Retail Business Location

  • Post last modified:13 April 2022
  • Reading time:12 mins read
  • Post category:Uncategorized
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Before visiting a mall or a shop, the first question that arises in consumers’ mind is, “How far do I have to walk or drive?” In populous cities such as Mumbai, Delhi, Banglore, and Chennai to name a few, consumers face rush-hour traffic jams because of road structure.

In such cases, accessing a retail outlet to procure day-to-day needs becomes very difficult. It is very important for the consumers to have retail stores near to their residence.

Importance of Location in Retail Business

Retail location area is additionally a critical component for the promoting group to consider while setting retail advertising technique. Here are a few reasons:

  • Business area is an odd variable which the contenders can’t mirror. So, it can give a solid upper hand.
  • Selection of retail store is a long term choice.
  • It requires long term capital investment.
  • Good location is the major component for drawing in clients to the outlet.
  • Locations can change customers purchasing behavior.

Types of Business Locations

A trade zone is a territory where the retailer draws in clients. It is likewise called catchment region.

There are three essential sorts of trade zones:

Solitary Sites

These are without single standing shops/outlets, which are segregated from different retailers. They are situated on streets or close different retailers or strip malls. They are predominantly utilized for nourishment and non-sustenance retailing, or as comfort shops. For instance, stand, Kirana stores in India.


  • It requires very less possession cost.
  • It is far from competition.
  • It also incurs very less operation limitations.


  • No pedestrians: As it is located solitary pedestrians cannot be attracted towards shop.
  • Low visibility: It is far from cities so low visibility.

Unplanned Shopping Areas

These are retail stores that have advanced after some time and have numerous outlets in nearness.

They are further separated as:

  • Central business locale, for example, conventional “downtown” territories in urban communities/towns.
  • Secondary business locale in bigger urban communities and primary road or high road areas. • Neighborhood locale.
  • Locations along a road or motorway (Strip areas).


  • High passerby activity at business hours
  • High occupant movement
  • Convenient transport center


  • High security required
  • Risk of shoplifting
  • Poor parking facilities

Planned Shopping Areas

These are retail stores that are structurally adequate to suit a measure of outlets. These sites acknowledge expansive, key retail brand stores (also called “anchored stores”) and a few small stores to include combination and drag clients’ interest.

There are different sorts of planned shopping centre’s, for example, nearness or strip/ malls, shopping centers, lifestyle centers’, specialty centers, outlet centers.


  • High visibility
  • High customer traffic
  • Excellent parking facilities.


  • High security required
  • High cost of possession.

Factors Determining Retail Locations

The retail company needs take into consideration the following issues while selecting a right location:

Size of Catchment Area

Primary (with 60 to 80% clients), Secondary (15 to 25% clients), and Tertiary (with residual clients who shop once in a while).

Occupancy Costs

Costs of lease/owning are distinctive in various territories, property charges, area support costs.

Customer Traffic

Number of clients going to the area, number of private vehicles going through the area, number of people on foot going by the area.

Restrictions Placed on Store Operations

Restrictions on working hours, commotion force amid media advancement occasions.

Location Convenience

Proximity to local locations, closeness to open transport office.

Steps to Choose the Right Retail Location

A retail company needs to follow the given steps for choosing the right location:

Step 1 – Look For

Assess the market area in terms of industry, product, and competitors. How old is the organization in the following business? What numbers of practically identical businesses are there around there? What the new location is supposed to offer: new products or new market? How far is the competitor’s retail unit from the organization’s proposed area?

Step 2 – Classification

This step involves classification of information obtained. Comprehend the Demographics – Literacy of customers in the fast approaching zone, age groups, profession, wage groups, lifestyles, and religion in different classes.

Step 3 – Selection

Assess the Market Potential along with the Density of masses in the arranged range, desire of contention impact, estimation of thing solicitation, Knowledge of laws and regulations in operations.

Step 4 – Find Alternative options

Find Alternative options if there some other potential location? What is its cost of occupancy? Which components can be compromised if there is a better location around?

Step 5 – Settlement

Settle the best and most sensible Location for the retail outlet.

Measuring the Success of Location

Once the retail outlet is opened at the chosen area, it is vital to monitor how sensible was the decision of the area. To understand this, the retail organization does two types of area evaluations:

Macro Location Evaluation

It is directed at a national level when the organization needs to begin a retail business universally.

Under this evaluation, the accompanying strides are done:

  • Review: Detailed outside review of the business sector by dissecting areas as large scale environment, for example, political, social, monetary, and specialized.

  • Record: Most essential components are recorded, for example, client’s level of spending, level of rivalry, Personal Disposable Income (PDI), accessibility of areas, and so on.

  • Select: The same variables recorded above are considered for neighbourhood locales inside the selected nations to locate a solid area.

Micro Location Evaluation

At this level of assessment, the area is evaluated against four elements to be specific:

  • Population: Desirable number of reasonable clients who will shop.

  • Infrastructure: The extent to which the store is available to potential clients.

  • Store Outlet: Identifying the level of contending stores (those which the diminishing engaging quality of an area) and also correlative stores (which increment the allure of an area).

  • Cost: Costs of improvement and operation. High startup and progressing costs influence the execution of retail business.

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