feasibility

Sales potential

Estimating competition

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Finding the Optimal Site

Fundamental site selection methods

Checklists

Analog method

Advanced site selection tools

Regression analysis

Gravity models

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Finding the Optimal Site

Geographic information systems

Geodemographic marketing tools

PRIZM segmentation

Identifying high-growth areas

Large land areas

Booming suburban rings

Increasing Hispanic population

Diversified employment

Long commutes

Presence of lifestyle shopping centers

Poloian Chapter 9

Finding the Optimal Site

Rich Web 2.0 features make ESRI’s interactive mapping techniques state of the art

This example shows the expenditures for retail goods by zip code areas of Chicago

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Types of Retail Location

Commercial areas

Freestanding stores

Central business districts

Downtown revitalization

Discounters: urban or suburban?

String streets

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Types of Retail Location

Toys “R” Us often seeks freestanding locations like this one, near a Tesco supermarket and the Brent Cross Shopping Center, north of London, where parking is plentiful and access is easy for families

Poloian Chapter 9

Types of Retail Location

Off-price stores like Marshalls have been departing from their usual mall locations to situate in central business districts like this one in Minneapolis

Poloian Chapter 9

Types of Retail Location

Alternative retail sites

Transportation terminals

Heathrow’s Terminal 5

Atlanta Airport’s global retailers

Post-9/11 changes

Trains: above and below ground

Tourist and historical sites

Sites with historical precedence

Resort-centered retail

Tourist attractions

Hospitals

Poloian Chapter 9

Types of Retail Location

Strong Street: The revitalized downtown area of Manayunk, Pennsylvania has a boardwalk, casual dining, and a combination of local shops peppered with a few national chains in renovated older buildings

Poloian Chapter 9

Types of Retail Location

Montreal’s many underground malls, like Cours Mont-Royal, are routine to residents but an adventure for tourists: the winters are long and hard and the summers are short

Poloian Chapter 9

Types of Retail Location

Resort towns provide plenty of options for vacationers, including this kayak rental service

Many areas like this are seasonal, so retailers must earn their revenue between Memorial Day and Columbus Day

Poloian Chapter 9

Owning and Leasing Retail Property

Buying versus leasing property

Owning the premises: Benefits

No lease expiration or renegotiations

Can alter or repair without landlord approval

May be able to sublease to other retailers

Benefit in increases in real-estate evaluation

Owning the premises: Disadvantages

May tie up capital better used for inventory

May not want to be landlord or property manager

Sole responsibility for tax and maintenance

May face decrease in property values

Poloian Chapter 9

Owning and Leasing Retail Property

Buying versus leasing property

Leasing retail space: Benefits

Location available may be in highest traffic area

Without capital, leasing may be only alternative

ROI may be greater

Additional responsibilities are avoided

Leasing retail space: Disadvantages

Leases are complex, all-encompassing and binding

Restrictions, policies, and procedures may be difficult

High costs can undermine profitability

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Owning and Leasing Retail Property

Zoning restrictions

Negotiating with a developer

Bases for establishing rates

Derivation of charges

Additional leasing costs

Common area maintenance, promotional funds, taxes and insurance, utilities

Peripheral locations

Poloian Chapter 9

Trends in Leasing and Property Acquisition

Since the global capitalist crisis of 2007–2008:

Retail vacancies are low in some areas and high in others

Cost of space rises some places and falls in others

Some retailers sublease their facilities

Retailers share space, signage and other resources

Other reduce the sizes of new stores

More international retailers are entering the United States market

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Trends in Leasing and Property Acquisition

Status of U.S. retail development

Poloian Chapter 9

Trends in Leasing and Property Acquisition

Temporary tenants

Shoppers’ positive psychological reaction to no vacancies

Temporary often becomes permanent

Seasonal businesses especially benefit

Bankruptcy laws affecting leasing

Influence of real estate investment trusts

Simon Property Group

General Growth Properties

DDR Corp.

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