Retailing Strategy

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Retailing Strategy
Human Resource Management Chapter 9
Retail Market and Financial Strategy Chapter 5, 6
Retail Locations Chapter 7 Site
LocationsChapter 8
Information and Distribution Systems Chapter 10
Customer Relationship Management Chapter 11
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Assignment 1

• Individual
• Choose a retail type (i.e. Specialty Store,
  Convenience, Department Store, etc.)
• Name your store (i.e. My Shop, More Food,
  Malee-Mart)
• Choose a secondary channel (besides BM) and
  explain your choice in one paragraph. (i.e. kiosk
  better than electronic because..)
• One typed page due July 5

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What Are the Three Most Important Things in
Retailing?
Location! Location! Location!
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Retail Locations

• Shopping Centers
• Strip Shopping Centers
• Shopping Malls
• City or Town Locations
• Inner City
• Main Street
• Free Standing Sites
• Other Location Opportunities

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Types of Strip Shopping Centers

• Traditional
• Mom and Pop Local Merchants, Childrens
  Place, GapKids, Blockbuster Video
• Power Centers
• Target, Home Depot, Office Depot, PetsMart,
  Best Buy, Sports Authority,Toys R Us

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Elements in Retail Mix
Location Strategy
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Types of Shopping Malls
Regional Centers Superregional Centers Lifestyle
Centers Fashion/Specialty Centers Outlet
Centers Theme/Festival Centers Merchandise Kiosks
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Problems Facing Regional Malls

• Competition from Alternative, More Convenient
  Locations
• Focus on Apparel Weak Apparel Sales
• Aging
• Demographic Shifts

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The Most Expensive Shopping Streets in the World
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Tradeoff Between Locations
There are relative advantages and
disadvantages to consider with each location.
Rent
Traffic
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Relative Advantages of Major Retail Locations
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Relative Advantages of Major Retail Locations
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Relative Advantages of Major Retail Locations
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Other Retail Location Opportunities
Mixed Use Developments AirportsResorts
HospitalsStore within a Store
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Matching Location to Retail Strategy

• Department Stores ? Regional Mall
• Specialty Apparel ?Central Business District,
  Regional Malls
• Category Specialists ? Power Centers,
  Free Standing
• Grocery Stores ? Strip Shopping Centers
• Drug Stores ? Stand Alone

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Types of Leases
Percentage Fixed - Rate
Percentage leases lease based on a of sales.
Retailers also typically pay a maintenance fee
based on a percentage of their square footage of
leased space. Most malls use some form of
percentage lease.
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Variations of Percentage Leases
Percentage lease with specified maximum -
percentage of sales up to a maximum
amount. Rewards retailer performance by allowing
retailer to hold rent constant above a certain
level of sales Percentage lease with specified
minimum - retailer must pay a minimum rent no
matter how low sales are. Sliding scale -
percentage of sales as rent decreases as sales go
up.
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Fixed Rate Leases
Fixed Rate Leases - used by community and
neighborhood centers. -Retailer pays a fixed
amount per month over the life of the lease. -Not
as popular as percentage leases Graduated Lease -
a variation of the fixed rate lease -Rent
increases by a fixed amount over a specified
period of time.
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Percentage or Fixed Rate Leases
Maintenance-increase-recoupment lease - used with
either a percentage or fixed rate lease. Rent
increases if insurance, property taxes, or
utility bills increase beyond a certain
point. Net lease - retailer is responsible for
all maintenance and utilities.
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Prohibited Use Clause
Limits the landlord from leasing to certain
tenants. Some tenants take up parking spaces and
dont bring in shoppers bowling alley, skating
rink, meeting hall, dentist, or real estate
office. Some tenants could harm the shopping
centers wholesome image bars, pool halls, game
parlors, off-track betting establishments,
massage parlors and pornography retailers.
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Exclusive Use Clause
Prohibits the landlord from leasing to
retailers selling competing merchandise Specify
no outparcels Specify if certain retailer leaves
center, they can terminate lease.
Escape Clause Allows the retailer to
terminate its lease if sales dontreach a
certain level after a specified number of years,
or if a specific co-tenant in the center
terminates its lease.
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Environmental Issues
Above-ground risks - such as
asbestos-containing materials or lead pipes used
in construction.
Hazardous materials - e.g. dry cleaning
chemicals, motor oil, that have been stored in
the ground.
Retailers Protection Stipulate in the lease
that the lessor is responsible for removal and
disposal of this material if its found. Retailer
can buy insurance that specifically protects it
from these risks.
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Other Legal Issues
Zoning and Building Codes Zoning determines
how a particular site can be used. Building
codes determine the type of building, signs,
size, type of parking lot, etc. that can be
used Signs Restrictions on the use of signs
can also impact a particular sites
desirability Licensing Requirements Some
areas may restrict or require a license for
alcoholic beverages