Ch 6

Weaknesses of Secondary Business District (SBD)

* Discontinuity of offerings * Sometimes high rent and taxes (but not as high as CBD) * Traffic and delivery congestion * Aging facilities * Parking difficulties * Fewer chain outlets than in the CBD

Strengths of Central Business District (CBD)

* Excellent goods/service assortment * Access to public transportation * Variety of store types and positioning strategies within 1 area * Wide range of prices * Variety of customer services * High level of pedestrian traffic * Nearness to commercial and social facilities

Strengths Neighborhood Business District (NBD)

* Good location * Long store hours * Good parking * Less hectic atmosphere than a CBD or SBD

Weaknesses of Central Business District (CBD)

* Inadequate parking as well as traffic and delivery congestion * Travel time for those living in suburbs * Frail condition of some cities--such as aging stores--compared w/their suburbs * Relatively poor image of central cities to some potential customers * High rents and taxes for the most popular sites * Movement of some popular downtown stores to suburban shopping centers * Discontinuity of offerings (such as 4 shoe stores and no pharmacy)

Primary Trading area

encompasses 50-80 percent of a stores customers. It is the area closes to the store and possesses the highest density of customers to population and the highest per capita sales. There is little overlap with other trading areas

Retail balance

he mix of stores within a district or shopping center. Proper balance occurs when the number of store facilities for each merchandise or service classification is equal to the location's market potential, a range of goods and services is provided to foster one-stop shopping, there is an adequate assortment within any category, and there is a proper mix of store types (balanced tenancy)

Fringe - trading area

includes all the remaining customers, and they are the more widely dispersed. A store could have primary trading area of 4 miles, a secondary trading area of 5 miles, and a fringe trading area of 10 miles. The fringe trading area typically includes some out shoppers who travel greater distances to patronize certain stores.

Commercial GIS software

lets firms quickly research the attractiveness of different locations and access computer-generated maps. Before, retailers often placed different color pins on paper maps to show current and proposed locales - and competitors's sites - and had to collect and analyze data.

String

unplanned shopping are comprising a group of retail stores, often w/similar or compatible product lines, located along a street or highway. Little extension or shopping onto perpendicular streets. May start w/an isolated store, success then breeding competitors. Car dealers, antique stores, and apparel retailers often situate in strings.

TIGER - Topologically integrated geographic encoding and referencing

Most GIS Software programs are extrapolated from the decennial Census of Population and the U.S. census Bureau's national digital map.

Competitive Situation

Number and size of existing competitors. Level of saturation, short and long run outlook, evaluations of competitors strengths and weaknesses.

Availability of Store Locations

Number and type of locations, Access to transportation, Owning versus leasing opportunities, Zoning restrictions, and costs.

Factors to consider in evaluating retail trade areas: pg 265 Table 9-1

Population size and characteristics Availability of Labor Closeness to Sources of Supply Promotion Facilities Economic Base Competitive Situation Availability of Store Locations Regulations

Population size and characteristics

Total size and density, age distribution, average educational level, percentage of residents owning homes, total disposable income, per-capita disposable income, per-capita disposable income, occupation distribution, trends

Unplanned business district

Type of retail location where two or more stores situate together (or nearby) in such a way that the total arrangement or mix of stores is not due to long range planning.

Trading area

"a geographic area containing the customers of a particular firm or group of firms for specific goods or services." After a trading area is picked, it should be reviewed regularly. A thorough analysis of trading areas provides several benefits.

