Chapter 07 – Retail Locations
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CHAPTER 7
RETAIL LOCATIONS
ANNOTATED OUTLINE
INSTRUCTOR NOTES
I. Types of Locations
• Store location is often the most important
decision made by a retailer.
• Location is typically the prime consideration
in a customer’s store choice.
• 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 7-5
Discuss the importance of store location
based on students’ shopping preferences. For
the following types of products, how far
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.
A. Freestanding Sites
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• Retailers with large space requirements,
such as warehouse clubs and hypermarkets,
are often freestanding.
• Advantages of freestanding locations are
greater visibility, lower rents, ample
parking, no direct competition, greater
convenience for customers, fewer
restrictions on signs, hours, or merchandise,
and ease of expansion.
Have the students visited a retailer in a
freestanding site? What made them travel to such
B. City or Town Locations
• Some retailers are finding urban locations
attractive, particularly in cities that are
redeveloping their downtowns and
surrounding urban areas.
• Redevelopment opportunities for retailers
are also emerging in so-called brownfields –
former industrial locations with a history of
See PPT 7-12
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chemical pollutants, as developers and
investors give these areas serious
consideration for clean-up.
1. Central Business Districts
• The central business district (CBD) is the
traditional downtown 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
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 love to shop in the CBD.
Why? If they were going to open a shop,
would they consider a CBD location? Why or
why not?
2. Main Street Locations
• Main Street is the traditional shopping area
Ask students if national retailers have started
3. Inner-City Locations
• The inner city in the United States refers to
high density urban areas that have higher
unemployment and lower median incomes
What are the various ethical issues in retailers
charging higher margins in inner cities? What
are the reasons retailers remain successful even
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for food items.
• That said, 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.
III. Shopping Centers
• A shopping center is a group of retail and
other commercial establishments that is
planned, developed, owned, and managed as
a single property.
• Most shopping centers have at least one or
two major retailers, referred to as anchors.
See PPT 7-16
A. Neighborhood and Community Shopping
Centers (Strip Centers)
• Strip centers are attached rows of stores
managed as units, with onsite parking
usually located at the front of the stores.
• The primary advantages of these centers are
that they offer customers convenient
locations and easy parking. They also offer
relatively low rents for retailers.
See PPT 7-18
Ask students for examples of neighborhood and
community shopping centers in the campus area
and discuss. What are the pros and cons of these
locations?
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entertainment options for customers than
malls.
and vehicular and pedestrian traffic.
B. Power centers
• A power center is a shopping center that is
dominated by several large anchors,
including discount stores, off-price stores,
warehouse clubs, or category specialists.
See PPT 7-19
Why would a smaller retailer locate in a power
C. Shopping Malls
• Shopping malls are enclosed, climate
controlled, lighted shopping centers with
retail stores on one or both sides of an
enclosed walkway.
• 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.
See PPT 7-20, 7-21
Ask students if they spend more/less time in
shopping malls than they did 5 years ago. [ It
will probably be less. Ask them why.]
of service through the various stores in the
shopping mall, etc.]
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diminished drawing power.
• Although shopping centers are an excellent
site option for many retailers, they have
some disadvantages.
• Third, competition within shopping centers
can be intense.
• Shopping malls are facing several
challenges, leading to declining mall traffic
and sales.
• Third, many malls are getting old and have
not been subject to any significant
remodeling, making them somewhat
rundown and less appealing to customers
D. Lifestyle Centers
• Lifestyle centers, the fastest growing type of
retail development, 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
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the fewer number of shoppers.
• Lifestyle centers resemble the main streets
in small towns, where people stroll from
store to store, have lunch, sit for a while on a
park bench talking to friends. Thus, they
cater to the “lifestyles” of consumers in their
trade areas.
E. Mixed-Use Developments
• Mixed-use developments (MXDs) combine
several different uses in one complex,
including shopping centers, office towers,
hotels, residential complexes, civic centers,
and convention centers.
See PPT 7- 24
traffic for many outlet centers. Thus, many
are located in with convenient interstate
attractions.
F. Outlet Centers
• Outlet centers are shopping centers that
consist mostly of manufacturers’ outlets.
• Outlet centers have progressed from no-frills
warehouses to well-designed buildings with
landscaping, gardens, and food courts that
make them hard to distinguish from more
traditional shopping and lifestyle centers.
