The Place / Location Mix Strategy:
The retailer should keep in mind the fact
that his ‘product’ should be available near the place of consumption so that
the consumers can easily buy it. If the brand preferred by the consumer is not
easily available at a convenient location, he may buy some other brand in the
same product category.
Location Strategies for Retail Business
Location
is the most important ingredient for any business that relies on customers. It
is also one of the most difficult to plan for completely. Location decisions
can be complex, costs can be quite high, there is often little flexibility once
a location has been chosen and the attributes of location have a strong impact
on a retailer’s overall strategy. In India, most retailers prefer to own the
property rather than avail of the desired property through lease or rental.
This makes the location decision even more critical. Choosing the wrong site
can lead to poor results and in some cases insolvency and closure.
Importance
of Location Decision in retail Business
The
importance of the location decision is due to the following factors.
Location
is a major cost factor because it.
1. Involves
large capital investment.
2. Affect’s
transportation costs.
3. Affects
human resources cost, e.g., salaries.
Location
is a major revenue factor in retail business because it.
1. Affects
the amount of customer traffic.
2. 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 must take the location decision, basing on three aspects:
1. Selection of a city
2. Selection of an area or type of location within a city
3. Identification of a specific site
The
factors which influence these decisions are discussed below:
1.
Selection of a City
The
following factors play a significant role in the selection of a particular city
for starting or relocating an existing retail business:
a) Size of
the city’s trading area: A
city’s trading area is the geographic region from which customers come to the
city for shopping. A city’s trading area would comprise its suburbs as well as neighbouring
cities and towns. Cities like Mumbai and Delhi have a large trading area as
they draw customers from far off cities and towns.
b) Population
of population growth in the trading area: The larger the population of the
trading area, the greater the potential of the city as a shopping location. A
high growth and population in the trading area can also increase the retail
potential.
c) Total
purchasing power and its distribution: The retail potential of a city also depends on the purchasing
power of the customers and its distribution networks in its trading area.
Cities with a large population of affluent and upper middle-class customers can
be an attractive location for stores selling high-priced products such as
designer men’s wear. The fast growth in purchasing power and its distribution
among a large base of middle class is contribution to a retailing boom around
major cities in India.
d) Total
retail trade potential for different lines of trade: A city may become specialized in
certain lines of trade and attract customers from other cities. Moradabad has
become an important retail location for brassware products while Mysore is
famous for silk saris.
e) Number,
size, and quality of competition: The
retailer also considers the number, size and quality of competition before
selecting a city.
f) Development
cost: The cost of
land, rental value, and other related cost.
2. Selection
of an Area or Type of Location within a City
In
the selection of a particular area or type of location within a city,
evaluation of the following factors is required.
a) Customer
attraction power of a shopping district or a particular store: Major shopping centres like Chandni
Chowk in Delhi, Colaba in Mumbai and Commercial Street in Bangalore attract
customers from far off, while small shopping centres located in colonies
attract customers from immediate neighbourhood.
b) Quantitative
and qualitative nature of competitive stores: Retailers would like to evaluate
the product lines carried by other sores, number of stores in the area, etc.
before selecting the area.
c) Availability
of access routes: The
area or shopping centre should provide easy access routes.
d) Nature
of zoning regulations: The
retailer should also consider the zoning regulations in the city.
e) Direction
of spread of the city: The
retailer should consider the direction in which the city is developing while
selection the location.
3. Selection
of a Specific Site
The
choice of a specific site is particularly important. In central and secondary
shopping centre, non-anchor sores depend on customers coming to the market and
the traffic generated by anchor stores. The large stores in turn depend on
attracting customers from the existing flow of traffic. Where sales depend on nearby
settlements, selecting the trading area is even more important than picking the
specific site.
Some of the
most common reasons why people visit stores are:
Convenience: they’re in a rush and need a product or service
right away
Efficiency: your store is on their existing journey and is
easy for them to visit, such as collecting a pick-up item on their way home
Inspiration: they want to find something that changes their
life in some way, like a new product or idea
Guilty
pleasure: it’s a place to make
impulse purchases and get things they want right then and there.
Problem-solving: they need the answer or solution to a common
problem and could do with some expert advice
Entertainment: they see stores as places where they can be
entertained and have fun
Community: they want to meet like-minded people who
share their interests and world views
Brand: they like the look of your brand and want to
see what you’re all about.
There are multiple ways you can improve communication
within your store or business. Follow this rough checklist to consider how your
customers see your store:
1. Make in-store digital
signage more visible, including information on sales, products, and directions
to restrooms, customer service, and changing areas.
2. Invest in overhead music and messaging.
This can match your brand and help you convey important information to customers.
3. Set up stations where customers can learn more. These might be tablets
or touchscreen kiosks where customers can access information online. You
can also offer free Wi-Fi so shoppers can
look up information on their own.
4. Encourage customers to sign up to your digital communication channels,
including your email newsletters, text blasts, and social media
channels.
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