Question

What do you understand by the term Locational Decisions in Retailing? If you were hired by an established multi brand men’s garment retailer to identify suitable locations for their new outlets in tier II cities across Pan India, how would you go about in choosing a store locator and the criteria for evaluating the location aspects for the same. Illustrate.

06 Feb 2018

Answer :

Word Count : 2694

The importance of the location decision is due to the following factors. Location is a major cost factor because it

Involves large capital investment
Affects transportation costs
Affects human resources cost, e.g., salaries etc

Location is a major revenue factor in retail business because it

Affects the amount of customer traffic
Affects the volume of business

The terms ‘location’ and ‘site’ are often used interchangeably but there is a distinct difference between the two. ‘Location’ is a broader concept, which denotes the store and its trading area from where a majority of its customers originate, while a site refers to the specific building or part of the building where a store is located. Location and site characteristics should interact in a positive and synergistic way with a store’s merchandising, operations and customer service characteristics. For example, a designer men’s store located in an up market shopping centre or a mall near posh residential colonies, housed in an attractive building with adequate parking facilities.

Levels of Location Decisions and its Determining Factors; A retailer has to take the location decision, basing on three aspects:

Selection of a city
Selection of an area or type of location within a city
Identification of a specific site

Some major factors-

ïƒ¨ Foot Traffic-

For most retail businesses, foot traffic is extremely important. You don't want to be tucked away in a corner where shoppers are likely to bypass you, and even the best retail areas have dead spots. By contrast, if your business requires confidentiality, you may not want to be located in a high-traffic area. Monitor the traffic outside a potential location at different times of the day and on different days of the week to make sure the volume of pedestrian traffic meets your needs.

ïƒ¨ Accessibility And Parking-

Consider how accessible the facility will be for everyone who must use it-customers, employees and suppliers. If you're on a busy street, how easy is it for cars to get in and out of your parking lot? Is the facility accessible to people with disabilities? What sort of deliveries are you likely to receive, and will your suppliers be able to easily and efficiently get materials to you? Small package couriers need to get in and out quickly; trucking companies need adequate roads and loading docks if you're going to be receiving freight on pallets.

ïƒ¨ Competition-

Are competing companies located near your business? Sometimes competition can be good, such as in industries where comparison shopping is popular. (That's why competing retail businesses, such as fast-food restaurants, antique shops and clothing stores tend to cluster together.) You may also catch the overflow from existing businesses, particularly if your company is located in a restaurant and entertainment area. But if a nearby competitor is only going to make your marketing job tougher, look elsewhere.

ïƒ¨ Proximity-

To Other Businesses Take a look at what other businesses and services are in the vicinity from two key perspectives. First, consider whether you can benefit from nearby businesses, either by the customer traffic they generate, or because those companies and their employees could become your customers, or because it may be convenient and efficient for you to be their customer.

ïƒ¨ Utilities And Other Costs-

Rent is certainly the major portion of your ongoing facilities expense, but it's not all. Consider extras such as utilities-they're included in some leases, but not in others. If they're not included, ask the utility company for a summary of the previous year's usage and billing for the site. Also, find out what kind of security deposits the various utility providers require so you can develop an accurate move-in budget; however, you may not need a deposit if you have an established payment record with the company. If you have to provide your own janitorial service, what will it cost? What are insurance rates for the area? Do you have to pay extra for parking? Make sure you consider all your location-related expenses, and factor them into your decision.

ïƒ¨Legal and Regulatory Environment You also need to understand legal and regulatory facts that impact

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