The Choice of a General Retail Location

The last part of Step 2 in location planning requires a retailer to select a locational format: isolated, unplanned district, or planned center. The decision depends on the firm’s strategy and a careful evaluation of the advantages and disadvantages of each alternative.

Next, in Step 3, the retailer chooses a broadly defined site. Two decisions are needed here. First, the specific kind of isolated store, unplanned business district, or planned shopping cen­ter location is selected. If a firm wants an isolated store, it must decide on a highway or side street. Should it desire an unplanned business area, it must decide on a central business district, a secondary business district, a neighborhood business district, or a string. A retailer seeking a planned area must choose a regional, community, or neighborhood shopping center—and decide whether to use a derivative form such as a megamall or power center. Here are the preferences of two retailers:

  • Guitar Center, privately owned by CNL-KKR, operates more than 260 Guitar Center stores in 44 states and 120 Music & Arts stores in 19 states. Among the Guitar Center stores, 62 percent are primary format units, 33 percent are secondary format units, and 5 percent are tertiary format units. The retailer selects the store format based on the size of the market in which it is located. Primary format stores range in size from 13,000 to 30,000 square feet and serve major metropolitan population centers. Secondary format stores range from 8,000 to 14,000 square feet and serve metropolitan areas not served by primary format stores. Tertiary market stores of 5,000 square feet serve smaller populations.16
  • Apple Stores are usually located at high-traffic locations in premium shopping malls and urban shopping districts in about a dozen countries, including the United States. Apple owns and operates 400 of its own stores, thereby attracting new customers by ensuring a high- quality buying experience. Stores are designed to simplify and enhance the presentation and marketing of Apple products and related items. Store configurations of various sizes have evolved to address market-specific demands.17

The second decision is that a firm must select its general store placement. For an isolated store, this means choosing a specific highway or side street. For an unplanned district or planned center, this means selecting a specific district (e.g., downtown Los Angeles) or center (e.g., La Gran Plaza in Fort Worth, Texas).

In Step 3, the retailer narrows down the decisions made in the first two steps and then chooses a general location. Step 4 requires the firm to evaluate specific alternative sites, including their position on a block (or in a center), the side of the street, and the terms of tenancy. Factors to be considered in assessing and choosing a general location and a specific site within that location are described together in the next section because many strategic decisions are similar for these two steps.

Source: Barry Berman, Joel R Evans, Patrali Chatterjee (2017), Retail Management: A Strategic Approach, Pearson; 13th edition.

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