RTMNU 4th sem MBA Subject - Retail Sales Management & Services Marketing [ Marketing ] Module 2 STORE LOCATION & LAYOUT BY Jayanti R Pande

1. RASHTRASANT TUKDOJI MAHARAJ NAGPUR UNIVERSITY
MBA
SEMESTER: 4
SPECIALIZATION – MARKETING
RETAIL SALES MANAGEMENT & SERVICES MARKETING
MODULE NO 2
STORE LOCATION & LAYOUT
- Jayanti R Pande
DGICM college, Nagpur

2. Q1. What do you mean by retail store location? Explain the types of retail locations.
RETAIL STORE LOCATION
Retail store location refers to the physical position or geographical placement of a store where
customers can go to purchase products or services. A retail store's location is a crucial factor in
determining its success because it can affect factors such as foot traffic, accessibility, and visibility,
among others. Retailers often consider various factors such as demographics, competition,
transportation, and cost when selecting a location for their store.
TYPES OF RETAIL LOCATIONS
1 Central Business Districts (CBD): Prime locations in the heart of commercial centres with high foot
traffic and accessibility to public transportation.
2 Destination Locations: Retail locations designed to attract customers who are willing to travel to a
specific destination to shop, often offering a unique shopping experience.
3 Stand Alone Locations: Retail stores located in standalone buildings, often found in suburban or rural
areas, offering convenience and ease of access for customers.
4 Convenience Locations: Small retail locations offering limited products or services, designed for quick
and easy purchases, often located in high foot traffic areas such as gas stations or transit stations.
Central Business
Districts
Destination
Locations
Stand Alone
Locations
Convenience
Locations

3. Q2. Explain the process of retail location & site selection. Describe the factors affecting retail location
decision.
PROCESS OF RETAIL LOCATION & SITE SELECTION
1.Selection of city: The first step in the process is to select a city based on various factors such as the
target market, demographic data, economic indicators, and the overall growth potential of the city.
2.Deciding about trade locations in the city: The next step is to evaluate potential trade locations
within the city. This involves assessing the customer attraction power of the store, analyzing the
availability of access routes and transportation options, and considering zoning regulations and the
direction of the spread of the city. Retailers also need to determine the types of product lines that are
in demand in the area.
3.Analysis of alternative sites: After identifying potential trade locations, retailers need to evaluate
each location's suitability and potential. This includes analyzing the potential traffic passing the site
and intercepting the traffic following past the site. Retailers may also consider the site's visibility,
accessibility, and availability of parking.
4.Final site selection: Based on the analysis of alternative sites, the retailer will identify a shortlist of
potential sites and conduct a thorough evaluation of each one. This may involve conducting surveys,
analyzing customer data, and considering the site's lease terms and rental costs. Once the analysis is
complete, the retailer will select the site that offers the best combination of customer appeal,
accessibility, and financial viability.

4. FACTORS AFFECTING RETAIL LOCATION DECISION.
1.Pedestrian traffic: The level of pedestrian traffic is a critical factor in determining the attractiveness
of a retail location. A higher volume of foot traffic can lead to increased sales and brand exposure
for the retailer.
2.Transportation: Accessibility to transportation is also a significant consideration when selecting a
retail location. This can include proximity to highways, public transportation, and parking facilities.
3.Parking facilities: Adequate parking facilities are essential for many retailers, particularly those
located in suburban or rural areas. The availability of parking can impact the number of customers
who are willing to visit the store.
4.Store composition: The composition of a store, including its size, layout, and design, can influence
the success of a retail location. Factors such as the availability of natural light, the positioning of
shelves, and the location of fitting rooms can all impact the customer experience.
5.Specific site: The specific site of a retail location can also influence its success. Factors such as the
surrounding retail environment, demographics of the local population, and zoning regulations can
all play a role in determining the viability of a retail location.

5. Q3. Describe country analysis, trade area evaluation & site evaluation in retail location decision.
RETAIL LOCATION DECISIONS
COUNTRY ANALYSIS
TRADE AREA ANALYSIS
SITE EVALUATION
MARKET AREA / COUNTRY / REGION ANALYSIS
Market area analysis is the process of defining a geographic area surrounding a retail location
that is most likely to attract its customers. This analysis helps retailers to better understand their
target market and make informed decisions about their marketing and advertising strategies.

6. Designated Market Area (DMA): A region defined by media market researchers to identify the
target audience for television and radio stations based on population size, demographics, and
economic indicators.
Metropolitan Statistical Area (MSA): A region that includes an urban centre with a population of
at least 50,000 people and surrounding areas that are economically and socially integrated with
the urban centre.
TRADING AREA ANALYSIS
• Trading Area Analysis is a method used by retailers to determine the geographic area from
which they draw their customers.
• It involves analysing customer data, conducting surveys, and using other data sources to
identify the location and buying habits of customers.
• The objective of Trading Area Analysis is to help retailers understand their target market and
make informed decisions about their marketing and advertising strategies. Retailers can use
the information gathered from Trading Area Analysis to tailor their product offerings, store
layout, and pricing strategies to better serve their customers.
• By understanding their customers' needs and behaviors, retailers can maximize their sales and
profits.

