Identify Alternate Sites and Select the Site

After having determined the market potential and taking a decision on the location of the store, a retailer has to select the site to locate the store. Though each retailer strives to find the 100% perfect location, there are various factors which affect his decision. The chief among them are:


This refers to both pedestrian and vehicular traffic. The traffic that passes that site is an important determinant of the potential sales that can be generated from that store. However, it is essential that the traffic is suitable to the kind of products to be retailed in the store. For example, the kind of traffic required by a retailer of high fashion garments is different from the kind of traffic that may be needed for a hypermarket.

Accessibility of the market is also a key factor:

Accessibility of the market is defined in terms of availability of public transport and road / local train connections to reach the market. Public transport refers to the means of reaching the market, the frequency of bus / train services and connectivity to the different parts of the city. Places like Connaught Place in New Delhi and Colaba or linking Road in Mumbai are far accessible than places like Kamala Nagar and Powai.

The total Number of stores and the type of stores that exist in the area:

A market with a large number of stores usually has more people visiting the area than locations where one or two stores exist. The type of stores that exist in the area is also equally important. If a particular place is a market for cloth or footwear, it may not be the best place for other product categories. The types of stores should be compatible with the kind of business that the retailer wishes to conduct. The type of competition also needs to be taken into account, as competition does not necessarily diminish the business. The food and entertainment avenues are also becoming important.

Amenities Available:

Depending on the type of product to be retailed, facilities, like free an ample parking become important. This is factor which has gained in importance and hence complexes like Ansal Plaza in New Delhi will be preferred to places like Lajpat Nagar.

To buy or to lease:

An important factor to be considered before taking the decision on the site is the decision to buy the store or to lease it. If the store is to be leased, then the terms of lease will have to be studied carefully. The length of the lease period should not be too long or too short. If the lease period is too short, the retailer my have to shift the store even it has built up a strong base in the area and this may adversely affect its image. The second consideration is that of the lease rent, which should be justified for the location. Paying too high rent may eat into the profits that the retailer would make. It is believed that the ratio of sales per sq foot to rent per sq foot should be in excess of 8 to 10 units for a shop to make reasonably good profit.

The Product Mix offered:

The kind of product mix to be offered by the retailer also affects his choice of location. For examples a food and grocery retailer or a supermarket would need to locate his store near or in a residential area. Locating a supermarket in a pure business district may not be very advisable. Similarly, for a designer who retails up markets high fashion garments, it is necessary that the store is located in an up market area in keeping with the image that it seeks to create.

The importance of each of the parameters mentioned above would be different for each retailer. Releasing an advertisement in the newspaper is a common method adopted by many retailers for seeking out properties. While doing so, a retailer may prepare a comprehensive list of details that may be required by him and seek it out from the respondents.

In practice, a retailer is very often restricted by what is available on the open market and hence, must look at the cost; benefit relationship of any given location and the physical characteristics of the property i.e. the frontage the shape and quality of the floor space the spread of the space in terms of the levels on which it is spread over and the turnover expected from each. Governing the lease will play a crucial role in the decision on the site.

Typically, when a retailer wants to enter a market, he may decide to release an advertisement in thee local newspaper and call for the details. After gong through the details received, the retailer may shortlist the sites on the basis of the considerations which are of priority to him. After short listing the sites, an actual visit tot eh sites by a company official is necessary to asses the sites and help determine the future course of action.