The selection of a location type must reinforce the retailer’s strategy. Thus, the location-type decision needs to be consistent with the shopping behaviour and size of the target market and the retailer’s positioning in its target market.
1. SHOPPING BEHAVIOUR OF CONSUMERS IN RETAILER’S TARGET MARKET
A critical factor affecting the type of location that consumers select to visit is the shopping situation in which they are involved. Following are the three types of shopping situations:.
A. 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.
- They are relatively insensitive to price and indifferent about which brands to buy.
- Thus, they don’t spend much time evaluating different brands or retailers, they simply want to make the purchase as quickly and easily as possible.
How Retailers targets:
Retailers locate their stores close to where their customers are and make it easy for them to access the location, park, and find what they want. Thus, convenience stores are generally located in neighbourhood strip centers and freestanding locations.
Eg: Drugstores and fast-food restaurants also cater to convenience shoppers and thus select locations with easy access, parking, and the added convenience of a drive-through window.
B. 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 or model.
- The purchase decisions are more important to them, so they seek information and are willing to expend effort to compare alternatives.
- Consumers typically engage in this type of shopping behavior when buying furniture, appliances, apparel, consumer electronics, hand tools, and cameras.
How Retailers targets:
Furniture retailers, for instance, often locate next to one another to create a “furniture row.” These competing retailers locate near one another because doing so facilitates comparison shopping and thus attracts customers to the locations.
C. Speciality Shopping
- When consumers go speciality shopping , they know what they want and will not accept a substitute.
- They are brand and/or retailer loyal and will pay a premium or expend extra effort, if necessary, to get exactly what they want.
- Examples of these shopping occasions include buying organic vegetables, adopting a dog from the animal shelter, or buying a new, high-quality stove top and oven.
How Retailers targets:
Consumers engaged in specialty shopping are willing to travel to an inconvenient location. Having a convenient location is not as important for retailers selling unique merchandise or services.
2. DENSITY OF TARGET MARKET
A good location has many people in the target market who are drawn to it.
- So a convenience store located in a CBD can be sustained by customers living or working in fairly close proximity to the store.
- Similarly, a comparison shopping store located next to a Walmart is a potentially good location because Walmart draws lots of customers from a very large area.
- It is not as important to have high customer density near a store that sells specialty merchandise, because people are willing to search out this type of merchandise.
Eg: A Porsche dealer, for instance, need not be near other car dealers or in close proximity to its target market, because those seeking this luxury car will drive to wherever the dealer may be.
3. UNIQUENESS OF RETAIL OFFERING
The convenience of their locations is less important for retailers with unique, differentiated offerings than for retailers with an offering similar to other retailers.
For example, Bass Pro Shops provides a unique merchandise assortment and store atmosphere. Customers will travel to wherever the store is located, and its location will become a destination.
Excerpts from the Book ” Retailing Management ” by Michael Levy & Barton A. Weitz
