A CONCEPT NOTE ON RETAIL LOCATION ANALYSIS

Vivek Kumar Pathak * *Research Scholar, Faculty of Management Studies, Banaras Hindu University, Varanasi, Uttar Pradesh-221005 E-mail: vivekbizs@yahoo.co.in, Mob. No: 9450387713

Abstract: Location is one of the most critical factors leading to a firms success or failure. Competition is intense and is increasingly crossing format lines, major societal changes are taking place. Accurate location research for stores and shopping centers has never been so important. The techniques associated with retail location and geographical market analyses are widely documented. The present paper is an attempt to study the contemporary perspectives of retail location. Key Words: Retailing, Location analysis 1. Introduction: Location, location, location is the major factor leading to a firms success or failure. Location decisions are complex in nature and there is little flexibility in retracting from the decision once a site is chosen. A good location lets a retailer succeed even if there is any lacuna in the strategy mix. But, it is found that there is negligence of retail location studies. In most of the marketing research studies, the central concern is channel of distribution, store environment and image and not the location. Location analysis is basically done on the basis of geographical research and most of the strategic dimensions of location in marketing research are borrowed from it.

2. Theoretical Approaches to Retail Location Analysis: According to Clarkson et al. (1996), there are basically four broad theoretical approaches to study retail location. A. Central Place Theory: It is based on range and threshold of goods (Range- The maximum distance people are willing to travel, Threshold- Minimum size of an agglomeration of people necessary before a function is provided). It attempts to reduce a complex reality into a simplified manageable form and provides partial explanation of shopping behavior. It is not a very realistic concept.

B. Spatial Interaction Theory: It is based on hypothesis that consumer trades off the attractiveness of alternative shopping area against the deterrent effect of distance. It explains behavioural interaction. It is based on Reillys gravitation law. Problem is travel distance and attractiveness is difficult to define. C. Land Value Theory: Businesses are prepared to bid the highest rental but the amount falls off rapidly with distance. D. The Principle of Minimum Differentiation: (From Harold Hotelling Classical paper), in retailing context, a given no. of stores operating within the same market sector will achieve superior performance if they are clustered together. (Ladies outfitters or departmental stores exhibit the most clustered distribution, Personal services and convenience stores are least clustered)

3. Retail Location Analysis Methods: There are mainly five location analysis methods that are used by the retailers. a) Checklist analysis b) Financial analysis c) Gravity modelling Analogue method attempts to forecast the potential sales of new or existing stores by drawing comparisons with other stores in the corporate chain that are alike in physical location and trade area characteristics. The success of analogue technique depends only when we find similar sites. In regression analysis models, a dependent variable is defined and an attempt is made to correlate this to a set of independent variables. Existing stores similar to the proposed new store are used to estimate an equation relating variation in sales to a set of variables e.g. Competition, store size, population etc. Gravity modeling techniques attempt to quantify the relationship between the movements of consumers in relation to attractiveness of surrounding retail centers. d) Analogue method e) Regression analysis

4. Key Factors in Retail Store Location: According to Mazze (1972), in selecting a site three variables can be measured. A. Product Assortment: (Measured by the number and type of like and unlike stores surrounding the site selected) B. Population Density: (Measured by Population per square mile)

C. Traffic Configuration Apart from this he has suggested consideration of five additional factors- accessibility, vehicular traffic, parking lots, and cost of occupancy and retail groupings. Some other factors in retail store location cited by different authors are proximity to major roads, availability of public transportation, local competitive retail environment, trading area, competition, laws related to retail business, visibility and accessibility, artistic and aesthetic qualities associated with the location, compatibility of the adjacent retail businesses, convenience, history of the location and trading hours Hand et al. (1986), Hemalatha et al. (2008).

5. Store Type and Retail Location Assessment Technique: Retail development, whether of individual stores or entire shopping centers is a complex decision making process. The traditional separateness of the large Superstore/Hypermarket sector and the convenience store market has been mirrored in the techniques used for sales forecasting. According to Graham Clark (1998), Different type of stores uses different location assessment techniques. Departmental store----------------------------------Checklist Varity store-------------------------------------------Checklist and analogue Out of town warehouse------------------------------Analogue Grocery superstore-----------------------------------Analogue and regression High street multiples--------------------------------Gut feeling and analogue Small multiples and financial outlets--------------Gut feeling.

6. Role of Geographic Information Systems (GIS) in Retail Location Research: In the past ten years GIS has made a major impact on the business industry. As there is not one best method for site selection, this has paved the way for GIS, which includes many of these classical procedures embedded in GIS soft wares. According to Clark (1998), three era of location research exists: A. Pre GIS era: 1970s and early 1980s- location analysis based on gut feeling, checklist and analogue method. B. GIS era: Mid 1980s C. Post GIS era: underway, there is an argument that saturation will inevitably reduce the need for the site selection.

The capabilities of GIS allow us to improve the application of location models in several ways. GIS is by no means a system that gives a final solution to a user but it provides the possibilities for a better and more organized analysis of information, which is a pre-requisite for a better quality decision.

7. References: A. Clarke G (1998), Changing methods for location planning for retail companies, Geojournal, vol.45, pp 289-298 B. Clarke I (1997), Towards a contemporary perspective of retail location, International journal of retail and distribution management, vol.25, no.2, pp59-69. C. Clarkson R M (1996), UK Supermarket location assessment, International journal of retail and distribution management, vol.24, no.6, pp22-23. D. David Gilbert (2009), Retail marketing management, Sixth Edition, Pearson education. E. Hand H H (1979), Economic feasibility analysis of retail location, Journal of small business management, vol.17, pp28-36 F. Hemalatha et al. (2008), Multiattribute analysis of the retail store location decision, Journal of contemporary research in management, pp43-52 G. Mazze E M (1986), Identifying the key factors in retail store location, Journal of small business management, vol-10, pp17-21 H. Wood & Brown (2007), Convenience store sales Forecasting: art before science, International journal of retail and distribution management.

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