Marketing Communications

Chapter 6 : Store Location and Site Evaluation

Selecting the Store Location

Market Area Analysis

Factors Affecting Attractiveness of Market Areas and Trade Areas

Demographic
Economic
Cultural
Demand
Infrastructure

Estimating Sales Potential

Area sales activities
Level of competition

Trade Area Analysis

Size and shape of trade areas
Measurement and definition of the trade area

Site Evaluation and Selection

Types of locations
Choosing a General Location
Multi attribute weighted check list

Chapter Summary

Retailers desire to set up their outlets in the best possible locations. The optimum store location for a retailer is based on many factors like the type of industry, the product category being sold, and the degree of competition. Retail stores are located where the opportunities offered by the market are at a maximum.

Retailers usually go through four step process to select a store location: a) analyzing alternate trade areas; b) determining the most beneficial type of location; c) selecting a general site and; d) selecting a specific site. A trade area refers to the geographical area from which retailers attract customers. When two or more shopping centers are situated close to each other, then their trade areas would overlap. Every trade area consists of three parts, primary, secondary and fringe. The size and shape of the trade area depends on the size of the store, the type of the store, competitor’s placement, and the time taken to travel to the store.

Reilly's Law and Huff's model help retailers define their trade area. Globally, retailers use geographic information systems to analyze and delineate their trade areas. And three major factors that help retailers analyze their trade areas accurately: the characteristics of the population, the characteristics of the economic base, the competition and the level of retail saturation.

There are three types of locations that a retailer can consider for locating its store – isolated store, unplanned business districts and planned shopping centers. Important factors that are considered when selecting a site are: sales potential; accessibility; pedestrian traffic; terms of occupancy; and the legal and political environment.

The retailer must go through all these steps of location and site evaluation to find the “one hundred percent location”.

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