Professional Documents
Culture Documents
Module 2
Module 3
Module 4
Merchandise Management Merchandise Plans Buying Merchandise Pricing Buying Systems Financial Performance
Understanding Retail Customers Customer Behavior at Retail Location Customer Relationship Management Supply Chain Management
Location
Site Selection Store Layout
Location Analysis
Learning Objectives
To outline the process for choosing a store location To discuss the concept of a trading area and its related components To examine three major factors: population characteristics, economic base characteristics, competition and level of saturation
Dr. Paromita Goswami Location Managing Retailing
Trading-Area Analysis
A trading area is a geographic area containing the customers of a particular firm or group of firms for specific goods or services
Sources of Information
Customer Spotting Census Data Geodemographic Information Systems Information on Competition Yellow Pages
Customer Spotting
Purpose: to spot, or locate, the residences of customers for a store or shopping center.
How to obtain data:
GIS Components
GIS Software
Geographic Information Systems digitized mapping with key locational data to graphically depict trading-area characteristics such as population demographics data on customer purchases listings of current, proposed, and competitor locations
Primary trading area - 50-80% of a stores customers Secondary trading area - 15-25% of a stores customers Fringe trading area/ Tertiary - all remaining customers
Department stores
Supermarkets
TRADING AREAS
Apparel stores
Gift stores
Smallest
Convenience stores
Methods of Estimating Demand: Computerized Trading-Area Analysis Models Analog Model Regression Model Gravity Model
Dr. Paromita Goswami Location Managing Retailing
Select appropriate measures of performance, such as per capita sales or market share
Select a set of variables that may be useful in predicting performance
Solve the regression equation and use it to project performance for future sites
Dr. Paromita Goswami Location Managing Retailing
Reillys Law
Reillys law of retail gravitation, a traditional means of trading-area delineation, establishes a point of indifference between two cities or communities, so the trading area of each can be determined Point of Indifference: Is the extremity of a citys trading area where households would be indifferent between shopping in that city or an alternative city in a different geographical direction
Pc where Dcb is the breaking point from Cuttack, measured in miles along the road to Bhubaneswar; d is the distance between Cuttack and Bhubaneswar along the major highway; Pc is the population of Cuttack; and Pb is the population of Bhubaneswar
Dr. Paromita Goswami Location Managing Retailing
Distance is only measured by major thoroughfares; some people will travel shorter distances along cross streets Travel time does not reflect distance traveled. Many people are more concerned with time traveled than with distance Actual distance may not correspond with perceptions of distance
P ij S j
Probability of a customer at a given point of origin i traveling to a particular shopping center j Size of shopping center j Travel time or distance from customer's starting point to shopping center
T ij b
An exponent to T that reflects the effect of travel time on different ij kinds of shopping trips
Dr. Paromita Goswami Location Managing Retailing
Step 1) Probability = .48 Step 2) .48 x 12,000 students = 5,760 customers Step 3) 5,760 customers x $150 = $864,000
Population Characteristics
Retail Saturation
Index of Retail Saturation (IRS): is the ratio of demand for a product divided by available supply IRS = (H X RE)/RF H is the number of households in the area; RE is the annual retail expenditures for a particular line of trade per household in the area; RF is the square footage of retail facilities of a particular line of trade in the area (including square footage of the proposed store)
Demand Density
Demand Density: Is the extent to which the potential demand for the retailers goods and services is concentrated in certain census tracts, ZIP code areas, or parts of the community
Supply Density
Supply Density: The extent to which retailers are concentrated in different areas of the market under question
Characteristics Total population, 2007 Population change, 1997-2007 College graduates, 25 +, 20007 (%) Median household income, 2007 Managerial and professional occupations (%), 2007
Area A
13,732 +8.2 41.4 Rs. 61,236 45.3
Area B
15,499 +2.5 39.2 Rs. 61,242 45.0