Retail Locations
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Chapter 8 Retail Locations
Irwin/McGraw-Hill
Levy/Weitz: Retailing Management, 4/e
Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
PPT 8-2
Shopping Centers A shopping center is a group of retail and other commercial establishments that is planned, developed, owned, and managed as a single property. Two main configurations: strip centers & malls Strip centers have parking in front of the stores and do not have enclosed walkways linking the stores. Malls have a pedestrian focus; customers park in outlying areas and walk to the stores. Traditional malls are enclosed with walkways between two facing strips of stores.
McGraw-Hill/Irwin
Levy/Weitz: Retailing Management, 4/e
Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
PPT 8-3a
Shopping Center Definitions
Type
Concept
Sq. Ft. Including Anchors
Number of Type of Anchors
Anchors
Trade Area *
SHOPPING CENTERS Neighborhood
Convenience
Community General Merchandise; convenience
30,000-150,000
100,000-350,000
1 or more
2 or more
Supermarket
3 miles
Discount dept.
3-7 miles
store; supermarket; drug; home improvement; large specialty/ discount apparel
McGraw-Hill/Irwin
Levy/Weitz: Retailing Management, 4/e
Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
PPT 8-3b
Shopping Center Definitions
Type
Concept
Power
Category-
Center
dominant
Sq. Ft. Including Number of Type of Anchors
Anchors
250,000-600,000
3 or more
Trade
Anchors
Area *
Category killer; 5-10 home improve- miles
“Las Tiendas” anchors; few small tenants
ment; discount department store; warehouse club; off-price
SHOPPING MALL Regional
General
400,000-800,000
2 or more
Full-line dept.
5-15
Merchandise;
store; junior
miles
fashion (mall,
dept. store;
typically
mass merchant;
enclosed)
discount dept. store; fashion apparel
McGraw-Hill/Irwin
Levy/Weitz: Retailing Management, 4/e
Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
PPT 8-3c
Type
Shopping Center Definitions Concept
Super-
Similar to
regional
Sq. Ft. Including
Number of
Anchors
Anchors
800,000 +
3 or more
Type of
Trade
Anchors
Area *
Full-line dept.
5-25
regional but has more
store; junior dept. store;
miles
variety and
mass
assortment
merchant; fashion apparel
Fashion/
Higher-end,
specialty
fashion-
80,000-250,000
N/A
Fashion
5-15 miles
oriented Outlet
Manufacturers’ 50,000-400,000
N/A
outlet stores Theme/
Leisure; tour-
festival
ist oriented
McGraw-Hill/Irwin
Levy/Weitz: Retailing Management, 4/e
80,000-250,000
N/A
Manufacturers’ 25-75 outlet stores
miles
Restaurants;
N/A
entertainment
Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
Relative Advantages of Major Retail Locations
PPT 8-5a
Location
CBD
Issues
Neighborhood
Strip
Shopping
CBD
Center
Mall
Free Standing
Large size draws people to area
+
-
-
+
-
People working/living in area provided source of customers
+
+
+
-
-
Source of entertainment/ recreation
?
-
-
+
-
Protection against weather
-
-
-
+
-
McGraw-Hill/Irwin
Levy/Weitz: Retailing Management, 4/e
Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
Relative Advantages of Major Retail Locations
PPT 8-5b
Location
CBD
Issues
Neighborhood CBD
Strip Center
Shopping Mall
Free Standing
-
-
+
+ +
+
Planned shopping area/balanced tenant mix
-
-
-
+
-
Parking
-
+
?
+ +
?
Occupancy costs (e.g. rent)
+
Security Long, uniform hours of operation
McGraw-Hill/Irwin
Levy/Weitz: Retailing Management, 4/e
-
Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
+
Relative Advantages of Major Retail Locations
PPT 8-5c
Location
CBD
Issues
Neighborhood CBD
+
Strip
Shopping
Free
Center
Mall
Standing
-
+
+
Pedestrian traffic
+
Landlord
+
+
+
-
Strong competition
+
+
+
-
Tax incentives
?
