Chapter 07 – Retail Locations
7-1
CHAPTER 7
RETAIL LOCATIONS
ANNOTATED OUTLINE
INSTRUCTOR NOTES
• Store location is often the most important decision
made by a retailer.
• “What are the three most important things in
retailing?” “Location, location, location.”
• Store location is an important decision for a retailer
because (1) location is typically one of the most
I. Types of Locations
• The two basic types of location are unplanned
(freestanding and urban sites) and planned (shopping
centers).
• Unplanned locations do not have any centralized
LO 7-1 Describe the types of retail
locations.
See PPT 7-5
Discuss the importance of store
location based on students’
shopping preferences. For the
Chapter 07 – Retail Locations
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• Many types of locations are available for retail stores –
each with their own strengths and weaknesses. Choosing a
II. Unplanned Retail Locations
• Some retailers put their stores in unplanned locations. In
an unplanned location, there is no centralized
LO 7-2 Review the types of
unplanned locations.
A. Freestanding Sites
• A freestanding site is a retail location that’s not connected
to other retailers, although many are located near other
freestanding stores or near a shopping center. Retailers
with large space requirements, such as warehouse clubs
and hypermarkets, are often freestanding.
• The most serious disadvantage is the lack of synergy with
other stores. A retailer in a freestanding location must be a
primary destination point for customers. It must offer
customers something special in terms of merchandise,
price, promotion, or services to get them into the store.
See PPT 7-11
Have the students visited a retailer
B. Urban Locations
• Some retailers are finding urban locations attractive,
See PPT 7-12
Chapter 07 – Retail Locations
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• Many urban areas are going through a process of
gentrification – the renewal and rebuilding of offices,
housing, and retailers in deteriorating areas – coupled with
an influx of more affluent people that displaces the former
poorer residents.
1. Central Business Districts
• The central business district (CBD) is the traditional
downtown financial and business area in a city or town.
• Although CBD locations in the United States declined in
popularity among retailers and their customers for years,
See PPT 7-13
Ask students whether they shop in
the CBD of the town/city in which
they live. Ask them in which
2. Inner City
• During the 1970s and 1980s, many U.S. and some
European cities experienced urban decay. Urban decay is
the process of a previously functioning city, or part of a
city, falling into disrepair.
What are the various ethical
issues in retailers charging higher
margins in inner cities? What are
the reasons retailers remain
successful even though their prices
may be higher in inner cities?
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• Retailing can play an important role in inner city
redevelopment activities by bringing needed services and
jobs to inner city residents, as well as property taxes to
support redevelopment efforts.
retailers in deteriorating areas—coupled with an influx of
more affluent people that displaces the former, lower-
3. Gentrified Residential Areas
• The renewal and rebuilding of offices, housing, and
C. Main Street
• Main Street is the traditional shopping area in smaller
towns, or a secondary business district in a suburb or
within a larger city. Their occupancy costs are lower than
Ask students if national retailers
have started to invade the “Main
Street” in their neighborhoods.
III. Shopping Centers and Planned Retail Locations
• A shopping center is a group of retail and other
commercial establishments that is planned, developed,
owned, and managed as a single property.
LO 7-3 Analyze the characteristics
of the different types of shopping
centers.
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• In strip shopping centers, supermarkets are typically the
anchors, whereas department stores traditionally anchor
enclosed shopping malls. Lifestyle centers may not have
anchors, while power centers are often made of “anchors”
exclusively.
A. Convenience, Neighborhood, and Community Shopping
Centers
• Convenience, neighborhood, and community shopping
centers (also called strip shopping centers) are attached
See PPT 7-18
Ask students for examples of
B. Power Centers
• A power center is a shopping center that is dominated by
several large anchors, including full-line discount stores,
off-price stores, warehouse clubs, and category specialists.
See PPT 7-19
C. Enclosed Shopping Malls
• Shopping malls have several advantages over alternative
See PPT 7-20, 7-21
Ask students if they spend
more/less time in shopping malls
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locations.
• First, because of the many different types of stores, the
merchandise assortments available within those stores,
and the opportunity to combine shopping with
entertainment, shopping malls attract many shoppers and
have a large trade area.
• Second, some tenants may not like mall management’s
control of their operations. Managers can, for instance,
dictate store hours and window displays.
• Third, competition within shopping centers can be intense.
• Finally, the growing sales through the Internet channel is
cannibalizing sales in the store channel.
• One approach for dealing with aging malls is to tailor their
offerings to the markets that do exist today, for example,
immigrant populations.
•
than they did 5 years ago. [ It will
probably be less. Ask them why.]
Do students notice some
significant differences between
one shopping mall and another?
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D. Lifestyle Centers
• Lifestyle centers are shopping centers with an open-air
configuration of specialty stores, entertainment, and
restaurants, with design ambience and amenities such as
fountains and street furniture.