7. Types of Trading Area:
1.Primary Area: The primary trading area is the region where a retailer generates the majority of its
business. This area typically accounts for 50 to 80 percent of a store's sales.
2.Secondary Area: The secondary trading area is the region surrounding the primary trading area
where a retailer generates a smaller percentage of its sales. This area typically accounts for 10 to 20
percent of a store's sales.
3.Fringe Area: The fringe trading area is the outermost region where a retailer generates a small
percentage of its sales. This area typically accounts for less than 10 percent of a store's sales.
Techniques of Trade Area Analysis:
1.Reilly's Law of Retail Gravitation: Reilly's Law states that consumers will travel to the closest
and most convenient shopping center that offers the products they need. The law takes into
account the distance between competing retail centers and the attractiveness of the centers
based on factors such as store size and selection.
2.Huff's Gravity Model: The Huff model is used to estimate the probability that a customer will
choose a particular store based on its proximity and the attractiveness of the store. This model
takes into account the distance between the store and the customer's home, as well as the
size and selection of the store.

8. 3. Central Place Theory: Central Place Theory explains how urban centers and markets develop and
function based on their size and location. The theory takes into account the distance that customers are
willing to travel to access goods and services, and how the distribution of these goods and services
impacts the location and size of urban centers
4. Herfindahl-Hirschman Index: The Herfindahl-Hirschman Index is used to measure the concentration of
sales in a given market. The index takes into account the market share of each competitor and provides
an overall measure of market concentration.
5. Index of Retail Saturation Theory: The Index of Retail Saturation Theory is used to determine the
optimal number of stores in a given market based on population density and income levels. The theory
takes into account the level of competition in the market and helps retailers to determine whether a
new store will be profitable.
SITE EVALUATION
•Site evaluation is a crucial process in retail.
•It involves assessing the suitability and potential of a prospective location.
•Factors considered include proximity to the target customer base.
•Accessibility and visibility from main roads or high-traffic areas are important considerations.
•Demographic and market characteristics of the surrounding area are analyzed.
•Competitor analysis helps gauge the level of competition and market saturation.
•Physical attributes of the site, such as size, layout, and parking facilities, are evaluated.
•Financial aspects, including costs and feasibility, are considered.
•The goal is to make informed decisions and select a location aligned with business goals, target
market, and long-term growth strategy.

9. TYPES OF RETAIL SITES
A] Freestanding sites: Freestanding sites are independent retail locations that are not part of a larger
complex. They have their own dedicated space and parking facilities. These sites offer retailers more
control over their branding, store layout, and customer experience, but may require additional
marketing efforts to attract customers. Eg: Standalone grocery store or a single-brand retail store
located on its own premises
B] City or town location: City or town locations refer to retail sites situated within the central business
districts or commercial areas of cities or towns. These locations benefit from high foot traffic, proximity
to other businesses, and easy accessibility. They often attract shoppers who are already in the area
for work, leisure, or other shopping activities. Eg : Boutique clothing store located in a busy
downtown area.
C] Planned shopping center: Planned shopping centers are purpose-built complexes that offer a
variety of retail options in one centralized location. They provide a convenient and diverse shopping
experience for customers, offering a range of stores, dining options, and entertainment activities.
These sites often have shared parking, common areas, and promotional events to attract a larger
customer base. Eg : Large shopping mall housing various retail stores, restaurants, and entertainment
facilities.

10. RETAIL PLAN METHOD
• Rating plan method is used in site evaluation to compare and rate potential
locations based on specific criteria.
• It involves assigning scores to factors like proximity, accessibility, visibility, competition,
and market potential.
• Factors are weighted according to their importance in the decision-making process.
• Ratings are given based on each factor's performance or suitability.
• Overall ratings are calculated for each site, aiding in comparative analysis and
location selection.

