Choosing the Right Location and Layout

Transcription

1 CHAPTER 14 Choosing the Right Location and Layout Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall Choosing a Location The right region of the country The right state in the region The right city in the state The right site in the city Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall

2 Choosing the Region: Sources of Information Census data ZoomProspector Population Reference Bureau STAT-USA Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall 14-3 Choosing the Region: Sources of Information Demographics USA Lifestyle Market Analyst Survey of Buying Power Editor and Publisher Market Guide The American Marketplace: Demographics and Spending Patterns Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall

3 Choosing the Region: Sources of Information (continued) Commercial Atlas and Marketing Guide Zip Code Atlas Geographic Information Systems (GIS) U.S. Census Department s TIGER Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall 14-5 Geographic Information Systems (GIS) Computerized programs combining map-drawing with database management capability. Search through virtually any database and then plot the results on a map. Visual display reveals otherwise hidden trends. Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall

4 Choosing the State Proximity to markets Proximity to needed raw materials Wage rates Labor supply needs Business climate Tax rates Internet access Total operating costs Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall 14-7 State Evaluation Matrix State Weighted Score (Weight x Score) Location Criterion Quality of labor force Wage rates Union activity Property/building costs Utility costs Transportation costs Tax burden Educational/training assistance Start-up incentives Raw material availability Quality of life Other: Other Weight Score (Low = 1, High = 5) State 1 State 2 State 3 TABLE 14.1 Total Score Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall

5 Choosing the City Population trends Competition Clustering Compatibility with community Local laws and regulations Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall 14-9 Choosing the City (continued) Appropriate infrastructure Cost of utilities and public services Incentives Quality of life Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall

6 Location Criteria for Retail and Service Trade area size the region from which a business can expect to draw customers Retail compatibility Degree of competition Index of retail saturation (IRS) Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall Index of Retail Saturation Where: IRS = C x RE RF C = Number of customers in the trading area RE = Retail expenditures equals the average expenditure per person for the product in the trading area RF = Retail facilities = the total square feet of selling space allocated to the product in the trading area Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall

7 Location Criteria for Retail and Service (continued) Trade area size the region from which a business can expect to draw customers. Retail compatibility. Degree of competition. Index of retail saturation (IRS). Reilly s law of retail gravitation. Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall Reilly s Law of Retail Gravitation Where: BP = Distance in miles from location A to the break point d P a P b = Distance in miles between locations A and B = Population surrounding location A = Population surrounding location B Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall

8 Location Criteria for Retail and Service (continued) Transportation network Physical and psychological barriers Customer traffic Adequate parking Reputation Visibility Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall Retail & Service Location Options Central Business Districts (CBDs) Neighborhood locations Shopping centers and malls Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall

9 Shopping Centers and Malls Neighborhood shopping centers 3 to 12 Stores; anchor is supermarket or drugstore; serves up to 40,000 people. Community shopping centers 12 to 50 stores; anchor is department or variety store; serves 40,000 to 150,000 people. Power centers Combine drawing power of a mall with convenience of neighborhood shopping center; anchor stores typically occupy 80% of space. Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall Shopping Centers and Malls (continued) Theme or festival centers Employ a unifying theme, often involving entertainment, to attract tourists. Outlet centers Feature manufacturers and retailers outlet stores selling name-brand goods at discount prices; usually follows open air design. Lifestyle centers Located near affluent residential neighborhoods; designed to look more like a central business district than a shopping center or mall. Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall

10 Shopping Centers and Malls Regional shopping malls 50 to 100 stores; anchor is one or more major department stores; draws customers from a large trading area, often 5 to 15 miles or more. Super-regional shopping malls Similar to a regional mall but bigger; trading area is 25 miles or more in all directions. Examples Mall of America (Bloomington, MN), the largest mall in the U.S. West Edmonton Mall (West Edmonton, Canada), the largest mall in North America. Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall FIGURE 14.1 Shopping Mall Patterns Source: International Council of Shopping Centers. Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall

11 Retail and Service Location Options Near competitors Inside large retail store Outlying areas (continued) Home-based businesses Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall Location Decisions for Manufacturers Foreign trade zones Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall

12 FIGURE 14.2 How a Foreign Trade Zone (FTZ) Works Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall Manufacturing Locations Foreign trade zones Empowerment zones Business incubators Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall

13 Business Incubators Organizations that combine low-cost, flexible rental space with a multitude of support services for their small business residents. More than 1,100 in operation across the U.S. They work! Companies that graduate from incubators have a success rate of 87%. 84% of graduates stay in the local community, creating local job opportunities. Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall FIGURE 14.3 Business Incubator Tenants by Industry Source: National Business Incubation Association. Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall

14 Layout The logical arrangement of the physical facilities of a business that contributes to efficient operations, increased productivity, and higher sales. Study: Employees believe that the quality and quantity of their work would increase by an average of 25% with better workplace design. Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall Layout: External Factors The size must be adequate to accommodate business needs. The appearance must create the proper image or personality for the business in the customer s eyes. The entrance must invite customers to come in. Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall

15 Layout: External Factors (continued) Must comply with Americans with Disabilities Act (ADA). Pay attention to the business sign, the most direct method of reaching potential customers. Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall A Business Sign Tells potential customers who you are and what you re selling. Contrasting colors and simple typeface. Should be visible, simple, and clear. Should be legible both day and night. Must be maintained properly. Must comply with local sign ordinances. Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall

16 Building Interiors Ergonomics is an integral part of any design. Proper layout and design pays off in higher productivity, efficiency, or sales. Proper lighting is measured by what is ideal for the job being done the use of natural light can increase retail sales. Sound and scent should appeal to all customers and can boost sales. Environmental-friendly design for efficiency and appeal. Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall Layout Guidelines Know your customers buying habits and plan your layout accordingly. Display merchandise as attractively as your budget will allow. Display complementary items together. Recognize the value of floor space; never waste valuable selling space with non-selling functions. Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall

17 FIGURE 14.4 Space Values for a Small Store Source: Retailing, 6e, 1997 Prentice Hall Dale M. Lewis Ch. 6: Franchising and the Entrepreneur Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall Three Retail Layout Patterns Grid In addition to the text Rectangular with parallel aisles; formal; controls traffic flow; uses selling space efficiently. Supermarkets and self-service discount stores. Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall

18 Three Retail Layout Patterns In addition to the text Free-Form Free-flowing; informal; creates friendly environment; flexible. Small specialty shops. Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall Three Retail Layout Patterns In addition to the text Boutique Divides store into a series of individual shopping areas, each with its own theme; unique shopping environment. Small department stores. Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall

19 Layout for Manufacturers Type of product Type of production process Ergonomic considerations Economic considerations Space availability within the facility Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall Manufacturing Layouts Analyzing production layouts: Avoid the 7 forms of waste Transportation Inventory Motion Waiting Overproduction Processing Defects Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall

20 Conclusion Location is an important decision for businesses in the areas of: Retail Service Manufacturing The criteria for site selection, layout, design, and ADA considerations present challenges and opportunities for entrepreneurs. Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America. Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall