Page 53 - DMGT552_VISUAL_MERCHANDISING

Visual Merchandising

Notes Site Analysis and Evaluation

Site analysis and evaluation is an important step in the selection of a retail location. As a retailer,
you have three basic choices for a site:
 Shopping centres/malls

 Downtown core
 Freestanding location
The following chart highlights the strengths and weaknesses of these sites.

Table 3.1: Site Evaluation

Location Type Potential Advantage Potential Disadvantage
Downtown  Good transit  Perceived parking problems
 Established market  Possibly in decline
 Independent focus  Usually poor evening traffic
 Strong business audience
Regional Mall  High traffic  High rent
 Plenty of parking  Very competitive
 Established draw  High building costs
 Professional image  Controlled hours
Community Mall  Trading area defined  Mixed images
 Good parking  Limited market
 Community-driven  Limited traffic
Strip Mall  Specialised tenant mix  Limited draw
 Visibility  Limited access/transit
 Convenient
Free Standing/Big Box  Lower rents  Unit size (large)
 Value image  Exclusive to major tenants
 Lower overheads  Harder to attract customers

Choosing a Shopping Centre

 Sales Per Square Foot: Most shopping centres require tenants to report monthly sales
figures. This valuable data makes it easier to compare malls and their rents. It also allows
you to make more accurate sales forecasts.

Example: Let’s say a mall’s average sales for women’s wear are $300 per square foot and
you are contemplating renting a 1000 square foot location. If you perform to the average, you
would expect to attain a sales level of $300,000 per year.
 Total Rent: Traditionally, malls will charge a minimum rent per square foot or a percentage
of sales (whichever is greatest), plus a prorated common area and maintenance charge
(CAM) per square foot leased. CAM expenses are the developer’s total cost of maintaining
the mall divided by the total allowable space for rent. They usually include the mall’s
expenses for insurance, real estate taxes, snow removal, maintenance staff wages, garbage
removal, promotions, etc.
 Cost per Shopper Analysis: One approach to determining the true “cost” of a location is to
calculate the “cost per shopper”. The key here is to determine whether the traffic created
at a particular site consists of your target customers or a more general customer base.

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