Weaknesses of Planned Shopping Center

* Landlord regulations that reduce each retailer's flexibility, such as required hours * Generally higher rent than an isolated store * Restrictions on the goods/services that can be sold by each store * A competitive environment within the center * Required payments for items that may be of little or no value to an individual retailer, such as membership in a merchants' association * Too many malls in a number of areas ("the mailing of America") * Rising consumer boredom w/and disinterest in shopping as an activity * Aging facilities by some older centers * Domination of large anchor stores

Weaknesses of String

* Less product variety * Increased travel for many consumers * Higher advertising costs * Zoning restrictions * The need to build the premises

Weaknesses Neighborhood Business District (NBD)

* Limited selection of goods and services * Prices tend to be higher b/c competition is less than CBD or SBD

Strengths of String

* Lower rent * More flexibility * Better road visibility and parking * Lower operating costs

Strengths of Secondary Business District (SBD)

* Solid product selection * Access to thoroughfares and public transportation * Less crowding and more personal service than a CBD * Placement nearer to residential areas than a CBD

Strengths of Planned Shopping Center

* Well-rounded assortment of goods and services based on long-range planning * Storing suburban population * Interest in one-stop, family shopping * Cooperative planning and sharing of common costs * Creation of distinctive, but unified, shopping center images * Maximization of pedestrian traffic for individual stores * Access to highways and availability of parking for consumers * More appealing than city shopping for some people * Generally lower rent and taxes than CBDs (except for enclosed regional malls) * Generally lower theft rates than CBDs * Popularity of malls * Growth of discount malls and other newer types of shopping centers

Chapter 10: Site Selection

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Size and shape of trading area - pg 257 See Figure 9-4 to help understand

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Understored vs overstored vs saturated trading areas:

A trading area may have residents who match the characteristics of the desired market and a strong economic base, yet still be a poor location for a new tore if competition is too intense. # A trading area with a small population and a narrow economic base may be a good location IF competition is minimial. # When examining competition these factors should be analyzed * The number of existing stores * The size distribution of existing stores * The rate of new store openings * The strengtrhs and weaknesses of all stores * Short-run and long run trends * level of saturation

Promotion Facilities

Availability and frequency of media, costs, waste

retail store saturation

Beacuse any trading area can support only a given number of stores or square feet of selling space per goods/service category, these ratios can help to quantify retail store saturation. # Number of persons per retail establishment # Average sales per retail sales # Average sales per retail store category # Average store sales per capita or household # Average sales per square foot or selling area # Average sales per employee

Closeness to Sources of Supply

Delivery costs, Timeliness, number of manufacturers and wholesalers, availability and reliability of product lines.

Parasite store

Does not create its own traffic and has no real trading area of its own. This store depends on people who are drawn to the location for other reasons. A magazine stand in a hotel lobby and a snack bar in a shopping center are parasites. While they are there, customers patronize these shops.

Economic Base

Dominant industry, extent of diversification, growth projections, freedom from economic and seasonal fluctuations, availability of credit and finical facilities

Isolated store

Freestanding retail outlet located on either a highway or a street. There are no adjacent retailers with this type of store shares traffic.

Understored Trading area

Geographic area that has too few stores selling a specific good or service to satisfy the needs of its population.

Overstored Trading area

Geographic area with so many stores selling a specific good or service that some retailers will be unable to earn an adequate profit.

Saturated Trading area

Gergraphic area with the proper amount of retail facilities to satisfy the needs of its population for a specific good or service, as well as to enable retailers to prosper.

Affinity

If a store at a given location (be it an unplanned district or a planned center) complement, blend, and cooperate with one another, and each benefits from the others' presence, then affinity exists. When affinity is strong, the sales of each store are greater, due to the high customer traffic, that if the stores are apart.

Disdvantages: of Isolated Stores

Initial customers may be difficult to attract, many people will not travel very far to get to one store on a continuous basis, most people like variety in shopping, advertising expenses may be high. Costs such as outside lighting, security, grounds maintenance, and trash collection are not shared. Other retailers and community zoning laws may restrict access to desirable locations. A store must often be built rather than rented. As a rule, unplanned business districts and planned shopping centers are much more popular among consumers; they generate most of retail sales.

Availability of Labor

Management, Management Trainee, clerical

Destination store

Retail outlet with a trading area much largen than that of a competitor with a less unique appeal. It offers a better merchandise assortment in its product categories, promotes more extensively, and/or creates a stronger image. This has a very large trading area much larger than its competitor with a "me-too" appeal. That is why Dunkin' Donuts uses the slogan "America Runs on Dunkin"

Lifestyle Center

an open-air shopping site that typically includes 150,000 to 500,000 square feet of space dedicated to upscale, well-known specialty stores.

