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www.bradford.ac.uk/management
Retail Location
Lecture 4
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Lecture Objectives
• To ensure you appreciate the importance
of location within retail strategy
• To explain how retail location may be
classified
• To consider the location decision process
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Importance of Location
“Location, location and location” Sir Charles Core
“at least 85% of store performance isdetermined ……by local and external
factors” Collins 1992
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Importance of Location
• Store choice factors - Food and Grocery
– Brand choice
– Price
– Convenience
– Customer services
– Peripheral services
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Location factors
• Traffic
• Distribution Intensity
• Proximity v destination
• Strength of proposition
• Back to marketing basics – understanding and deliveringcustomer needs better than competition
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Location Classification
• Incremental v planned
• City Centre v out of town
• Pre-existing v Brownfield v Greenfield
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How do retailers decide?
• Intuition and availability
• Paper based v computer based
• Complex due to saturation/planning laws
• Choose location to fit offer or flex offer tofit location??
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How do retailers decide?
• Macro location evaluation
– Sequential Hurdle
– Multi-factor
• Micro location evaluation
• Site selection
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Micro evaluation factors
• Population
• Infrastructure
• Retail outlets (number and type)
• Costs
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Population
• Who are my customers?
• Are there enough of them?
• Do I need to/can I adapt my offer?
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Defining a potential trade area
• Central Place Theory – Attractiveness of store
– Cost/benefit outcomes
• Land Value Theory – Sites go to highest bidder
– He who affords wins
• Minimum Differentiation
• Spatial Interaction• Concentric Zones
• Shopper mobility/time constraints
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The principle of minimum
differentiation (PMD)
• PMD describes the intra-centre agglomeration of
similar retail outlets. It is found that many retailers
choose to locate near similar retailers orcomplementary activities, in order to attract a higher
flow of customers jointly.
• Assumptions: a retailer would be able to maximize
profits by locating or relocating closer to a
competitor in order to gain a larger market area.
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Spatial Interaction
Gravitational model
(Reilly’s Law)
• How competing retail areas affect shoppers in intermediate residentialareas
• The selection of a primary trading location is based upon the idea that
consumers are attracted towards one location as opposed to anotherby its draw or poll effect.
• Assumptions:1) two competing area are equally accessible from amajor road 2) these retailers offers no additional competitiveadvantage and are equally effective 3)the areas are similar in terms ofethnic, civic and general architecture, facilities or parking
• More customers will be attracted to the larger city or community toshop due to the greater amount of store facilities and choice whichmake any extra traveling time worthwhile.
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Shopper Mobility/time Constraints
Matrix
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The Davies & Clarke Model
(1994)
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Infrastructure
• Pedestrian flow and entry routes
• Public transport
• Road networks• Parking
• Visibility
• Site Access
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Retail Outlets
• Total stores
• Planning applications
• Likely disposals• Complementary stores
• Competing stores
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