Chapter 9
? To Demonstrate Importance of Store
Location
? To Discuss the Concept of Trading Area
? To Show How Trading Areas Can Be
Delineated
? To Examine Factors in Trading Area
Analysis
? Good Location CAN Overcome
Mediocre Strategy Mix
? Poor Location Difficult to Overcome
? Requires Extensive Decision Making
? Least Flexible Element of Strategy Mix
? Loyal Customers and Employees May
Be Lost
? New Location May Not Have Same
Characteristics
? Store Fixtures and Renovations May
Not Transfer
Evaluate
Alternate
Geographic
(Trading)
Areas
Select
General
Location
Analyze
Alternate
Sites
Determine
Type of Location
? Consumer Characteristics Detailed
? Promotional Activity Focus Determined
? Ascertain Overall Net Increase
? Proper Number of Stores Calculated
? Geographic Weaknesses Highlighted
Total Revised Sales Total Sales Total Previous Sales
of Existing Store of New Store of Existing Store + -
? Trading Area by Specific
Demographics
? Derive Sales Potential
? Effect of New Location on
Existing
? Primary
? Secondary
? Fringe (Tertiary)
? Not Concentric
? Two Stores in Same Area
Can Have Different Trading
Areas (TA)
? Destination
? Parasite
? Store Size
? Competitors’ Locations
? New Stores
? Residential Housing Patterns
? Travel or Driving Time
? Promotion
By Geographic Location
? Shopping Frequency
? Average Dollar Purchases
? Concentration of Store’s Credit Card
? Trend Analysis
? Analog Model
? Regression Model
? Gravity Model
– Reilly’s Law of Retail Gravitation
– Huffs Law of Shopper Attraction
By Geographic Location
? Shopping Frequency
? Average Dollar Purchases
? Concentration of Store’s Credit Card
? Population
– Census
– Survey of Buying Power
? Effective Buying Index (EBI)
? Buying Power Index (BPI)
? Economic Base
? Understored
? Saturated
? Overstored
? Number of People Per Establishment
? Average Sales
– Store
– Category
– Store Per Capita or Household
– Per Square Foot
– Per Sales Person
? The Importance of Store Location and the
Process of Choosing a Location
? The Concept of Trading Area and Its
Components
? How Trading Areas May Be Delineated for
Existing and New Stores
? Three Major Factors in Trading Area
Analysis,
– Population Characteristics
– Economic Base Characteristics
– Competition and Level of Saturation
Questions?