See PPTs 7-23
E. Mixed-Use Developments
• Mixed-use developments (MXDs) combine several
different uses in one complex, including retail, office,
hotels, residential, and other functions. They are
See PPT 7- 24
F. Outlet Centers
• Outlet centers are shopping centers that contain mostly
manufacturers’ and retailers’ outlets.
• Outlet centers have progressed from no-frills warehouses
to well-designed buildings with landscaping, gardens, and
• Tourism is an important factor in generating traffic for
many outlet centers. Thus, many are in locations with
convenient interstate access and close to popular tourist
attractions.
See PPT 7-25
Ask students if they have been to
an outlet center. What types of
products have they purchased
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or department stores.
G. Theme/Festival Centers
• Theme/festival centers are shopping centers that typically
employ a unifying theme that is carried out by the
See PPT 7-26
H. Larger, Multiformat Developments
• New shopping center developments are combining
enclosed malls, lifestyle centers, and power centers.
Although centers of this type do not have an official name,
they may be referred to as omnicenters.
See PPT 7-27
IV. Nontraditonal Locations
• Pop-up stores, stores within a store, and kiosks are other
location alternatives for many retailers.
LO 7-4 Discuss nontraditional
retail locations.
See PPT 7-28
attractive to retailers with highly seasonal sales.
A. Pop-Up Stores and Other Temporary Stores
• Pop-up stores are stores in temporary locations that focus
See PPT 7-29
B. Store-within-a-Store
• Another nontraditional location for retailers is within
other, larger stores, known as store-within-a-store.
See PPT 7-30
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• Grocery stores have been experimenting with the store-
C. Merchandise Kiosks
• Merchandise kiosks are small, temporary selling spaces
typically located in the walkways of enclosed malls,
airports, college campuses, or office building lobbies.
See PPT 7-31
Ask students which categories of
merchandise are best suited for
V. Location and Retail Strategy
• Location type decisions need to be consistent with the
shopping behavior and size of the retailer’s target market
and its positioning.
LO 7-5 Match the locations to the
retailer’s strategy.
PPT 7-33 illustrates the need to
match the retailer’s strategy with
its location type.
A. Shopping Behavior of Consumers in Retailer’s Target Market
• A critical factor affecting the location consumers select to
See PPT 7-34
1. Convenience Shopping
• When consumers are engaged in convenience shopping
situations, they are primarily concerned with minimizing
their effort to get the product or service they want.
See PPT 7-35
Ask students where they are most
likely to purchase convenience
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2. Comparison Shopping
• Consumers involved in comparison shopping situations
have a general idea about the type of product or service
they want, but they do not have a well-developed
preference for a brand, model, or specific retailer to
patronize.
See PPT 7-36
Ask students to discuss product
categories they often comparison
shop for. Where do they go to
compare? Describe the types of
retailers they patronize for
comparison shopping situations.
3. Specialty Shopping
• When consumers go specialty shopping, they know what
they want and will not accept a substitute.
Discuss specialty stores students
have been to. Would those stores
B. Density of Target Market
• A factor that affects the retailer’s choice of location type is
the density of the retailer’s target market in relation to the
C. Uniqueness of Retail Offering
• Convenience of location is less important for retailers with
unique, differentiated offerings than for retailers with an
offering similar to other retailers.
VI. Societal and Legal Considerations
LO 7-6 Review the societal and
legal considerations in selecting
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environmental issues, zoning, building codes, signs, and
licensing requirements.
• Societal and legal considerations often restrict where
retailers can locate and operate their stores.
locations.
A. Urban Sprawl
• Urban sprawl is the increased expansion of residential and
shopping center development in suburban and rural areas
outside of their respective urban centers.
manufacturing merchandise outside the United States,
thus contributing to the decline of U.S. jobs.
B. Opposition to Big-Box Retailers
• Retailers that operate big-box stores like Walmart, Target,
Costco, and Home Depot often meet with a great deal of
resistance when they plan to build a store in a community.
sense of identity.
C. Zoning
• Local governments in the United States use zoning to
regulate land uses in specific areas to prevent any
D. Building Codes
• Building codes are legal restrictions that specify the type of
See PPT 7-39 for a review of other
legal issues retailers must
consider.
1. Signs
• Restrictions on the use of signs can impact a particular
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2. Licensing Requirements
• Licensing requirements may vary in different parts of a
VI. Summary
• Location decisions are particularly important because of
their high-cost, long-term commitment and impact on
customer patronage.
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ANSWERS TO SELECT “GET OUT AND DO IT” QUESTIONS
2. INTERNET EXERCISE Go to the web page for Faneuil Hall Marketplace at:
differences. Who is the target market for each of these retail locations?
Faneuil Hall Marketplace – “It’s the seat of American history and the site of one of America’s
most famous shopping and dining experiences, Faneuil Hall Marketplace. For over 250 years,
the marketplace has played an integral role in the life of Boston’s residents.”
