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.”
• Locations are hard to change because retailers
frequently have to either make substantial investments
to buy and develop real estate or commit to long-term
leases with developers.
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
management that determines what stores will be in a
development, where the specific stores will be located, or
how they will be operated.
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
following types of products, how
far would they travel to reach a
store?
• Many types of locations are available for retail stores –
each with their own strengths and weaknesses. Choosing a
particular location type involves evaluating a series of
trade-offs.
See PPT 7-8 and 7-9
II. Unplanned Retail Locations
• Some retailers put their stores in unplanned locations. In
an unplanned location, there is no centralized
management to determine where specific stores are and
how they are operated.
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.
• These locations enable retailers to have a drive-through
window, dedicated parking, and clear visibility from the
street.
See PPT 7-11
Have the students visited a retailer
B. Urban Locations
• Some retailers are finding urban locations attractive,
See PPT 7-12
particularly in cities that are redeveloping their downtowns
and surrounding urban areas.
• 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,
many are experiencing revival as they become gentrified,
drawing in new residents and retailers.
See PPT 7-13
Ask students whether they shop in
the CBD of the town/city in which
they live. Ask them in which
city(s) they like to shop in the CBD.
Why? If they were going to open a
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.
• The inner city in the United States refers to high-density
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?
• 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.
3. Gentrified Residential Areas
• The renewal and rebuilding of offices, housing, and
retailers in deteriorating areas—coupled with an influx of
more affluent people that displaces the former, lower-
income residents is known as the process of gentrification.
C. Main Street
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.
• By combining many stores at one location, the developer
attracts more consumers to the shopping center than if the
stores were at separate locations.
LO 7-3 Analyze the characteristics
of the different types of shopping
centers.
See PPT 7-16
centers are generally managed by a shopping center
property management firm.
• Most shopping centers have at least one or two major
retailers, referred to as anchors.
A. Convenience, Neighborhood, and Community Shopping
Centers
• Convenience, neighborhood, and community shopping
centers (also called strip shopping centers) are attached
rows of open-air stores, with onsite parking usually located
at the front of the stores.
See PPT 7-18
Ask students for examples of
neighborhood and community
shopping centers in the campus
area and discuss. What are the
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.
• Unlike traditional strip centers, power centers often
include several freestanding (unconnected) anchors and
only a minimum number of specialty tenants.
See PPT 7-19
Why would a smaller retailer
locate in a power center anchored
by full-line discount stores and off-
price stores? What types of
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
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.
• Although shopping centers are an excellent site option for
many retailers, they have some disadvantages.
• First, mall occupancy costs are higher than those of strip
centers, freestanding sites, and most central business
districts.
• Many malls were built over 50 years ago and appear
rundown and unappealing to shoppers.
• The consolidation in the department store sector has
decreased the number of potential anchor tenants and
diminished the drawing power of enclosed malls.
• Finally, the growing sales through the Internet channel is
cannibalizing sales in the store channel.
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?
mall, etc.]
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
pedestrian-oriented and therefore facilitate a live-work-
play environment.
See PPT 7- 24
F. Outlet Centers
• Outlet centers are shopping centers that contain mostly
manufacturers’ and retailers’ outlets.
• In the U.S. only two or three new outlet centers open each
year, yet outlet centers are becoming very popular outside
the U.S.
See PPT 7-25
Ask students if they have been to
G. Theme/Festival Centers
• Theme/festival centers are shopping centers that typically
employ a unifying theme that is carried out by the
individual shops in their architectural design, and to an
extent, in their merchandise. The biggest appeal of these
centers is to tourists.
or department stores.
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
A. Pop-Up Stores and Other Temporary Stores
• Pop-up stores are stores in temporary locations that focus
on new products or a limited group of products.
attractive to retailers with highly seasonal sales.
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.
Retailers, particularly department stores, have traditionally
leased space to other retailers such as sellers of fine
See PPT 7-30
jewelry or furs.
• Grocery stores have been experimenting with the store-
within-a-store concept for years with service providers like
banks, film processors, coffee bars, and medical clinics.
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.
