Page 104 - DMGT550_RETAIL_MANAGEMENT

Unit 6: Financial Strategy and Retail Locations

Location, Location, Location? Notes
What does all of this mean if you have a site looking for a use or a use looking for a site? Throw
out those preconceived ideas about location, as the old adage is in a state of evolution. Market,
market, market is a more-appropriate concept for the future as retailers and developers alike
ask not “Is this a good location,” but rather “Is this the best location in the market, given the
competition?”
Historically, the criteria for many retailers has included a location on Main and Main, with a
minimum population within a specific radius, generally concentric rings of 1, 3, 5, or 10 miles.
But providing demographics based on concentric rings and identifying the competition are no
longer enough to sell a buyer on a location. Road systems, buyer preferences, and new venues
of competition must now be considered, making use of the new technologically advanced
systems that overlay mapping, demographics, and other data.
Consistency in consumer behavior also plays a part in the decision-making process, as cluster
analysis, which identifies similar behavior patterns within similar demographic tracts, becomes
prevalent. Psychographics-adding psychology, behavior, and lifestyles to demographic data-is
also being utilized. For example, the shopping patterns in the Midwest are not the same as those
in the New York City metropolitan area when parking, road access, and visibility are considered.
Providing information on the existing, proposed, and potential competition surrounding each
site is critical when reviewing any location. Geodemographic systems have quickly become the
choice among savvy market researchers, as the use of one or more of these systems has proved
successful in selecting new store locations. Doing research and providing this information are
now key to satisfying retailers and capital markets.
Retailers, developers, and brokers must push the envelope and look beyond the obvious to find
creative options. For example, Tandy’s Incredible Universe, the cutting edge of electronics
retailing, includes in-store McDonald’s in its 185,000 square foot stores. Brand recognition has
made Starbucks a household word, with locations in malls, airports, stadiums, and most recently,
flying the friendly skies with United Airlines.

Current Trends
With many retailers opting for locations in more densely populated areas, sites currently occupied
for other uses are finding new life as adaptive reuse becomes the standard in urban economic
development. Many of the nation’s retailers are discovering the substantial dollar volumes that
are largely untapped in the major urban markets. Obsolescent industrial buildings in A locations
are making way for new supermarkets, Wal-Marts, and Home Depots across the country. In fact,
Wal-Mart is considering obsolescence in its new prototype by designing stores that can be
converted into multifamily housing in the future. Communities with enterprise zones and
other economic incentives are getting a second chance as retailers rediscover downtown in
more-affluent markets. A shining example is the Circle Centre redevelopment in Indiana polis.
B locations, or those neighborhood centers once anchored by supermarkets, are getting a breath
of new life from Rite Aid, Walgreens, and CVS as consumers yearn for service and convenience.
In addition, the surviving supermarkets and large discount department stores are anchoring
regional malls. K mart now focuses on its superstore concept in metropolitan locations, with
Wal-Mart continuing to identify gaps in suburban markets. There are fewer active big-box
players; therefore, opportunities for regional mall locations, as they become repositioned, will
become more prevalent.
The Challenge of Cyber Retailing
Technology is making a dramatic impact on the retail industry as a whole. A recent Gallup Poll
study concluded that 40 percent of all shoppers are now using non-store venues to make some of

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