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Chapter

RMG 200 Chapter Notes -Gentrification, Dollarama, Traffic Flow


Department
Retail Management
Course Code
RMG 200
Professor
Brent Barr

Page:
of 4
OTHER RETAIL LOCATION OPPORTUNITIES
Mix-Use Developments (MXDs)
Development that combines several uses in one complex (eg. Shopping
centre, office tower, hotel, residential complex, civic centre, and
convention centre)
Land costs the same whether a developer builds a shopping mall by itself
or builds an office tower over the mall or parking structure
Airports
Three to four times as high as regular mall stores
Rents are at least 20% higher than malls
Costs may be higher because inconvenient for workers, higher wages
Resorts
Prime location opportunities for gold courses, entertainment spas and
complementary retailers
Hospitals
Patients and guests
Eg. Chapters
Store within a store
Eg. department stores lease spaces t retailers such as sellers of cosmetics
and fine jewelry or furs
Eg. Grocery stores have been experimenting with providers such as banks,
film processors, and video outlets
CITY OR TOWN LOCATIONS
Central Business District
(CBD)
The traditional downtown business area of a city or town
hub for public transportation
high level of pedestrian traffic
parking often limited
no control over weather
shopping on weekends and evening is slow
lack of planning (one street is upscale and another street is low income)
Downtown Locations
The CBD located in the tradition shopping area of smaller towns, or a secondary
business district in suburb or within a larger city, generally featuring lower
occupancy costs, fewer people, fewer stores, smaller overall selection of goods or
services, and fewer entertainment and recreational activities than more successful
primary central business districts
Redevelopment Efforts in
City and Town Locations
Reasons why city and town location have become very attractive location
alternatives to shopping centres:
Gentrification: process in which old buildings are town down or are restored to
create new offices, housing developments and retailers
Developers not building as many malls as before
Same chains are finding that occupancy costs in city and town locations
compare favourably to malls
City and town locations often offer retailers incredible expansion opportunities
because of a stable and mature customer base and relatively low competition
Cities often provide significant incentives to locate in urban centres
Young professionals and retired empty nesters are moving to urban centres to
enjoy the convenience of shopping, restaurants, and entertainment
FREESTANDING SITES
Freestanding site: a retail location that is not connected to other retailers
Advantage
Disadvantage
greter visibility
Lower rents
Ample parking
No direct competition
Greater convenience for customers
Fewer restrictions on signs, hours, or merchandise
Ease of expansion
lack of synergy with other stores
must be destination point for customers
must offer customers something special in
merchandise, price, promotion, or services to get
them into the store
RETAIL SITE SELECTION
What issues should be considered when determining in which region or trade area to locate a store?
What is a trade area, and why should a retailer choose one over another?
What factors should retailers consider when deciding on a particular site?
How can retailers forecast sales for new store locations?
FACTORS AFFECTING THE ATTRACTIVNESS OF A SITE
1. Characteristics of the site
2. Characteristics of the trading area for a store at the site
3. Estimated potential sales that can be generated by a store at the site
Traffic Flow and Accessibility
Macro Analysis
Micro Analysis
Road pattern: a consideration used in measuring the
accessibility of a retail location via major arteries,
high ways or roads
Road condition: includes the age, number of lanes,
number of stoplights, congestion, and general state
of repair of roads in a trade area
Natural Barriers: a barrier such as a river or
mountain, that affects accessibility to a site
Artificial barriers: in site evaluations for
accessibility, barriers such as railroad tracks, major
highways or parks
Visibility: the customer’s ability to see the store and
enter the parking lot safely
Traffic flow
Amount and equality of parking facilities: a store’s
having enough parking spaces, close enough to the
building, that the store is ideally accessible to
customer, but not so many open spaces that the
store is viewed as being unpopular. A standard rule
of thumb is 5.9 spaces per 100 square metres of
retail store space
Congestion: the amount of crowding of either cars
or people
Ingress/egress: the means of entering/ exiting the
parking lot of a retail site
Adjacent Tenants
Complementary retailers target the same market segment but have a different, noncompeting merchandise
offering
Eg. Price Chopper co-located with Dollarama or even Walmart
This location approach is based on the principle of cumulative attraction, in which a cluster of similar and
complementary retailing activities will generally have greater drawing power than isolated stores that engage
in the same retailing activities
Locational Advantages within a Centre
Cumulative attraction: the principle that a cluster of similar and complementary retailing activities will
generally have a greater drawing power than isolated stores that engage in the same retailing activities
Cumulative theory applies to both stores that sell complmenary merchandise and those that compete directly
with one another
Good location is one whose tenant mix provides:
o A good selection of merchandise that competes with itself
o Complementary merchandise
ESTIMATING DEMAND FOR A NEW LOCATION
Trade Area
Trade area: contiguous geographic area that accounts for the majority of a store’s sales and customers. They
are divided into three zones:
Secondary zone
Tertiary zone
The geographic area of secondary
importance in terms of customer
sales, generating about 20% of
stores sales (aka secondary trade
area)
The outermost ring of a trade area;
includes customers who
occasionally shop at the store or
shopping centre (aka. Tertiary trade
area)
Polygon: trade area whose boundaries conform to streets and other map features rather than being concentric
circles
Reasons for tertiary zone:
o Customers may lack adequate retail facilities closer to home
o Excellent highway systems to the store or centre so customers can get there easily
o Customers may drive near the store or centre on the way to or from work
o Customers are drawn to the store or centre because it is in or near a tourist area
Factors Defining Trade Areas
Actual boundaries of a trade area are determined by the store’s accessibility, natural and physical barriers, type
of shopping area, type of store, and competition
Trade area size also influenced by the type of store or shopping area
Another way of looking at how the type of store influences the size of a trade area is whether it’s a:
o Destination store: one in which the merchandise, selection, presentation, pricing or other unique
features act as a magnet for customers (eg. Hakim Optical, anchor stores, grocery stores, department