There are many factors to consider in order to effectively select a retail space.
Dominant Factors
1. Proximity to customers
A location must be selected based on the demographics of potential customers in the area. Compiling research on the age distribution, income, family size, market trends and growth rates are only a handful of factors that must be taken into account to determine the proximity and number of potential customers in the area and the profits they may bring in. The customers’ wants and needs are essential for knowing whether or not there is a need for the products or services in the selected area.
2. Transportation costs and proximity to markets
Having a warehouse nearby allows inventory to be closer to the customer, thus reducing delivery time and promoting sales. Timely delivery is a distinct competitive advantage.3. Location of competitors
In addition to considering the location of current competitors firms should anticipate their reaction to the store’s opening. Competing firms generally cluster together in one location to attract more customers compared to if they were scattered; a strategy known as critical mass. Retail compatibility refers to the three major retail categories of consumer goods.
· Convenience goods are low priced, frequently purchased goods sold in many stores. Little time is spent on the decision process (i.e. gum, milk).
· Shopping goods are higher priced items,purchased less frequently and require a more intensive selling effort. These goods are sold in more selective shops (i.e automobiles, furniture). Consumers typically compare prices and features of the items before making their purchase.
· Specialty goods are high priced items, bought very infrequently, and require special effort to purchase them with no substitutes to consider (i.e. jewelry, designer labels). Specialty goods are sold exclusively in franchised stores.
4. Site-specific factors
Site visibility, traffic flow, residential density, and retail activity are all factors that need to be considered when selecting a location. Traffic patterns are of great concern as you want to choose a location that has a high level of pedestrian and vehicular traffic, in addition to available parking. Being situated on a public transit route also has positive impact on a business’ success bringing in more foot traffic on a daily basis. Additionally, corner store locations are superior to the rest on the block as it is more visible to traffic passing by or vehicles stopped at an intersection.
5. Other factors
Comparing sites
The process of choosing a new store location involves the following steps:
1. Identify the important location factors and categorize them as dominant or secondary.
2. Consider alternative regions and narrow your search down to a few specific sites.
3. Collect data on the alternatives from provincial development agencies, city planning departments, land developers, banks, etc…
4. Analyze the collected data. Begin with the quantitative data; these dollar values can be broken down into cost categories and converted into a single measure of financial value. This value can then be used to compare two or more sites.
5. Analyze the qualitative data and compare sites by assigning each factor a weight of relative importance and calculating a weighted score for each site.
A geographical information system (GIS) is a system of computer software, hardware, and data that companies can use to manipulate, analyze, and present information relevant to a location decision. These systems can be very helpful in the comparison of sites.
The following is an example of a GIS map of the Greater Vancouver Area.
Layout Types
The following is a list of examples of different layout types.
1. Flexible-Flow Layout: A layout that groups workstations or departments according to function. Some advantages to this layout type are:
- - Resources are less capital intensive
- - Layout is less vulnerable to changes in product mix or new marketing strategies
- - Equipment utilization can be higher with low-volume products or services.
- - Employee supervision can be more specialized
2. Line-Flow Layout: A layout in which workstations or departments are arranged in a linear path. Some advantages to this type are:
- - Faster processing rates
- - Lower inventories
- - Less unproductive time lost to changeovers and material handling
3. Hybrid Layout: A layout in which some portions of the facility are arranged in a flexible-flow layout and others are arranged in a line-flow layout. Fabrication operations, where components are made from raw materials, have a flexible flow. On the other hand, assembly operations, where components are assembled into finished products, have a line flow.
4. Fixed-Position Layout: An arrangement in which the product is fixed in place. Workers, along with their tools an dequipment come to the product to work on it. An advantage of a fixed position layout is that it minimizes the number of times that the product must be moved.
