TRADING

AREA
ANALYSIS
 Choosing a location requires extensive decision – making.

CRITERIA
 Competition
 Availability of labour
 Access to transport
 Legal restrictions
 Property costs
 Length of agreement
 Attributes of the nearby stores
 Size & characteristics of surrounding population

 SHIFTING FROM ONE LOCATION TO ANOTHER :

 3 POTENTIAL PROBLEMS
 Loses some loyal customers
 New location may not possess same features
 Store fixtures/renovation cannot be transferred

 In the long run the location affects the overall strategy of the retailer
CHOOSING STORE LOCATION

KEY DECISIONS

 Evaluate alternative geographic areas whether to locate as an isolated

store in an unplanned /planned shopping centre.

 Select the general isolated store, planned shopping centre or unplanned

business district location.

 Analyse alternate sites

TRADING AREA ANALYSIS
 Trading area is the geographic area from which a store draws its customers.
 A district whose size is usually determined by the boundaries within which
it is economical in terms of volume and cost or a marketing unit or group to
sell and / deliver a good or service.
 TRADING AREA COMPRISES OF :
 PRIMARY T.A. : 50 to 70 percent of store’s customers
 SECONDARY T.A. : 20 to 25 percent of store’s customers
 FRINGE: Remaining & most widely dispersed

 FACTORS DETERMINING SIZE & SHAPE OF TRADING AREA

 Store Type
 Store Size
 Location Of Competitors
 Travel Time & Traffic Barriers
 Availability Of Media
 PARASITE : is a type of store that does not create its own traffic and has
no trading of its own.
 As the store gets larger trading area usually increases.
 However, trading area Does increase proportionally with the size.

THE DELINATION OF TRADING AREA OF AN EXISTING STORE

 Store records reveal addresses of credit & cash customers.
 Primary, secondary & fringe trading area can be decided on the basis of :
 frequency with which customers in a geographic area buy merchandise
 Average purchase ( in rupees ) by a customer in a geographic area
 Concentration of a store’s credit card holders within a given area

THE DELINATION OF TRADING AREA OF AN EXISTING STORE

 Better Road Visibility
 Easy Parking
 Cost Reductions Are Possible
MAJOR FACTORS TO CONSIDER WHILE
EVALUATING RETAIL TRADING AREA

 POPULATAION SIZE & CHARACTERISTICS

 Total Size & Density
 Age Distribution
 Occupation Distribution
 Average Education Level
 Per Capita Disposable Income

 AVAILABILITY OF LABOUR

 CLOSENESS TO SOURCES OF SUPPLY

 Delivery Costs
 Timeliness
 Availability & Reliability Of Product Lines
 Number Of Manufacturers & Wholesalers
 PROMOTION
 Availability & Frequency Of Media
 Costs

 ECONOMIC BASE refers to an area’s industrial and commercial

structure, the companies & industries that residents depend on to earn
a living.

 An area with a Diverse economic base is more secure.

 DOMINANT INDUSTRY
 GROWTH PROJECTIONS
 EXTENT OF DIVERSIFICATION
 FREEDOM FROM ECONOMIC & SEASONAL FLUCTUATIONS
 REGULATIONS
 TAXES
 OPERATIONS
 LICENSING
 MINIMUM WAGES
 ZONING

 AVAILABILITY OF STORE LOCATION

 NUMBER & TYPES OF LOCATION
 COSTS
 ZONING RESTRICTIONS
 OWNING VS. LEASING OPPORTUNITIES

 COMPETITIVE SITUATION
 NUMBER & SIZE OF EXISTING COMPETITORS
 SWOT OF ALL COMPETITORS
 SHORT & LONG RUN OUTLOOK
 LEVEL OF SATURATION
SITE SELECTION
TYPES OF LOCATION

1. ISOLATED STORE
 Free Standing Store
 No Adjacent Store Usually On A Highway Or A Side Street

 ADVANTAGES
 No Competition Better Road Visibility
 Easy Parking Cost Reductions Are Possible
 Low Rent Good For One Stop Shopping

 DISADVANTAGES
 Initial Customers Difficult To Attract Lack of Variety In Shopping
 Consumers May Not Travel To One Store High Promotion Costs
 High Operating Costs Store Required To Be Built
2. THE UNPLANNED BUSINESS DISTRICT
Two or more store located in proximity
Not result of prior planning

