Chapter 8: Retail Site Location

census block

an area bounded on all sides by visible (roads, rivers, etc.) and/ or invisible (country, state boundaries) features that is the smallest geographic entity for which census data are available

using the _____ approach, a small retail chain merely describes the site and trade area characteristics for its most successful stores and attempts to find a site with similar characteristics.

analog

railroad tracks, limited-access highways, and parks are examples of _____ barriers that affect the accessibility to a particular site.

artificial

a secondary trading area is the geographic area of secondary importance in terms of customer sales, generating about _____ percent of the site's customers. a. 60 to 70 b. 20 to 30 c. 80 to 90 d. 50 to 60

b. 20 to 30

congestion

the amount of crowding of either people or cars too much congestion can make shopping slow, irritate customers and generally discourage sales however, a relatively high level of activity in a shipping center creates excitement and can stimulate sales

a(n) _____ trading area includes customers from widely dispersed areas who travel long distances to shop at a store site.

tertiary

parking

the amount and quality of parking facilities are critical for evaluating a shopping center example: if there aren't enough spaces or the spaces are too far from the store, customers will be discouraged from patronizing the site and the store example: if there are too many open spaces, the shopping center may be perceived as having unpopular stores

select from the following the two widely used sources of information regarding the nature of consumers in a given trade area - data from GIS systems - U.S. census data - retailing trade publications - local property records

- data from GIS systems - U.S. census data

factors affecting the attractiveness of an area for locating stores

- strategic fit with target market - economic conditions - competition - cost of operating stores

accessibility

1. the degree to which customers can easily get into and out of a shopping center 2. ability of the retailer to deliver the appropriate retail mix to customers in the segment accessibility is greater for sites located near major highways, on uncongested highways, and at streets with traffic lights and lanes that enable turns into the site

in retail leases, _____ clauses traditionally assign responsibilities for taking care of public areas, including sidewalks or parking lots

CAM - common area maintenance clause

fixed-rate lease

a lease that requires the retailer to pay a fixed amount per month over the life of the lease

an MSA usually is named after the major urban area in the MSA

a characteristic of metropolitan statistical areas

metropolitan statistical area

a city with 50,000 or more inhabitants or an urbanized area of at least 50,000 inhabitants and a total MSA population of at least 100,000 (75,000 in New England)

micropolitan statistical area

a city with only 10,000 inhabitants in its core urban area

prohibited-use clause

a clause in a lease that keeps a landlord from leasing to certain kinds of tenants

exclusive-use clause

a clause in a lease that prohibits the landlord from leasing to retailers selling competing products

cotenancy clauses

a clause in a leasing contract that requires a certain percentage of a shopping center be leased, while others name specific retailers or types of retailers that are to remain open

block group

a collection of adjacent census blocks that contain between 600 and 3,000 people that is the smallest unit for the sample data

geographic information system (GIS)

a computerized system that enables analysts to visualize information about their customers' demographics, buying behavior, and other data in map format

trade area

a contiguous geographic area that accounts for the majority of a store's sales and customers

census

a count of the population of a country as of a specified date

percentage lease

a lease in which rent is based on a percentage of sales

graduated lease

a lease that requires rent to increase by a fixed amount over a specified period of time

analog approach

a method of trade area analysis also known as the similar store or mapping approach divided into four steps: 1. describing the current trade areas through the technique of customer spotting 2. plotting the customers on a map 3. defining the primary, secondary, and tertiary area zones 4. matching the characteristics of stores in the trade areas with the potential new store to estimate its sales potential

regression analysis

a statistical approach for evaluating retail locations based on the assumption that factors that affect the sales of existing stores in a chain will have the same impact on stores located at new sites being considered

customer spotting

a technique used in trade area analysis that "spots" (locates) residences of customers for a store or shopping center

every _____ years, census takers gather demographic information from every household in the United States. a. 10 b. 2 c. 5 d. 15

a. 10

the average Spending Potential Index is _____. a. 100 b. 50 c. 120 d. 80

a. 100

category specialists offer a large choice of brands and products for which customers are engaged in _____. thus, customers generally drive some distance to shop at these stores. a. comparison shopping b. impulse shopping c. spontaneous shopping d. unplanned shopping

a. comparison shopping

a retailer that targets the same market segment but offers different, noncompeting merchandise is called a _____ retailer. a. complementary b. cumulative c. adjacent d. tertiary

a. complementary

if a discount store's lease states that the landlord cannot lease to another discount store, this is an example of what type of clause? a. exclusive-use b. joint tenancy c. common area maintenance d. cotenancy

