Retail Outlet

CHAPTER 1 : Retail outlet

Introduction :

Choosing the location of an outlet is a very strategic and crucial decision where we want to settle a new outlet.

This decision should take into account a lot of factors of various kinds.

type of goods distributed (food, clothes, sport items...)

the geographical situation (all the topographic features around the store have a lot of importance, ex: roads leading to a store, lot of ppl living around...?)

competition: is there a tough competition on the area or on the contrary are we alone settled in the area ?

the typology and structure of the customer base (la clientele)

It is necessary to consider the area and its potential, we have to study the area we have chosen

I. Determining the location of the outlet

The 1st step is to estimate the influence of the future shop, first study the shopping area (zone de chalandise).

A. The shopping area (SA)

The place where ppl could be potential customers. The influence of a SA depend of 2 main elements:

• it depends on its attractiveness, its dynamism

• it depends on its traffic and access conditions (roads, public transport access...)

1. The SA can be divided in 3 influence zones

- the primary zone is the most interesting zone to the shop bcause it includes a very small access time, example below 5 minutes. It's the nearest place around the shop and concerns customers who have no other choice except going into the secondary zone.

- the secondary zone is caracterized by a strong competition between the shops bcause the customer can choose between one or another shop. And we generally consider an access time between 5 and 15 minutes.

- the tertiary zone which is a location with a very poor attractiveness, most of the time located far away and we can imagine that ppl living in this tertiary zone have to move (car, public transport) to visit our store.

2. Two ways of determination

We have to determine the exact shape of the SA and we have 2 ways of determination before finding out the exact shape of the SA.

- the first way of determination uses isometric curves: concentric circles, measuring the distance in km or miles or yards or meters... We can consider these 3 examples for a convenience store (magasin de proximite) some hundred meters, for a supermarket 5-6-7 km ppl take their car, for a shopping center of a mall the isometric circle can reach some thousand km's.

- second way of determination: isochronal curves or same time curves. They measure the access time in minutes using ≠ ways of transport. It must take into account all the geographical elements. For example: roads and boulevards, obstacles (river: natural obstacle so ppl pass by a bridge to pass on the other side of the river, or a railway track that ppl must get pass), these obstacles are psychological difficulties/barriers (railway track, river, sloat?...)

As a result, it is often more effective to study a shopping area in terms of access time than in terms of distance (km's).

a convenience store: Spar → 5mn

a discount store: Lidl → 10mn

a supermarket: Casino supermarches → 15mn

a hypermarket: Carrefour → 20mn

a giant speciality store (GSS): Ikea → 30mn

a shopping center: Grand'Place: → 45mn to 1 hr

3. Evaluating and measuring each area

We have to deal with the:

Socio-economic structure of the area and

- its social features such as: age, gender, socio-economic groups, type of housing...

- economic features (INSEE) such as: standard of living, income index, expense index average of 100... Each area has its own figures.

The area appeal can be measured with the help of 3 main “outils”

- attraction within the area: measures the percentage/ratio of ppl living in our area and the ones that could become our customers.

- evasion rate outside the area: the ratio of ppl living in our area and who go shopping outside the area. Or the other way around, we have to consider ppl living in another area who go shopping within our area. The evasion rate work both ways.

B. Estimating the turnover

Once we have determined the SA we have to quantify the population who are likely to visit our store, once we have this population we have to estimate the number of ppl and their expense in our store => determine the turnover

The more specialzed the store is, the more specific its customerbase is => SA very large

But if the store is a non specialized store, its customer base will be very large and its customer base will be very small

The first step: quantifying the potential population

→ Total population X (total population) % ppl belonging to the target (age, gender...)

X attraction rate on the SA

OR X % ppl intending to visit the outlet

The second step: quantifying the potential turnover

Potential population X average expense during each visit (average sales ticket) X number of annual visits

II. The location of the outlet is crucial

A. Urban management

We must evaluate all the facilities of the area. Among these facilities, the main roads, car parking capacities, public transport access, tramway stations...

We can meet 4 main

...