Site Selection
(within
a selected market area)
SITE SELECTION
CRITERIA
J&S Table 10.1 uses the common geographic distinction between “site” and “situation”:
- "Site" refers to the characteristics of the actual
location (size, shape, access, zoning), and
- "Situation" refers to its context (market area,
competitors).
Having spent much time on situational factors, we’ll focus briefly on site considerations, for selecting a
site within your designated market area – or for determining which of a
few suitable market areas have an excellent site available when you
need it:
Availability: Where is there space
available, of the size needed? (Note that different retail formats
require different proportions of “back” and “front” space.) Will the
zoning allow for the proposed type and size of retailing or service
provision?
Cost: What are the
lease or purchase terms? More importantly, what are the monthly
carrying costs of the lease (including any percentage of gross) or
mortgage (including taxes and insurance at that location), and how does
that relate to projections of monthly sales revenue?
Accessibility: How
do you expect customers to get to the store? Is the site well served by
that mode (bus routes; parking; automobile access from the street;
amount of auto or pedestrian traffic; difficulty of pedestrian access
because of terrain, lack of sidewalks, perceived danger)?
Visibility: Is the
site visible from the street or mall concourse? Sign restrictions? Sign
clutter?
Proximate competition:
This is a positive for some “shopping goods” or services and a negative
for “convenience goods” or services. If you’re sure that your format
(price, selection, quality, appearance) is better than a proximate
competitor, you can reduce the negative
implications
Configuration: Does
the configuration of the building signal your desired customers?
Location within the
general market area (since you've already approved the general
market area): Need to note specialized demographic characteristics of
actual locations, such as minority or gay enclaves.
SITE SELECTION METHODS
See J&S Table 10.9
Cost-minimization
1) Decide on a minimum quality for each criterion except cost.
2) Identify which sites meet the minimum for all criteria.
3) Select the lowest cost of those sites.
Weighting and ranking
1) Decide on a measurement scale and ranking for each specific
criterion:
- the availability questions lend themselves to yes/no;
- the costs are on a continuous scale;
- accessibility, visibility, design, and other criteria
can be on a 1-5 or 1-3 scale.
- Absence of proximate competitors would be a positive
for some retailers; presence of complementary competitors would be a
positive for other retailers.
2) Give each criterion a weight (between 0-1 or 1-100, doesn’t matter).
3) For each possible site, multiply the value for each criterion by its
weight, and sum the resultant products.
4) Compare the values for the various sites
Regression analysis:
for a chain that has data on existing store performance
1) Relate sales/s.f. to a small number of market-area measures and a
small set of site location variables (not including site costs), to
determine the relationship experienced. It’s important to include the
variables that most affect store performance.
2) Then you can tell what variables have the greatest effect, because
the regression results will show how strong each relationship is
(between each variable and sales/s.f.).
3) You’ll also know in what direction and by what amount a difference
in each variable makes in store results – by the coefficient of the
resultant equation.
Location-allocation models:
for a chain that is willing to move its locations to serve a large but
dispersed market
This is a form of spatial analysis that allocates demand by small area
to a designated number of stores, by moving the store locations and
allocating demand from specific small areas to each store.
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