retail location

1. Retailing Strategy
Retail Locations
Chapter 7
Site Locations
Chapter 8
Human Resource
Management
Chapter 9
Information and
Distribution
Systems
Chapter 10
Customer
Relationship
Management
Chapter 11
Retail Market and
Financial Strategy
Chapter 5, 6

2. Assignment 1
• Individual
• Choose a retail type (i.e. Specialty Store,
Convenience, Department Store, etc.)
• Name your store (i.e. My Shop, More Food,
Malee-Mart)
• Choose a secondary channel (besides B+M)
and explain your choice in one paragraph. (i.e.
kiosk better than electronic because…..)
• One typed page due July 5

3. What Are the
Three Most Important Things in Retailing?
Location! Location! Location!

4. Retail Locations
Shopping Centers
– Strip Shopping Centers
– Shopping Malls
City or Town Locations
– Inner City
– Main Street
Free Standing Sites
Other Location Opportunities

5. Types of Strip Shopping Centers
Traditional
Mom and Pop Local Merchants,
Children’s Place, GapKids,
Blockbuster Video
Power Centers
Target, Home Depot, Office Depot,
PetsMart, Best Buy, Sports Authority,
Toys R Us

6. Elements in Retail Mix
Customer
Service
Merchandise
Assortment
Pricing
Communication
Mix
Store Display
And Design
Location Strategy

7. Types of Shopping Malls
Regional Centers
Super regional Centers
Lifestyle Centers
Fashion/Specialty Centers
Outlet Centers
Theme/Festival Centers
Merchandise Kiosks

8. Problems Facing Regional Malls
• Competition from Alternative, More
Convenient Locations
• Focus on Apparel – Weak Apparel Sales
• Aging
• Demographic Shifts

9. The Most Expensive Shopping
Streets in the World
Street Location Cost / sq foot / year
Fifth Avenue (48th to
58th St.)
57th Street (5th Ave.
to Madison Ave.)
Oxford Street
Madison Avenue (57th
to 72nd St.)
Ave. des Champs
Elysee
New York City
New York City
London
New York City
Paris
$580
$500
$400
$375
$360

10. Tradeoff Between Locations
Rent
Traffic
There are relative advantages
and disadvantages to consider
with each location.

11. Relative Advantages
of Major Retail Locations
Location City Strip Shopping Free
Issues Center Mall Standing
Large size + - + -
draws people
to area
People + + - -
working/living
in area
provided source
of customers
Source of ? - + -
entertainment/
recreation
Protection - - + -
against weather

12. Relative Advantages
of Major Retail Locations
Location CBD Strip Shopping Free
Issues Center Mall Standing
Security - - + -
Long, uniform - + + +
hours of
operation
Planned - - + -
shopping
area/balanced
tenant mix
Parking - + - +
Occupancy ? + - +
costs
(e.g. rent)

13. Relative Advantages
of Major Retail Locations
Location City Strip Shopping Free
Issues Center Mall Standing
Pedestrian + - + -
traffic
Landlord + + - +
control
Strong + + - +
competition
Tax ? ? ? ?
incentives

14. Other Retail Location Opportunities
Mixed Use Developments
Airports
Resorts
Hospitals
Store within a Store

15. Matching Location to Retail Strategy
• Department Stores  Regional Mall
• Specialty Apparel Central Business District,
Regional Malls
• Category Specialists  Power Centers,
Free Standing
• Grocery Stores  Strip Shopping Centers
• Drug Stores  Stand Alone

16. Types of Leases
Percentage
Fixed - Rate
Percentage leases – lease based on a % of sales.
Retailers also typically pay a maintenance fee
based on a percentage of their square footage of
leased space.
Most malls use some form of percentage lease.

17. Variations of Percentage Leases
Percentage lease with specified maximum -
percentage of sales up to a maximum amount.
Rewards retailer performance by allowing retailer
to hold rent constant above a certain level of sales
Percentage lease with specified minimum -
retailer must pay a minimum rent no matter how
low sales are.
Sliding scale - percentage of sales as rent
decreases as sales go up.

18. Fixed Rate Leases
Fixed Rate Leases - used by community and
neighborhood centers.
-Retailer pays a fixed amount per month over the life
of the lease.
-Not as popular as percentage leases
Graduated Lease - a variation of the fixed rate
lease
-Rent increases by a fixed amount over a specified
period of time.

19. Percentage or Fixed Rate Leases
Maintenance-increase-recoupment
lease - used with either a percentage or
fixed
rate lease.
Rent increases if insurance, property
taxes, or utility bills increase beyond a
certain point.
Net lease - retailer is responsible for all
maintenance and utilities.

20. Prohibited Use Clause
Limits the landlord from leasing to certain tenants.
Some tenants take up parking spaces and don’t
bring in shoppers: bowling alley, skating rink,
meeting hall, dentist, or real estate office.
Some tenants could harm the shopping center’s
wholesome image: bars, pool halls, game parlors,
off-track betting establishments, massage parlors
and pornography retailers.

21. Exclusive Use Clause
Prohibits the landlord from leasing to retailers
selling competing merchandise
Specify no out parcels
Specify if certain retailer leaves center, they can
terminate lease.
Escape Clause
Allows the retailer to terminate its lease if sales don’t
reach a certain level after a specified number of
years, or if a specific co-tenant in the center
terminates its lease.

22. Other Legal Issues
Zoning and Building Codes
Zoning determines how a particular site can be
used.
Building codes determine the type of building,
signs, size, type of parking lot, etc. that can be
used
Signs
Restrictions on the use of signs can also impact
a particular site’s desirability
Licensing Requirements
Some areas may restrict or require a license for
alcoholic beverages