a. exclusive-use

a(n) _____ system is a system of hardware and software used to store, retrieve, map, and analyze geographic data. a. geographic information system b. census block c. geographic potential index d. block group

a. geographic information system

the accessibility of a site _____. a. is greater for retail sites located near major highways b. is the number of vehicles and pedestrians passing by the site c. is the number of customers entering a store's site d. is lower for retail sites located at streets with traffic lights

a. is greater for retail sites located near major highways

assume that Altair Inc. is a retailer that runs a store in San Antonio - New Braunfels, an eight-county metropolitan area in the U.S. state of Texas. in order to lower its promotion and distribution costs, Altair opens up more stores in the same metropolitan area. in this scenario, Altair is lowering its promotion and distribution costs by _____. a. realizing economies of scale b. reducing inventory turnover c. using cannibalization strategies d. using disintermediation

a. realizing economies of scale

a retailer may pay 4 percent on the first $200,000 in sales and then 3 percent on sales greater than $200,000. this is an example of _____ lease. a. sliding scale b. novated c. fixed-rate d. graduated

a. sliding scale

_____ refers to customers' ability to see the store from the street. a. visibility b. traffic flow c. marketability d. accessibility

a. visibility

locations with complementary adjacent retailers have the potential to build customer straffic

adjacent retailers

operating costs

affected by the proximity of the area being considered to other areas in which the retailer operates stores if a store is located near other stores and the retailer's distribution centers, the cost of shipping merchandise to the store is lower, as the cost and travel time spent by the district manager supervising the stores' operations

what can be said of store locations in a strip shopping center? a. destination stores require a lot of foot traffic b. locations closes to supermarkets attract greater foot traffic c. destination stores would want to be placed next to a supermarket d. the locations closest to a supermarket are the least expensive

b. locations closes to supermarkets attract greater foot traffic

which of the following statements is true about retail stores' visibility? a. good visibility is always important for stores with a well-established and loyal customer base b. most retailers prefer a direct, unimpeded view of their store c. visibility refers to the ease with which customers can get into and out of a site d. natural barriers do not have any effect on the visibility of a retail site

b. most retailers prefer a direct, unimpeded view of their store

when it comes to driving time, which trading zone takes the least amount of time for a customer to reach? a. tertiary trading zone b. primary trading zone c. fringe trading zone d. secondary trading zone

b. primary trading zone

the _____ approach is based on the assumption that factors that affect the sales of existing stores in a chain will have the same impact on stores located at new sites being considered. a. spending potential index b. regression analysis c. market-basket analysis d. metropolitan statistical

b. regression analysis

identify the true statement about traffic flow. a. it is the ability to see the store from the street b. retailers use traffic count measures to access a site's attractiveness c. more traffic flow is always better for a store d. it is the ease with which customers can get into and out of the site

b. retailers use traffic count measures to access a site's attractiveness

identify a true statement about data from the United States Census Bureau a. the data sources do not provide a snapshot of the country's social characteristics b. the data is not very current c. the data is not available at higher levels of aggregation d. the data projections are highly inaccurate

b. the data is not very current

with respect to maximizing profits, retailers should continue to open stores only as long as _____. a. they are able to minimize their economies of scale b. their marginal revenues achieved by opening a new store are greater than their marginal costs c. they are able to maximize sales cannibalization d. the promotion and distribution costs of their existing stores can be increased indefinitely

b. their marginal revenues achieved by opening a new store are greater than their marginal costs

the measure that determines the number of consumers entering a shopping center _____. a. provides a less accurate picture of the number of consumers actually patronizing a shopping center b. cannot be used for a more detailed analyses based on week-to-week comparisons c. is available for every day of the year individually d. is independent of the retail mix

c. is available for every day of the year individually

_____ costs are affected by the proximity of the area being considered to other areas in which the retailer operates stores. a. fixed b. private c. operating d. marginal

c. operating

which of the following is a system that classifies all U.S. residential neighborhoods into 67 distinctive segments, based on demographic and socioeconomic characteristics? a. the CAMEO Classifications b. the Acorn system c. the ESRI Tapestry Segmentation d. the Output Area Classification

c. the ESRI Tapestry Segmentation

identify the accurate statement about a location within a shopping center a. destination stores should be located in the expensive sites of a shopping center b. the stores that cater to customers shopping on impulse typically benefit in low traffic locations c. the stores in an enclosed mall that cater to customers engaging in comparison shopping benefit in more expensive locations d. stores that are located closest to an anchor store have lower occupancy costs

c. the stores in an enclosed mall that cater to customers engaging in comparison shopping benefit in more expensive locations

trade areas are divided into _____ zones. a. eight b. twelve c. three d. nineteen

c. three

it lacks big cities' pull and economic significance

characteristic feature of a micropolitan statistical area

in addition to the percentage of sales, retailers typically pay a _____ _____ maintenance (CAM) fee based on the percentage of their square footage of leased space.

