Guidelines to select best location for a retail store

Guidelines to select best location for retail store

The prerequisites for the success of retailing are selection of merchandise, sound pricing policy, layout and location of retailing business. Location among other factors plays a crucial role within the retailing industry. The selection of the site should be based on a systematic approach. In selecting the best location for a retail outlet, the following points has to be considered.

1. Consumer choice

Consumer choice is the most important factor to be considered while selecting the site of the store. Customers are in the habit of visiting a store as a place of doing business for themselves. Their decision of where to shop is largely influenced by the location of the store.

2. Competitive advantage

An intense competition prevails in the retail market. The decision on retail location is of strategic importance as retailers can gain long-term competitive advantage by selecting the best location.

3. Social and structural changes

Any decision on location should take into account the current social and structural changes in the society. Increased use of motor car, the importance of out of town shopping, the image and power of retail brands are some important factors which cause changes in society and consequently the buying pattern of consumers.

4. Huge investment

Development of a retail site requires huge investment. The land cost has escalated. Alternatively, if retailers obtain land on lease basis, they have to pay high rents. A newly established retail store gains profitability only in the long-run. The presence of all these factors in retail business bears long term financial implications for retailers.

5. Assets of the company

The assets owned by the company are as important as its turnover. The value of such assets should keep growing in the long run. So, it is important to select carefully the location of a retail store.

6. Paucity of sites

Government applies restrictions on development of sites by retailers for their operations. Obtaining permission is also not easy. The planning policy guidelines should aim at the following:

  1. Enhancing the viability of town centres.
  2. The proximity of the business facilitates a healthy competition from which consumers should derive benefits.
  3. Maximizing the use of means of transport other than personal transport.
  4. Maintaining efficient and innovative retail sector.
  5. People to have easy access to wide range of shops, employment, services and other facilities.

While selecting a location for a retail store, the above guidelines are to be followed on regional basis along with local considerations. Due to increased market pressure, some leading retailers develop smaller stores in different locations. This format gives them the advantage of serving a different consumer demand.

Super stores located out of town offer one stop shopping services for weekly outings whereas in-town stores offer top up shopping facilities. In this way, both the “out of town super store” and “in town store” complement each other in serving customers.