GIS - geographic information system

Software which combines digitized mapping with key locational data to graphically depict trading-area characteristics such as population demographics; data on customer purchases; a listings of current, proposed, and competitor locations.

Regulations

Taxes, Licensing, Operations, Minimum wages, Zoning

Reilly's law of retail gravitation (Trading area for a new store)

The traditional means of trading-area delineation is this. It establishes a point of indifference between two cities or communities, so the trading area of each can be determined. The "point of indifference" is the geographic breaking point between two cities (communities) at which consumers are indifferent to shopping at either. According to Reilly's law, more consumers go to the larger city or community because there are more stores; the assortment makes travel time worthwhile. Reilly's law rests on these assumptions:

Advantages: of Isolated Stores

There is no competition, rental costs are relatively low, there is flexibility; no group rules must be followed in ooperations, and larger space may be obtained. Isolation is good for stores involved in one-stop or convenience shopping. Better road and traffic visibility is possible. Facilities can be adapted to individual specifications. Easy parking can be arranged, and cost reductions ,leading to lower prices.

Planned Shopping Center

a group of architecturally unified commercial establishments on site that is centrally owned or managed, designed and operated as 1 unit, based on balanced tenancy (when stores in a planned shopping center compliment each other as to the quality and variety of their product offerings), and accompanied by parking facilities.

Regional Shopping Center (mall)

a large, planner shopping facility appealing to a geographically dispersed market. It has at lease 1 or 2 department stores and 50-150 or more smaller stores. Offers a very broad and deep assortment of shopping-oriented goods and services intended to enhance the consumer's visit.

Community Shopping Center

a moderate-sized, planned shopping facility w/a branch department store (traditional or discount) and/or a category killer store, as well as several smaller stores (similar to those in a neighborhood center).

Neighborhood Shopping Center

a planned shopping facility, w/the largest store being a supermarket or a drugstore. Other retailers include a bakery, a laundry, a dry cleaner, a stationery store, a barbershop or beauty parlor, a hardware store, a restaurant, a liquor store, and a gas station. Focuses on convenience-oriented goods and services for people living or working nearby.

Power Center

a shopping site w/up to a half-dozen or so category killer stores and a mix of smaller stores AND several complementary stores specializing in 1 product category.

Mega mall

an enormous planned shopping center w/1+ million square feet of retail space, multiple anchor stores, up to several hundred specialty stores, food courts, and entertainment facilities. Exp. Mall of America.

Secondary Business District (SBD)

an unplanned shopping area in a city or town that is usually bounded by the intersection of 2 major streets. Cities--particularly larger ones--often have multiple SBDs, each w/at least a junior department store (a branch of a traditional department store or a full-line discount store) and/or some larger specialty stores, besides many smaller stores. The kinds of goods and services sold in an SBD mirror those in a CBD. However, an SBD has smaller stores. less width and depth of merchandise assortment, and a smaller trading area (consumers will not travel as far), and it sells a higher proportion of convenience-oriented items.

Neighborhood Business District (NBD)

an unplanned shopping area that appeals to the convenience shopping and service needs of residential area. Contains smaller stores (dry cleaner, stationary store, barber shop, liquor store, restaurant). The leading retailer is typically a supermarket or a large drugstore. Situated on a major street or its residential area.

Secondary - Trading area

contains and additional 15-25 percent of a store's customers. It is located outside the primary area, and customers are more widely dispersed.

Central Business District (CBD)

the hub of retailing in a city. Synonymous w/the term downtown. Exists where there is the greatest density of office buildings and stores. Vehicular and pedestrian traffic are very high. The core of CBD is no more than a square mile, w/cultural and entertainment facilities surrounding it. 1 major department store and a number of specialty and convenience stores.