See PPT 7-25
Ask students if they have been to an outlet center.
What types of products have they purchased from
such centers? Was the visit an everyday shopping
trip or part of a vacation?
G. Theme / Festival Centers
See PPT 7-26
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• These centers typically contain tenants
similar to specialty centers, except there
usually are no large specialty stores or
department stores.
H. Larger, Multiformat Developments –
Omnicenters
• 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.
• In addition these centers reflect the growing
tendency of consumers to cross-shop, as
well as the desire for time-scarce consumers
to participate in one-stop shopping.
See PPT 7-27
IV. Other Location Opportunities
• Airports, resorts, stores within a store, and
temporary stores are interesting location
alternatives for many retailers.
See PPT 7-28
remind consumers of a brand or store, but
they are not designed primarily to sell the
product.
A. Temporary Stores
See PPT 7-29
B. Store within a Store
See PPT 7-30
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• Another nontraditional location for retailers
is within other, larger stores. Retailers,
particularly department stores, have
traditionally leased space to other retailers
such as sellers of fine jewelry or furs.
C. Merchandise Kiosks
• Merchandise kiosks are small, temporary
selling spaces typically located in the
walkways of enclosed malls, airports, train
stations, or office building lobbies.
• They usually have short-term leases and are
often operated seasonally.
See PPT 7-31
Ask students which categories of merchandise are
best suited for sale in merchandise kiosks. Discuss
some of the merchandise kiosks that students most
frequently see in the mall.
D. Airports
• One important high-pedestrian area that has
become popular with national retail chains is
airports.
See PPT 7-32
Are airports good places to buy products? Why
or why not? Which products have students
purchased from an airport retailer?
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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.
PPT 7-33 illustrates the need to match the
retailer’s strategy with its location type.
convenience shopping, (2) comparison
A. Shopping Behavior of Consumers in
Retailer’s Target Market
See PPT 7-34
their customers are and make it easy for
them to park, find what they want, and go
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 items such as soda, gum
and milk. Why do they select those particular
locations?
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 strong
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.
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and models in a particular product category.
• This comparison shopping makes category
killers destination stores, places where
consumers will go even if it is inconvenient.
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 improve their business by
being more conveniently located? Why or why
VI. Legal Considerations
• The legal issues that affect site decision
include environmental issues, zoning,
building codes, signs, and licensing
requirements.
A. Environmental Issues
• Two environmental issues have received
particular attention in recent years. First is
See PPT 7-38 for a review of these issues.
B. Zoning and Building Codes
• Zoning determines how a particular site can
be used. Building codes are similar legal
See PPT 7-39 for a review of other legal
issues retailers must consider.
C. Signs
• Restrictions on the use of signs can impact a
particular site’s desirability. Size and style
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may be restricted by building codes, zoning
ordinances, or even the shopping center
management.
D. Licensing Requirements
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 “GET OUT AND DO ITS”
2. INTERNET EXERCISE Go to the web page for Faneuil Hall Marketplace at:
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
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
malls, and in some instances, power centers.
5. INTERNET EXERCISE Go to the home page for Simon Property Group,
Simon is in. What is the difference between their businesses?
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Simon Malls is a property management group specializing in three different types of properties:
6. INTERNET EXERCISE Go to the homepage of your favorite enclosed mall and describe it
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?
7. GO SHOPPING Visit a power center that contains a Target, Staples, Sports Authority, 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
about the Ashland’s town council’s decision to allow Walmart to open a store in Ashland,
Virginia. Summarize the pros and cons of allowing Walmart to open a store in town. Were you
surprised by the town council’s decision? Why or why not?
The people of Ashland that were in favor of the new Walmart said that they liked it because of
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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
2. Pick your favorite store. Describe the advantages and disadvantages of its current
location, given its target market.
Students store choices will likely vary considerably. The store’s 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: 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
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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 shop
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
5. Retailers are locating in shopping centers and free-standing locations in central
business districts 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 retailers.
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6. Staples, OfficeMax and Office Depot 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
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? What is the new trend for food retailers in the shopping environment?
Mall food courts allow customers to find the fast-food retailers in the center of the shopping
mall. Since food courts usually have public seating in one area within the food court, each
Chapter 07 – Retail Locations
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 strip shopping center because these centers offer
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 centers,
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