4 TYPES

i. CENTRAL BUSINESS DISTRICT

 Hub Of Retailing
 Largest Shopping Area In The City
 A Large Number Of Stores & Offices
 Vehicular & Pedestrian Traffic Are Highly Concentrated

STRENGTHS
Excellent Assortment Access To Transportation
Variety Of Store Images Variety Of Customer Services
High Level Of Pedestrian Traffic Variety Of Prices Offered

WEAKNESSES
Inadequate Parking High Rents
Increased Travel Time Traffic Congestion
Declining Congestion Discontinuity Of
Offerings
ii. SECONDARY BUSINESS DISTRICT
 Area Bounded By The Intersection Of Two Streets
 Smaller Stores
 Smaller Trading Area
 Less Width & Depth Of Assortment

STRENGTHS
 Good Assortment
 Access To Public Transport
 Less Crowding
 More Personalised Services
 Location Near Residential Areas

WEAKNESSES
 Discontinuity Of Offering
 High Rent & Taxes
 Traffic Congestion
 Parking Difficulties
 Fewer Chain Stores
iii. NEIGHBOURHOOD BUSINESS DISTRICT
 Convenience Shopping Needs Of A Neighbourhood
 Many Small Stores
 Located On Major Streets Of A Residential Area

STRENGTHS
 Good Location
 Good Parking
 Long Store Hours
 Less Hectic Atmosphere

WEAKNESSES
 Limited Selection Of Goods
 High Price
iv. STRING
 A Group Of Retail Stores often With Similar Or Compatible Product Lines
 Located Along A Street Or Highway
 May Start As An Isolated Store
ADVANTAGES
 Low Rent
 Flexibility
 Road Visibility
 Parking
 Lower Operating Costs
 Lower Operating Costs
DISADVANTAGES
 Limited Variety Of Products
 Travel Time
 High Advertising Costs
 Building Of Premises
3. THE PLANNED SHOPPING CENTRE
 Centrally Owned Or Managed
 Based On Balanced Tenancy
 Surrounded By Parking Facilities

BALANCED TENANCY: Type And Number Of Stores Within Any Planned Centre Are Related
To The Overall Needs Of The Surrounding Population.

https://www.theconstructionindex.co.uk/news

Source: https://scantygela.blogspot.com
/view/colchester-shopping-centre-planned

/2015/06 /new-city-mall-shopping-centre-to-be.html
REASONS FOR SUCCESS
 Growing Suburban Population
 One-stop Shopping
 Cooperative Planning
 Declining Appeal Of City Shopping
 Access To Highway
 Shared Costs
 Distinctive Shopping Centre Image
 Availability Of Parking
 Lower Theft Rates

LIMITATIONS
 Regulations Limiting Store
 Restriction On Product Lines/ Services Carried
 Rent High In Comparison To Isolated Stores
 Competitive Environment
 Domination By Large Store Anchor Store
3 TYPES OF PSCs

i. REGIONAL PSC
 Sells goods to geographically dispersed market
 Cultural, social and vocational focal point of an entire community

ii. COMMUNITY SHOPPING CENTRE

 Sells both convenience & shopping items to city & suburban dwellers

iii. THE NEIGHBOURHOOD SHOPPING CENTRE

 Mostly convenience items
 Usually arranged in a strip
CHOICE OF GENERAL LOCATION
 DIFFERENT LOCATIONS ARE EVALUATED

 AFTER GENERAL LOCATION DECISION, FOLLOWING ISSUES

ARE TAKEN CARE OF :

 EXACT SITE INCLUDNG POSITION ON A BLOCK

 THE SIDE OF THE STREET
 TERMS OF TENANCY DECIDED
 LOCATION & SITE EVALUATION CHECKLIST

 The Optimum Site For A Particular Store Is Called The 100% PERCENT
LOCATION

 RATING ON A SCALE OF 1 TO 10

 PEDESTRIAN TRAFFIC
 Number & Type Of People

 VEHICULAR TRAFFIC
 Number & Type Of Vehicles, Traffic Congestion

 PARKING FACILITIES
 Number & Quality Of Parking Spots
 Distance To Store
 Availability Of Employee Parking
 TRANSPORTATION
 Access From Highway And Availability Of Mass Transit
 Ease Of Deliveries

 STORE COMPOSITION
 Number & Size Of Stores
 Retail Balance

 SPECIFIC SITE
 Visibility
 Size & Shape Of Building
 Condition Of Building

 TERMS OF OCCUPANCY
 Taxes
 Leasing Terms
 Voluntary Regulations

 OVERALL RATING