• For mall operators, kiosks are an opportunity to generate
rental income in otherwise vacant space and to offer a
broad assortment of merchandise for visitors. They also
can generate excitement leading to additional sales for the
entire mall.
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
LO 7-5 Match the locations to the
retailer’s strategy.
A. Shopping Behavior of Consumers in Retailer’s Target Market
• A critical factor affecting the location consumers select to
visit is the shopping situation in which they are involved.
• Three shopping situations are (1) convenience shopping,
(2) comparison shopping, and (3) specialty shopping.
See PPT 7-34
Ask students how the nature of
the consumer’s shopping behavior
will affect their preferred store
location.
1. Convenience Shopping
See PPT 7-35
their other business.
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.
• Enclosed malls or shopping districts devoted to one type of
merchandise attract consumers by facilitating their
comparison shopping activities.
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.
• The retailer becomes a destination store. Thus, consumers
are willing to travel to an inconvenient location.
Discuss specialty stores students
have been to. Would those stores
improve their business by being
more conveniently located? Why
or why not?
See PPT 7-37
B. Density of Target Market
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
• Societal and legal considerations often restrict where
retailers can locate and operate their stores.
environmental issues, zoning, building codes, signs, and
licensing requirements.
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.
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.
manufacturing merchandise outside the United States,
thus contributing to the decline of U.S. jobs.
C. Zoning
• Local governments in the United States use zoning to
regulate land uses in specific areas to prevent any
interference with existing uses by residents or businesses,
as well as encourage the preservation of a community’s
sense of identity.
D. Building Codes
See PPT 7-39 for a review of other
legal issues retailers must
1. Signs
• Restrictions on the use of signs can impact a particular
site’s desirability. Size and style may be restricted by
building codes, zoning ordinances, or even the shopping
center management.
2. Licensing Requirements
VI. Summary
• Location decisions are particularly important because of
their high-cost, long-term commitment and impact on
customer patronage.
ANSWERS TO SELECT “GET OUT AND DO IT” QUESTIONS
2. INTERNET EXERCISE Go to the web page for Faneuil Hall Marketplace at:
www.faneuilhallmarketplace.com and the online site for CocoWalk at:
http://www.cocowalk.net. What kinds of centers are these? List their similarities and
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
complementary. Many retailers want to open locations close to their competitors, especially
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
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
categorize the different retailers (anchor stores versus specialty stores, etc.). How much
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?
Other retailers in this type of shopping center may include a food store, clothing stores such
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
nature and scale of the Davis market” and restricted retail businesses outside
downtown to sizes appropriate for serving small neighborhoods rather than larger
regions. The land use code limited store sizes to 30,000 square feet, far less than the
proposed 137,000 for the Target store.
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: Gap
The primary target market segments for this store are men and women ranging from as
young as 15 to 40 years old looking for value in basic clothing. The best location for this
store would be in a shopping center, particularly a mall. A shopping center consists of a
group of retail and other commercial establishments that is planned, developed, owned,
and managed as a single property. A mall focuses on pedestrians and gains its advantage
because it can have a set of stores that carry similar merchandise assortments. The target
market looking for basics, can shop at the Gap and also shop at complementary stores
nearby. This allows the target market to have a one-stop shopping experience.
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
shop at Home Depot. Home Depot will also benefit from this location due to increased
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
the merchandise/services offered are also different, these differences would also affect the
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
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
businesses. The Internet enables these firms to target medium and large firms as well. At
the same time, the Internet is also an opportunity to target customers far removed from
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
court, each quick-service food retailer does not have to provide a separate seating room for
customers. The common area charges associated with these kinds of arrangements are
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
centers offer customers convenient locations and easy parking, and offer retailers relatively
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
their neighborhoods, along with the needed services, jobs, enhanced safety, visibility, and
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.
7-4 Discuss
nontraditional retail
locations.
Legal Restrictions for
Retailers
Click and Drag;
Matching (accessible
version)
Types of Retail
Locations
7-6 Review the
societal and legal
considerations in
selecting locations.
Consumer Shopping
Click and Drag;
Matching (accessible
version)
What Is a Retail
Strategy?
7-5 Match the
locations to the