Site Selection Criteria in Retail

There is no such thing, such as a “Perfect site” in retailing. Retailers must decide which attributes are the most important to their business. Let’s summarize the key criteria critical to the site selection decision in retailing.

  1. Sales potential for the site. The demographic, economic, and competition factors and strategies by which management hopes to create a competitive advantage determine the estimate of sales for a site. Growth potential should be a basic consideration in the evaluation of the sales potential.
  2. Accessibility to the site. Automobile and public transportation access to the site and adequate parking may well be defining criteria. There may be a number of barriers to the target market seeing the site as accessible. The barriers may be geographical, such as mountains or rivers. They may be psychological, such as the perceived quality of the neighbor hoods that customers must travel through. Barriers are often man made, such as one way frontage roads, bridges, clover leafs, and long term public works construction projects.
  3. Pedestrian accessibility at the site. The site must provide reasonable actual and perceived access to the store. Traffic patterns within malls or on city streets can help or hinder pedestrian access. The storefronts can intimidate or encourage entry. Neighboring stores can bring potential customers near or drive them away. Have you ever watched customers turn away when they have to try to get to a store through a group of teens waiting in line to get tickets to the movie in the mall?
  4. Synergies from nearby stores. We discussed image transference as either a help or a hindrance to drawing traffic to the store. There is cumulative attraction when business can draw more customers together than they could individually. That is why auto dealers will tend to locate where shoppers can visit each of them in a single trip. In a shopping center a group of complementary stores such as apparel and accessories benefit from being near one have similar retailing strategies on dimensions of merchandise quality and price lines, service quality and store atmosphere. Technology is providing new ways to fine-tune the site evaluation process in terms of the architectural fit with neighboring stores. How the store and its exterior design mesh with the neighboring stores is a concern. Advanced computer imaging allows the retailer to see how the storefront will look in the area before construction or moving begins.
  5. Site economics. Leasing and occupancy terms. The terms of the lease or purchase contracts have critical implications for the retailers. In a recent survey of retail managers, leasing options and terms were expressed as among their top concerns. Occupancy rates in the immediate or surrounding vicinity also have important implications to retail managers. For example, lower occupancy rates may improve your ability to negotiate a more favorable lease because the developer is anxious to fill vacant space; but low occupancy may signal poor access, poor market variables, or poor management relations with the center owner /developer. Further more, even if the vacant space; but low occupancy may signal poor economic viability in the market, too much vacancy can be an open door to a competitor. In fact, if the vacant space is sufficient, it can quickly be occupied by a competitor that you did not anticipate. The full range of the costs of occupancy must be considered. Local taxes, maintenance costs, renovation costs, utilities, as well as the cost to rent or own are all critical factors.
  6. Legal and political environment. Increasingly, the legal and political environment is an important consideration in site location decisions. Changes in zoning laws, taxing districts, and road maintenance projects can threaten the long run viability of a specific site.
  7. Physical features. The physical features of the site and neighboring area must not be overlooked. Whether it is raw land or an existing building, the physical dimensions of the site must fit your needs. Gap, for example, has adopted a standard layout for all its stores to simplify shelving, checkout, stock room, and merchandise display needs. Consequently if a site will not accommodate this predetermined configuration it is abandoned. The size and shape of a site, visibility of a site for signs, age of surrounding buildings , traffic flows by time of day, traffic turning patterns, and number of traffic lanes have critical implications to factors such as access, number of cars that can be parked or room for future expansion. Condition of building or rental space, visibility from the street, disabled and delivery access, parking lot condition and size, and interior decor must also be considered. A site that is functional today may not be functional tomorrow as your business expands. As an area grows, you need to be able to access whether or not the existing streets, highways, and intersections will accommodate the expanded vehicular traffic. The close proximity of older buildings may suggest that furniture development is unlikely or that the area is suffering from economic decline. Close attention to zoning must be paid when evaluating the physical features of a proposed site.

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