common area

spending potential index (SPI)

compares the average expenditure in a particular area for a product to the amount spend on that product nationally

visibility

customers ability to see the store and enter the parking lot safely good visibility is less important for stores with a well-established and loyal customer base, but most retailers still want a direct, unimpeded view of their store in an area with highly transient population, such as a tourist center or large city, good visibility from the road is particularly important

in the United States, the smallest unit of analysis of demographic information is the _____. a. census tract b. census block c. nation d. block group

d. block group

Kenway set up a store that sells only video games next to a store, run by Roberts, that sells only gaming consoles. the merchandise offered by Kenway is complementary to the merchandise offered by Roberts. after a few weeks, customers after purchasing gaming consoles from Roberts's store purchased games from Kenway's store. these customers did not want to go drive to another place looking for games. in this scenario, Kenway used the principle of _____ to appeal to his customers. a. showrooming b. horizontal integration c. gentrification d. cumulative attraction

d. cumulative attraction

a _____ is a type of lease, in which a retailer pays a set amount per month over the life of the lease. a. sliding scale lease b. percentage lease with a specified minimum c. percentage lease with a specified maximum d. fixed-rate lease

d. fixed-rate lease

the _____ is a variation of the fixed-rate lease. a. sliding scale lease b. percentage lease with a specified minimum c. percentage lease with a specified maximum d. graduated lease

d. graduated lease

which of the following is an advantage of using data from the United States Census Bureau? a. the data sources from the Bureau are updated every year b. the data are particularly user-friendly c. the census data from the Bureau can be easily utilized to examine trade areas for various locations for specific products and services d. the projections from these data sources are reasonably accurate

d. the projections from these data sources are reasonably accurate

economic conditions

examine the area's level and growth of population and employment a large, fully employed population means high purchasing power and high levels of retail sales

primary trading zone

geographic area from which the shopping center or store site derives 50 to 70 percent of its customers

secondary trading center

geographic area of secondary importance in terms of customer sales, generating about 20 to 30 percent of the site's customers

a _____ _____ system provides descriptive information associated with the spatial features, such as street address and the characteristics of the household at the address.

geographic information (GIS)

in most cases, retailers prefer to sell their merchandise in areas where population is _____ than in areas where the population is _____.

large and growing; decreasing

trade areas three zones

light brown: 5 minute drive time blue: 10 minute drive time green: 15 minute drive time

cannibalization

locating too many additional stores in an area

adjacent tenants

locations with complementary, as well as competing, adjacent retailers have the potential to build traffic

economies of scale from multiple stores

most retail chains open multiple stores in an area to lower promotion and distribution costs by realizing economies of scale

natural barriers and artificial barriers

natural barrier: a river or mountain, that impacts accessibility to a site artificial barrier: in site evaluations for accessibility, a barrier such as railroad tracks, a major highway or a park - these barriers' impact on a particular site primarily depends on whether the merchandise or services will appeal to customers so strongly that they cross the barrier

a(n) _____ is a building or kiosk that sits in the parking lot of a shopping center but is not physically attached to the center.

outparcel

a percentage lease with a _____ _____ specifies that a retailer must pay a minimum amount of rent, no matter how low the sales are.

specified minimum

customer _____ is the process of locating the residences of customers for a store on a map displaying their positions relative to the store location.

spotting

strategic fit

the area needs to have consumers who are in the retailer's target market - who are attracted to the retailer's offering and interested in patronizing its stores the area must have the right demographic and lifestyle profile the size and composition of households in an area can be an important determinant of success

traffic flow

the balance between a substantial number of cars and not so many that congestion impedes access to the store the number of vehicles and pedestrians that pass by the site when the traffic is greater, more consumers are likely to stop in and shop at the store

competition

the level of competition in an area affected the demand for a retailer's merchandise a large, readily accessible labor force; and, in some neighborhoods, a surrounding market of customers with high disposable incomes

tertiary trading area (or fringe trading area)

the outermost area... includes the remaining customers who shop at the site but come from widely dispersed areas

cumulative attraction

the principle that a cluster of similar and complementary retailing activities will generally have greater drawing power than isolated stores that engage in the same retailing activities