Retail Management: Chapter 9

7. Huff's Law of Shopper Attraction

delineates trading areas on the basis of the product assortment carried at various shopping locations, travel times from the shopper's home to alternative locations, and the sensitivity of the kind of shopping to travel time

1. Trading Area

geographic area containing the customers of a particular firm or group of firms for specific goods or services

9. Overstored Trading Area

has so many stores selling a specific good or service that some retailers cannot earn an adequate profit

10. Saturated Trading Area

has the proper amount of stores to satisfy the needs of its population for a specific good or service, and to enable retailers to prosper

8. Understored Trading Area

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

3. Destination Store

one store has a better assortment, promotes more and has a stronger image, it has a much larger trading area than that of a competitor

2. 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, etc.

Primary Trading Area

50 to 80% of a store's customers

5. 3 trading area analysis models

a. Analog - simplest/most popular; potential sales for a new store are estimated on the basis of revenues for similar stores in existing areas, the competition at a prospective location, etc. b. Regression - uses a series of mathematical equations showing the association between potential store sales and several independent variables such as population size, average income, etc. c. Gravity - people are drawn to stores that are closer and more attractive than competitors' stores

Secondary Trading Area

additional 15 to 25%

Fringe Trading Area

all remaining customers, most widely dispersed

6. Reilly's Law of Retail Gravitation

establishes a point of indifference between two communities, so the trading area of each can be determined; the point of indifference is the geograhppic breaking point between two cities at which consumers are indifferent to shopping at either; more consumers go to the larger city because there are more stores; the assortment makes travel time worthwhile; the law rests on two assumptions: a. Two competing areas are equally accessible from a major road and retailers in the two areas are equally effective

4. Parasite Store

subway in Walmart