3. GO SHOPPING Go to your favorite shopping center, and analyze the tenant mx. Do the
tenants appear to complement one another? What changes would you make in the tenant
mix to increase the overall performance of the center?
Students’ answers will vary. Typically, in most shopping centers, the tenant mix is
4. GO SHOPPING Visit a lifestyle center. What tenants are found in this location? Describe
the population characteristics around this center. How far would people drive to shop at this
lifestyle center? What other types of retail locations does this lifestyle center compete with?
Students’ answers will vary. In most lifestyle centers, the tenants are going to be a mix of
5. INTERNET EXERCISE Go to the homepage of your favorite enclosed mall and describe the
mall in terms of the following characteristics: number of anchor stores, number and
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categories of specialty stores, number of sit-down and quick service restaurants, and types of
entertainment offered. What are the strengths and weaknesses of this assortment of
retailers? What are the unique features of this particular mall?
Student answers will vary depending on the mall selected. Students should be able to
6. GO SHOPPING Visit a power center that contains a Target, Staples, Dick’s Sporting Goods,
Home Depot, or other category specialists. What other retailers are in the same location?
How is this mix of stores beneficial to both shoppers and retailers?
7. INTERNET EXERCISE Review the research summarized at
http://www.accessmagazine.org/articles/spring-2015/the-first-big-box-store-in-davis/. How
did Target opening a store in Davis, California, affect the town? Summarize the benefits and
harms. Are you surprised by the study findings? Why or why not?
The city’s General Plan deemed “warehouse style retailers … inappropriate given the
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ANSWERS TO DISCUSSION QUESTIONS AND PROBLEMS
1. Why is store location such an important decision for retailers?
Location decisions are particularly important because of their high-cost, long-term
commitment and impact on customer patronage. Location is typically one of the most
2. Pick your favorite store. Describe the advantages and disadvantages of its current
location, given its store type and target market.
Students store choices will likely vary considerably. The store’s store type and target market
must be clearly defined. And then the location should give the store a competitive
advantage with the target market they have defined.
Store: Urban Outfitters
The target market for this store can be defined as young men and women from ages 16 to
Store: Verizon
The target market segments of Verizon are men and women ages 18 and up looking for a
cellular phone for convenience and safety. A great location for Verizon would be a kiosk. A
Chapter 07 – Retail Locations
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3. Home Depot typically locates in either a power center or a freestanding site. What are the
strengths of each location for this home improvement retailer?
The tenant mix of a power center lends itself to attracting customers who would want to
4. As a consultant to 7-Eleven convenience stores, American Eagle Outfitters, and Porsche of
America, what would you say is the single most important factor in choosing a site for
these three very different types of stores?
The most important criterion that is common to all types of stores is a location that attracts
the right segment of consumers. However, since the segments targeted are different and
5. Retailers are locating in urban areas that have suffered decay. As a result, these areas are
rejuvenating, a process known as gentrification. Some people have questioned the ethical
and social ramifications of this process. Discuss the benefits and detriments of
gentrification.
The benefits of gentrification include the redevelopment of urban areas that are in a state
of decay. Usually, these areas would continue to decay if it weren’t for the interested
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Gentrification may negatively impact the historical and/or cultural makeup of an area. In
addition, gentrification may be so successful that neighboring properties may increase in
6. Staples and Office Depot/OfficeMax all have strong multichannel strategies. How do
competition and the Internet affect their strategies for locating stores?
Since all three stores sell mostly standardized and easily specified office supplies, the
products stocked by them can be conveniently and easily sold through the Internet. The
primary target markets for this type of retail outlets are small office/home office
7. In many malls, quick-service food retailers are located together in an area known as a
food court. What are the advantages and disadvantages of this location for the food
retailers?
Mall food courts allow customers to find the quick-service food retailers in the center of the
shopping mall. Since food courts usually have public seating in one area within the food
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8. Why would a Payless ShoeSource store locate in a neighborhood shopping center instead
of a regional shopping mall?
A Payless Shoe Source might locate in a neighborhood shopping center because these
9. How does the mall near you home or university combine the shopping and entertainment
experience?
Answers here will vary widely. Students may describe efforts at traditional shopping
10. Consider a big city that has invested in an urban renaissance. What components of the
gentrification project attract both local residents and visiting tourists to spend time
shopping, eating, and sightseeing in this location?
Local residents will likely be attracted to the convenience of retailers located in or nearby
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CONNECT ACTIVITIES FOR CHAPTER 7
Activity Type(s)
Topic
Learning Objective(s)
Retail Locations
Drag and Drop;
Matching (accessible
version)
Types of Retail
Locations
7-1 Describe the
types of retail
locations available to
retailers.
7-4 Discuss
nontraditional retail
locations.