organization’s eventual success or failure. Several dominant factors should be carefully considered and analyzed in order to avoid poor decisions which are difficult and sometimes impossible to repair.
How Close the Business is to Customers
Consumers have an enormous impact on the survival rate of the firm; if there are none, there is no business. So, convenience is a crucial aspect to keep them satisfied and continue patronage. Consider what is “convenient” to the client. For instance, if the shopper is pregnant, is there a great walking distance from the parking lot to the store? What if they are elderly or confined to a wheelchair? The more easily accessible the facility is, the greater the perception of convenience.
How Close the Business is to Competitors
When choosing a location for a small retail business, look at the current competitors for that area but also at future competitors that can move next door. Be cautious not to select a location that already has well-established retail stores. In the event that you do, ensure you have certain competitive advantages and offer differentiated products and/or services.
Transport Costs and the Proximity to Supplier Locations
If the retail location is quite a distance away from warehouses and distribution centers, this might result in costly shipping fees that customers have to pay for in the end. In order to keep costs low and make a good profit margin, the location(s) of suppliers is imperative especially if your competitive priorities are cost efficiency, fast delivery time, and volume flexibility.
Factors of the Location Itself
Costs- Do a break-even analysis or some other form of cost measurement. This will give you an indication as to how many units must be sold in order to meet all of your costs. Consider whether the location is able to generate enough business to reach this target.
Traffic Flow- Do some primary research. Observe where intersections and bus stops are, whether there is sufficient parking, and the rate of traffic flow through the day. Other factors can be traffic congestion, whether the main roads are one-way or two-way streets, and where turning lanes and meridians are positioned.
Visibility- Observe how easily the location can been seen from different areas on the street. Also, take notice of the size of buildings that are around and if there are billboards, advertisements, etc. that can cause an obstructed view.
Retail Activity- Examine what types of business are situated in the area. For example, your retail store offers theatrical and dance supplies. If you’re located within close proximity to a dance studio, chances are, a significant amount of patronage will be from dancers and the like.
Level of Density- Use local statistics to see how densely populated the area is. Also, consider aspects such as the age, sex, income bracket, etc. and contemplate whether these factors align with your target market.
GEOGRAPHICAL INFORMATION SYSTEM (GIS)- A DECISION MAKING TOOL
There are many tools that can assist with your decision on selecting a retail location. The most commonly used is a GIS and it is described as an organized collection of computer hardware, software, and geographical referenced data designed to efficiently capture, store, update, manipulate, analyze and display all forms of geographical data. Basically, it’s a special kind of information system using computers to work with special information about what is where on the Earth's surface. A simple one to use is MapPoint.
GIS can be a valuable tool that tell us where a certain location is most densely populated, what percentage of families are within a certain income bracket, where terrain, road systems, bridges and highways are situated, etc. This information can be analyzed and extremely useful in determining how best to serve your customers.
Here's an example of a map of Greater Vancouver I created on MapPoint.
The pink shading shows: Population, ages 0-14 (1996) by Forward Sortation Area.
The blue circles shows: Families with children (1996) by Forward Sortation Area divided by Families (1996).
Figure 1: Greater Vancouver MapPoint Map
Here's an image of a MapPoint interface.
Figure 2: Mexico MapPoint Map
Here is a videoclip relating to GIS courtesy of YouTube.
PRICE LIST
Here is a price list for various GIS Software. Prices vary depending on the extensivity of features.
ArcExplorer Java Edition for Education 2 Price: $19.95
ArcLogistics Route 3 Price: $12,000.00
ArcPress for ArcView, Version 2.0 for Windows Price: $295.00
Arc Press for ArcView, Version 2.0 for UNIX Price: $295.00
ArcReader 9.1 - Linux Version Price: $19.95
ArcReader 9.1 - Solaris Version Price: $19.95
ArcReader 9.1 - Windows Version Price: $19.95
ArcView 3.3 for UNIX Price: $2,195.00
ArcView 3.3 for Windows Price: $1,195.00
ArcView 3D Analyst 1.0 for UNIX Price: $2,995.00
ArcView 3D Analyst 1.0 for Windows Price: $2,495.00
ArcView Network Analyst 1.0b for UNIX Price: $2,495.00
ArcView Network Analyst 1.0b for Windows Price: $1,495.00
ArcView Spatial Analyst 1.1 for UNIX Price: $2,995.00
ArcView Spatial Analyst 2.0a for Windows Price: $2,495.00
ArcView StreetMap 1.1 for Windows Price: $495.00
ArcView Tracking Analyst 1.0 for UNIX Price: $2,495.00
ArcView Tracking Analyst 1.0 for Windows Price: $1,495.00
BusinessMAP 4.5 Price: $349.95
BusinessMAP Financial (FSE) Price: $1,500.00
TOPO! Professional Suite for ArcGIS Price: $499.00
Trimble's GPS Analyst for Desktop ArcGIS Price: $1,995.00
REFERENCES
1. Government of Canada. (2005, October 17). Store Location - "Little Things" Mean a Lot. Retrieved February 15, 2008, from Canada Business Services for Entrepreneurs: http://www.canadabusiness.ca/servlet/ContentServer?cid=1081945275987&pagename=CBSC_FE/display&lang=en&c=GuideFactSheet
2. Stinson, B. (2007, September 5). Top 10 Retail Location Tips to Make Your Retail Business Grab the Best Sales. Retrieved February 15, 2008, from Ezine Articles: http://ezinearticles.com/?Top-10-Retail-Location-Tips-to-Make-Your-Retail-Business-Grab-the-Best-Sales&id=717198
3. Waters, S. (n.d.). Retail Store Location Important Factors. Retrieved February 15, 2008, from About.com: http://retail.about.com/od/location/a/selecting_site_2.htm
4. Women's Enterprise Center. (n.d.). Small Business Resources- Choosing a Retail Location. Retrieved February 15, 2008, from Womensenterprise.ca: http://www.womensenterprise.ca/resources/downloads/retail-location.pdf
FURTHER READINGS
· Hernández, T and Bennison, D. "The Art and Science of Retail Location Decisions" International Journal of Retail & Distribution Management. 28 (2000): 357-367 (T. & D., 2000)
· Mendes, A.B. and Themido, I.H. "Multi-outlet Retail Site Location Assessment" International Transactions in Operational Research. 11 (2004): 1-18
· Saaty, Thomas L. “How to Make A Decision: The Analytic Hierarchy Process.” European Journal of Operational Research. 48 (1990): 9-26
EXTERNAL LINKS
BCIT Geograhical Information Systems Program
BCIT Introduction to Operations Management Course
GIS Tutorial
MapPoint 2006- Free Trial
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