Choosing store location is a major activity/decision area in retailing. It is equally important in stand alone retailing as well as in operation of retail chains. It is equally important in respect of all types of retail chains — a food retail chain, a department store chain, a mega store chain, a hypermarket chain — though the criteria may vary case to case. In general terms, it can be said that the under mentioned three attributes are important to all retail locations:
Obviously, it is from the standpoint of the target customer that the location must meet the three criteria of attractiveness, convenience, and proximity.
While location decision is relatively easy for a stand alone retail store, it is very difficult in the case of retail chain. The latter has to look at it at three levels. The first aspect is the choice of the city. The chain has to decide the city in which it has to locate its store, the first in the chain, if it were a new entrant, and the next one in the chain, if it were already in business. Second, within the chosen city, it has to decide the are/areas where the store/stores have to be located. Third, it has to choose the premises/exact location of the store(s) within the chosen area(s) in the chosen city.
The criteria may vary depending on whether the chain in question is a food retail chain, or a department store chain, or a mega store chain or a hyper store chain. The location requirement of a food retail store for example, will be different from that of a department store — an apparel department store like Pantaloon, for instance. In food retailing, location selection is concerned with finding clusters rather than a dispersed customer base, and of finding a core residential area rather than a high street.
Again, the catchments for a food retail store usually reside in a radius of 2-3 km, while the catchments for a department store reside in a radius of 6-7 km. Moreover, in the case of a food retail store, the catchments are spread across one-fourth or at the most half a suburb, as against 7-8 suburbs in case of a departmental store.
Sourcing / buying / vendor partnership / supply chain management:
Sourcing and buying through vendor partnership and supply chain management is the next major task in retailing.
Buying in bulk, at the lowest possible prices, hold the key to success in most retailing formats. Through this ability, the store makes a handsome margin. It then passes on a good portion of it to the consumers and when the consumer gets the benefit of low prices, he/she comes back again and again to the store and buys more.