Page 52 - DMGT552_VISUAL_MERCHANDISING

Unit 3: Image Mix

(iii) Business Climate: Retailers should take into account the employment trends of the market Notes
because a high level of employment drives up the purchasing power. It is in the interest of
retailers and developers to determine which geographical areas are growing rapidly and
why.
(iv) Competition: The level and nature of competition in an area also influence the selection of
a particular retail location. On the basis of levels of competition, trade area can be classified
into three types:

 Saturated
 Under-stored
 Over-stored
A saturated trade area offers customers a wide variety of merchandise, which also ensure
impressive profits for retailers in the market. Customers tend to prefer these areas because
of the variety of merchandise offered and competitive pricing. Therefore, retailers who
find location characteristics compatible with their marketing mix prefer to establish their
stores at such locations.

Example: Nirula’s, McDonalds’s, Pizza Corner, and Pizza Hut are some examples in this
context in India.
Retailers located in a saturated trade area look for head-to-head competition. They
develop, methods and internal systems that allows them to successfully compete
and it ensures high footballs, which can be converted into sales with sustained marketing
efforts.

Under-stored trade area is one that has too few stores selling specific merchandise to meet
the needs of the segment efficiently.

Example: Subhiksha’s early success was based on its location strategy of opening stores
in small towns and residential neighbourhoods in Chennai that were relatively poorly served
by the existing retailers.
Over-stored trade areas are characterised by the presence of multiple retailers in a specific
product category.

Example: Nai Sarak in Delhi, which is well known all over India for its educational
books and stationery products.
These areas pose great challenges for new entrants in terms of investment and efforts in
attracting customers. In India, most of the over-stored trade areas are traditional markets
with limited space for new retailers and high rentals.

(v) Peer Pressure and Competition: The importance of support of public and the already
existing business in adjoining area is evident from the following example.

Example: Sonepat-Delhi national highway is one of the busiest highways in the country;
therefore, it has immense economic potential for dhabas. An entire stretch of one kilometer on
this highway near Delhi has no outlet serving non-vegetarian. Social norms have ensured that
non-vegetarian outlets do not set shops on this stretch.

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