11. Q4. Elaborate location based retail strategies. Mention the issues in selecting a retail location.
LOCATION BASED RETAIL STRATEGIES
Department stores: Department stores aim to secure prominent retail locations in high-traffic areas,
capitalizing on their wide range of product offerings and attracting diverse customer segments. Eg
Pantaloons
Specialty apparel stores: Specialty apparel stores focus on selecting locations in trendy or fashion-
forward neighbourhoods, catering to specific customer preferences and creating a unique
shopping experience. Eg Zara
Category specialists: Category specialists strategically position themselves near areas of high
demand or customer interest, specializing in a specific product category to attract targeted
customers. Eg Reliance Digital
Grocery or food stores: Grocery or food stores prioritize convenient locations near residential areas or
high-traffic zones, ensuring accessibility for customers and meeting their daily food shopping needs.
Eg Big Bazar, D-mart

12. ISSUES IN SELECTING A RETAIL LOCATION.
1 Demographics: Understanding the demographics of the target market is crucial to ensure the
chosen location aligns with the customer profile, such as age, income, and lifestyle preferences.
2 Trend consideration: Keeping up with consumer trends and preferences is important to select a
location that resonates with the current market demands and ensures long-term viability.
3 Property asset: Assessing the quality and suitability of the property or retail space is essential to
ensure it meets the requirements for the specific retail operation, including size, layout,
infrastructure, and amenities.
4 Declining number of sites: In some areas, the availability of suitable retail sites may be limited or
decreasing, making it challenging to find a desirable location that meets the business's needs.
5 High investment: Retail location selection often involves significant financial investment,
including lease or purchase costs, renovation expenses, and ongoing operational expenses.
Evaluating the financial feasibility and return on investment is crucial to make an informed
decision.

13. Q5. What is strategic retail planning? Explain the process of strategic retail planning.
STRATEGIC RETAIL PLANNING PROCESS

14. 1.Defining Business Philosophy, Mission & Corporate Objectives: This step involves establishing the
guiding principles, mission statement, and overall objectives of the retail business. It sets the foundation
for strategic decision-making and provides a clear direction for the organization.
2.Situation Analysis: This involves assessing the internal and external factors that can impact the retail
business. It includes analyzing the market, competitors, customer behavior, and the organization's
internal strengths and weaknesses. This analysis helps identify opportunities and challenges that need to
be addressed in the strategic planning process.
3.Identification & Evaluation of Strategic Opportunities: In this step, potential strategic opportunities are
identified, such as entering new markets, expanding product lines, or adopting new technologies. These
opportunities are evaluated based on their alignment with the business objectives, feasibility, and
potential returns.
4.Development of Marketing & Positioning Strategies: Once strategic opportunities are identified, this
step focuses on developing marketing strategies and positioning the retail business in the market. It
includes defining target customer segments, creating value propositions, determining pricing strategies,
and designing promotional activities to effectively reach and engage customers.
5.Evaluation & Control: The final step involves monitoring and evaluating the implementation of the
strategic plan. Key performance indicators (KPIs) are established to measure the success of the
strategies. Regular reviews are conducted, and necessary adjustments are made to ensure the retail
business is on track to achieve its objectives.

15. Q6. Explain target market & retail format. Describe the strategy at different level of business.
Target Market:
The target market refers to the specific group of customers that a retail business aims to serve and
cater to. It involves identifying and understanding the characteristics, needs, preferences, and
behaviors of the customers who are most likely to buy the products or services offered by the
business. By defining the target market, retail businesses can tailor their marketing strategies, product
assortment, pricing, and overall retail experience to effectively meet the needs and wants of their
desired customer segment.
Retail Format:
Retail format refers to the overall structure and characteristics of a retail business, encompassing its
physical layout, product assortment, pricing strategy, service level, and overall customer
experience. It is the way in which a retailer presents and delivers its offerings to the target market.
Retail formats can vary widely and may include brick-and-mortar stores, online stores, specialty
boutiques, department stores, discount stores, supermarkets, and more. Each retail format has its
unique features and value proposition, designed to attract and serve specific customer segments
with distinct shopping preferences and needs.

16. 1.Corporate Strategy: Corporate strategy refers to the overall direction and scope of a company at
the highest level. It involves making decisions that shape the long-term goals and objectives of the
entire organization. Corporate strategies often focus on areas such as diversification, mergers and
acquisitions, geographic expansion, and strategic partnerships. These strategies are designed to
maximize the company's overall performance and competitive advantage in the market.
2.Business Strategy: Business strategy focuses on a specific business unit or division within the
company. It outlines how the business unit will achieve its goals and objectives to contribute to the
overall corporate strategy. Business strategies typically address areas such as market positioning,
product/service differentiation, target market selection, and competitive advantage. The goal is to
create a sustainable and profitable business model that aligns with the company's overall vision.
3.Functional Strategy: Functional strategy refers to strategies developed at the functional level of a
business, such as marketing, operations, finance, human resources, and others. These strategies
support the broader corporate and business strategies by outlining specific actions and initiatives
within each functional area. For example, a marketing strategy may focus on market
segmentation, advertising campaigns, and brand positioning, while an operations strategy may
emphasize supply chain optimization and cost efficiency. Functional strategies ensure that each
department or function within the organization works cohesively to achieve the overall business
objectives.