?
?
control
McGraw-Hill/Irwin
Levy/Weitz: Retailing Management, 4/e
?
Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
+ ?
PPT 8-8
Fixed Rate Leases
Fixed rate leases - used by community and neighborhood centers. • Retailer pays a fixed amount per month over the life of the lease. • Not as popular as percentage leases
Graduated lease - a variation of the fixed rate lease • Rent increases by a fixed amount over a specified period of time.
McGraw-Hill/Irwin
Levy/Weitz: Retailing Management, 4/e
Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
PPT 8-11
Exclusive Use Clause
Prohibits the landlord from leasing to retailers selling competing merchandise • Specify no out parcels • Specify if certain retailer leaves center, they can terminate lease.
Escape clause • Allows the retailer to terminate its lease if sales don’t reach a certain level after a specified number of years, or if a specific co-tenant in the center terminates its lease.
McGraw-Hill/Irwin
Levy/Weitz: Retailing Management, 4/e
Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
PPT 8-12
Environmental Issues
“Above-ground” risks - such as asbestos-containing materials or lead pipes used in construction.
Hazardous materials - e.g. dry cleaning chemicals, motor oil, that have been stored in the ground.
Retailers’ Protection • Stipulate in the lease that the lessor is responsible for removal and disposal of this material if it’s found. • Retailer can buy insurance that specifically protects it from these risks. McGraw-Hill/Irwin
Levy/Weitz: Retailing Management, 4/e
Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
PPT 8-13
Other Legal Issues
Zoning and Building Codes • Zoning determines how a particular site can be used. • Building codes determine the type of building, signs, size, type of parking lot, etc. that can be used
Signs • Restrictions on the use of signs can also impact a particular site’s desirability
Licensing Requirements • Some areas may restrict or require a license for alcoholic beverages McGraw-Hill/Irwin
Levy/Weitz: Retailing Management, 4/e
Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
Irwin/McGraw-Hill
Levy/Weitz: Retailing Management, 4/e
Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
PPT 8-2
Shopping Centers A shopping center is a group of retail and other commercial establishments that is planned, developed, owned, and managed as a single property. Two main configurations: strip centers & malls Strip centers have parking in front of the stores and do not have enclosed walkways linking the stores. Malls have a pedestrian focus; customers park in outlying areas and walk to the stores. Traditional malls are enclosed with walkways between two facing strips of stores.
McGraw-Hill/Irwin
Levy/Weitz: Retailing Management, 4/e
Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
PPT 8-3a
Shopping Center Definitions
Type
Concept
Sq. Ft. Including Anchors
Number of Type of Anchors
Anchors
Trade Area *
SHOPPING CENTERS Neighborhood
Convenience
Community General Merchandise; convenience
30,000-150,000
100,000-350,000
1 or more
2 or more
Supermarket
3 miles
Discount dept.
3-7 miles
store; supermarket; drug; home improvement; large specialty/ discount apparel
McGraw-Hill/Irwin
Levy/Weitz: Retailing Management, 4/e
Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
PPT 8-3b
Shopping Center Definitions
Type
Concept
Power
Category-
Center
dominant
Sq. Ft. Including Number of Type of Anchors
Anchors
250,000-600,000
3 or more
Trade
Anchors
Area *
Category killer; 5-10 home improve- miles
“Las Tiendas” anchors; few small tenants
ment; discount department store; warehouse club; off-price
SHOPPING MALL Regional
General
400,000-800,000
2 or more
Full-line dept.
5-15
Merchandise;
store; junior
miles
fashion (mall,
dept. store;
typically
mass merchant;
enclosed)
discount dept. store; fashion apparel
McGraw-Hill/Irwin
Levy/Weitz: Retailing Management, 4/e
Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
PPT 8-3c
Type
Shopping Center Definitions Concept
Super-
Similar to
regional
Sq. Ft. Including
Number of
Anchors
Anchors
800,000 +
3 or more
Type of
Trade
Anchors
Area *
Full-line dept.
