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ch7_retail_location_S2011 - Chapter 7 – Market Selec0on...

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Unformatted text preview: Chapter 7 – Market Selec0on and Retail Loca0on Analysis Your “Daddy” is Your Target Market… I must first select a target market Then I must figure out ways to get to them Who’s the target market? ? Target Markets Need to Be…. MEASURABLE ACCESSIBLE SIZEABLE Central Business Districts • Downtown locaIon • Unplanned • Near hub of public transit • Department & specialty stores Central Business Districts • Recently an “anI‐chain” movement has grown stronger Secondary Business Districts • Found in large ciIes • Has at least one large anchor • Located near a major street intersecIon Neighborhood Business Districts • Downtown locaIon • Unplanned • Near hub of public transit • Department & specialty stores Neighborhood Business Districts • Small stores • Convenience oriented • May include Peets Coffee, Books Inc, supermarket, Radio Shack, BeauIful Café, True Value or Ace Hardware Shopping Centers and Malls Shopping Centers •  Advantages –  Heavy traffic –  Sharing costs –  Parking –  Mall security –  Common maintenance •  Disadvantages –  Loss of control –  Fixed mall hours –  Product restricIons –  Much compeIIon –  Visibility of smaller stores in shadow of anchor stores Non‐store Based Retailers Freestanding Retailers •  Low compeIIon •  Low rents •  High freedom •  Solitary locaIon •  Harder to get customers •  Costly markeIng •  Owns 100% of expenses •  Customized faciliIes •  Cheap easy parking •  More $$ to develop •  Subject to zoning laws GIS SoDware •  Geographic InformaIon Systems •  Digi0zed Mapping With Data to Graphically Depict Trading Area Characteris0cs •  Popula0on Demographics •  Data on Customer Purchases •  Compe0tor Loca0ons •  Uses of GIS •  Market selec0on •  Site analysis •  Trading area defini0on •  Adver0sing budget alloca0on GIS SoDware in Ac0on Delinea0ng Trading‐Area Segments The Segments of a Trading Area Primary 50%-80% of customers Secondary 15%-25% of customers Fringe Smallest % of customers Serramonte Trading Area •  PopulaIon ‐ 950,314 •  Households ‐ 353,649 •  Avg Household Income ‐ $88,835 •  Median Age ‐ 38 years Stonestown Trading Area •  PopulaIon 854,048 •  Households 317,825 •  Avg Household Income $92,829 •  Median Age 37.8 Retail Loca0on Theories Gravity Models A Gravity Model: Reilly’s Law Reilly’s law of retail gravitaIon, a tradiIonal means of trading‐area delineaIon, establishes a point of indifference between two ciIes or communiIes, so the trading area of each can be determined Example: What is the breaking point between Town A and Town B calculated by Reilly’s Law? Example: Town A and Town B 36 Distance between A & B 100 Population of B 4 Population of A 6 Distance from A to B Limita0ons of Reilly’s Law   Distance is only measured by major thoroughfares; some people will travel shorter distances along cross streets   Travel 0me does not reflect distance traveled. Many people are more concerned with 0me traveled than with distance   Actual distance may not correspond with percep0ons of distance Theory of Retail SaturaIon • IRS = (H x RE) / RF $$$ No. Households Retail Sales Retail Sq Footage Buying Power Index •  BPI = 0.5 (% of U.S. effec0ve buying income   0.3 (% of U.S. retail sales)   0.2 (% of U.S. popula0on) Is one measure of market potenIal that can be used to compare one trading area with others. Market Demand Poten0al and Market Supply Poten0al Many Other Factors •  Traffic density & paeerns •  Site neighbors •  Demand density Many Other Factors •  •  •  •  Traffic density & paeerns Site neighbors Demand density Supply density Many Other Factors •  •  •  •  •  •  •  Traffic density & paeerns Site neighbors Demand density Supply density Site availability Terms of acqusi0on Expected profitability Thank you! ...
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