17. Q7. Illustrate the building of sustainable competition. Also explain the differentiation strategy for
retailers.
COMMUNICATIONS
LOCATION PRICE SERVICE
MERCHANDISE
MARKET RESEARCH
OPERATIONS PURCHASING TECHNOLOGY
FINANCE
LOGISTICS
IMPROVED
QUALITY &
CUSTOMER
SATISFACTION
CORE DIMENSIONS
STORE FUNCTIONS
POSITIONING THE RETAIL STORE

18. ELEMENTS FOR BUILDING SUSTAINABLE COMPETITION
1 Location: A strategic and well-positioned location can provide a competitive advantage by
attracting customers and maximizing accessibility. Factors such as proximity to target market,
visibility, and convenience play a significant role in the success of a retail business.
2 Merchandise: Offering a unique and compelling product assortment that meets the needs and
preferences of the target market is crucial. This includes sourcing high-quality products, staying
updated with market trends, and providing a diverse range of options to cater to customer
demands.
3 Price: Developing competitive pricing strategies is essential to attract customers and stay ahead
of the competition. This involves pricing products appropriately based on market conditions, cost
structures, and perceived value to ensure profitability while remaining appealing to customers.
4 Service: Exceptional customer service can set a retail business apart from competitors. Providing
personalized assistance, knowledgeable staff, efficient checkout processes, and after-sales support
contribute to customer satisfaction and loyalty.
5 Communications: Effective communication strategies encompass marketing and promotional
activities that reach and engage the target market. This includes advertising, digital marketing,
social media presence, public relations, and other communication channels to create brand
awareness, promote products, and maintain customer relationships.

19. Differentiation strategy refers to a strategic approach that aims to set a retailer apart from its
competitors by offering unique and distinctive features, products, or services. The goal of
differentiation strategy is to create a perceived value among customers that is unmatched by
competitors, leading to increased customer loyalty, preference, and competitive advantage.
Retailers employing differentiation strategy focus on developing and promoting unique selling
propositions (USPs) that differentiate them in the marketplace. This can include factors such as
 Product Differentiation: Offering a unique and exclusive product selection, innovative
products, or customized offerings that are not readily available from competitors.
 Service Differentiation: Providing exceptional customer service, personalized assistance,
expert advice, after-sales support, convenient return policies, or other value-added services
that enhance the customer experience.
 Store Environment Differentiation: Creating a unique and appealing in-store ambiance, store
layout, visual merchandising, and overall shopping atmosphere that sets the retailer apart
and creates a memorable experience.
 Brand Differentiation: Developing a strong and distinctive brand identity, brand image, and
brand positioning that resonates with the target market and communicates a clear value
proposition.

20. TYPES OF DIFFERENTIATION
1.Price Differentiation: Retailers can differentiate themselves by offering competitive pricing
strategies. This can involve pricing products lower than competitors, providing discounts, or
implementing pricing strategies such as price matching or price bundling.
2.Image Differentiation: Retailers can differentiate themselves based on their brand image and
reputation. This includes developing a unique and recognizable brand identity, creating a positive
brand image through marketing and advertising efforts, and positioning themselves as a preferred
choice among customers.
3.Support Differentiation: Providing exceptional customer support and service can be a key
differentiator. This includes offering personalized assistance, efficient after-sales support, customer
loyalty programs, and convenient return or exchange policies.
4.Quality Differentiation: Retailers can differentiate themselves by offering products of superior quality
compared to competitors. This can involve sourcing high-quality materials, partnering with reputable
suppliers, and implementing strict quality control measures to ensure customer satisfaction.
5.Design Differentiation: Retailers can differentiate themselves through unique product designs or
store aesthetics. This includes offering exclusive or innovative designs that are not readily available
elsewhere, creating visually appealing store layouts, and utilizing attractive visual merchandising
techniques.

21. Q8. Explain retail EST model in detail.
CHEAP-EST
[LOWEST PRICE]
HOT-EST
[FASHION]
BIG-EST
[SELECTION]
QUICK-EST
[SPEED]
EASY-EST
[SERVICE]
BLACK HOLE
THE MIDDLE
EST Model

22. • Norm McMillan first presented Est theory in the early 1990s.
• It says that retailer must be best at one proposition that’s important to a specific group of
customers.
• Retailers must strive for a specific positioning to a specific set of customers rather than attempting
to be great at everything to everybody.
• Forgetting short term goals for a long term success.
STRUCTURE OF EST MODEL
1 Cheap-Est : represents the companies having cheapest price products. E.g. Walmart.
2 Big-Est : It means having largest assortment of product in specific merchandise category.
3 Hot-Est : means having the right product just as customers begin to buy them in volume.
4 Easy-Est : means having the proper combination of products that makes shopping easy.
5 Quick-Est : organising the store to make the shopping trip as quick and efficient as possible
Black hole : is the place where companies which are no longer relevant to customers go to die.
APPLICATION OF EST MODEL
• To compare with competitors
• To identify growth opportunities
• To form company’s strategic foundation