5-25
regional but has more
store; junior dept. store;
miles
variety and
mass
assortment
merchant; fashion apparel
Fashion/
Higher-end,
specialty
fashion-
80,000-250,000
N/A
Fashion
5-15 miles
oriented Outlet
Manufacturers’ 50,000-400,000
N/A
outlet stores Theme/
Leisure; tour-
festival
ist oriented
McGraw-Hill/Irwin
Levy/Weitz: Retailing Management, 4/e
80,000-250,000
N/A
Manufacturers’ 25-75 outlet stores
miles
Restaurants;
N/A
entertainment
Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
Relative Advantages of Major Retail Locations
PPT 8-5a
Location
CBD
Issues
Neighborhood
Strip
Shopping
CBD
Center
Mall
Free Standing
Large size draws people to area
+
-
-
+
-
People working/living in area provided source of customers
+
+
+
-
-
Source of entertainment/ recreation
?
-
-
+
-
Protection against weather
-
-
-
+
-
McGraw-Hill/Irwin
Levy/Weitz: Retailing Management, 4/e
Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
Relative Advantages of Major Retail Locations
PPT 8-5b
Location
CBD
Issues
Neighborhood CBD
Strip Center
Shopping Mall
Free Standing
-
-
+
+ +
+
Planned shopping area/balanced tenant mix
-
-
-
+
-
Parking
-
+
?
+ +
?
Occupancy costs (e.g. rent)
+
Security Long, uniform hours of operation
McGraw-Hill/Irwin
Levy/Weitz: Retailing Management, 4/e
-
Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
+
Relative Advantages of Major Retail Locations
PPT 8-5c
Location
CBD
Issues
Neighborhood CBD
+
Strip
Shopping
Free
Center
Mall
Standing
-
+
+
Pedestrian traffic
+
Landlord
+
+
+
-
Strong competition
+
+
+
-
Tax incentives
?
?
?
control
McGraw-Hill/Irwin
Levy/Weitz: Retailing Management, 4/e
?
Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
+ ?
PPT 8-8
Fixed Rate Leases
Fixed rate leases - used by community and neighborhood centers. • Retailer pays a fixed amount per month over the life of the lease. • Not as popular as percentage leases
Graduated lease - a variation of the fixed rate lease • Rent increases by a fixed amount over a specified period of time.
McGraw-Hill/Irwin
Levy/Weitz: Retailing Management, 4/e
Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
PPT 8-11
Exclusive Use Clause
Prohibits the landlord from leasing to retailers selling competing merchandise • Specify no out parcels • Specify if certain retailer leaves center, they can terminate lease.
Escape clause • Allows the retailer to terminate its lease if sales don’t reach a certain level after a specified number of years, or if a specific co-tenant in the center terminates its lease.
McGraw-Hill/Irwin
Levy/Weitz: Retailing Management, 4/e
Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
PPT 8-12
Environmental Issues
“Above-ground” risks - such as asbestos-containing materials or lead pipes used in construction.
Hazardous materials - e.g. dry cleaning chemicals, motor oil, that have been stored in the ground.
Retailers’ Protection • Stipulate in the lease that the lessor is responsible for removal and disposal of this material if it’s found. • Retailer can buy insurance that specifically protects it from these risks. McGraw-Hill/Irwin
Levy/Weitz: Retailing Management, 4/e
Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
PPT 8-13
Other Legal Issues
Zoning and Building Codes • Zoning determines how a particular site can be used. • Building codes determine the type of building, signs, size, type of parking lot, etc. that can be used
Signs • Restrictions on the use of signs can also impact a particular site’s desirability
Licensing Requirements • Some areas may restrict or require a license for alcoholic beverages McGraw-Hill/Irwin
Levy/Weitz: Retailing Management, 4/e
Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
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