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Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall
Choosing the Right Choosing the Right Location and LayoutLocation and Layout
Choosing the Right Choosing the Right Location and LayoutLocation and Layout
CHAPTER CHAPTER 1414
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 14 - 2Ch. 14: Location and Layout
Choosing a LocationChoosing a Location
The right region of the countryThe right region of the country The right state in the regionThe right state in the region The right city in the stateThe right city in the state The right site in the cityThe right site in the city
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 14 - 3Ch. 14: Location and Layout
Choosing the Region:Choosing the Region:Sources of InformationSources of Information
Census dataCensus data http://www.census.gov/ http://factfinder.census.gov
ZoomProspectorZoomProspector www.zoomprospector.com
Population Reference BureauPopulation Reference Bureau www.prb.org
STAT-USA STAT-USA http://www.statusa.gov
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 14 - 4Ch. 14: Location and Layout
Choosing the Region:Choosing the Region:Sources of InformationSources of Information
Demographics USADemographics USA
Lifestyle Market Analyst Lifestyle Market Analyst
Survey of Buying PowerSurvey of Buying Power
Editor and Publisher Market GuideEditor and Publisher Market Guide
The American Marketplace: The American Marketplace: Demographics and Spending PatternsDemographics and Spending Patterns
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 14 - 5Ch. 14: Location and Layout
Choosing the Region:Choosing the Region:Sources of InformationSources of Information
Commercial Atlas and Marketing GuideCommercial Atlas and Marketing Guide
Zip Code AtlasZip Code Atlas
Geographic Information Systems (GIS)Geographic Information Systems (GIS)
U.S. Census Department’s TIGER U.S. Census Department’s TIGER
(continued)
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 14 - 6Ch. 14: Location and Layout
Geographic Information Geographic Information Systems (GIS)Systems (GIS)
Computerized programs combining Computerized programs combining map-drawing with database map-drawing with database management capability.management capability.
Search through virtually Search through virtually anyany database database and then plot the results on a map.and then plot the results on a map.
Visual display reveals Visual display reveals otherwise hidden trends.otherwise hidden trends.
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 14 - 7Ch. 14: Location and Layout
Choosing the StateChoosing the State
Proximity to marketsProximity to markets Proximity to needed raw materialsProximity to needed raw materials Wage ratesWage rates Labor supply needsLabor supply needs Business climateBusiness climate Tax ratesTax rates Internet accessInternet access Total operating costsTotal operating costs
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice HallCh. 14: Location and Layout
State Evaluation MatrixState Evaluation MatrixState Weighted Score (Weight x Score)
Location Criterion WeightScore (Low = 1, High = 5) State 1 State 2 State 3
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
Total Score
14 - 8
TABLE 14.1
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 14 - 9Ch. 14: Location and Layout
Choosing the CityChoosing the City
Population trendsPopulation trends CompetitionCompetition ClusteringClustering Compatibility with communityCompatibility with community Local laws and regulationsLocal laws and regulations
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 14 - 10Ch. 14: Location and Layout
Appropriate infrastructureAppropriate infrastructure Cost of utilities and public servicesCost of utilities and public services IncentivesIncentives Quality of lifeQuality of life
(continued)(continued)
Choosing the CityChoosing the City
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 14 - 11Ch. 14: Location and Layout
Location Criteria for Location Criteria for Retail and Service Retail and Service
Trade area size – the region Trade area size – the region from which a business can from which a business can expect to draw customers expect to draw customers
Retail compatibilityRetail compatibility Degree of competitionDegree of competition Index of retail saturation (IRS) Index of retail saturation (IRS)
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 14 - 12Ch. 14: Location and Layout
Index of Retail SaturationIndex of Retail Saturation
C x REC x RE RFRF
Where:Where:
C = C = Number of customers in the trading Number of customers in the trading areaarea
RE = Retail expenditures equals the average RE = Retail expenditures equals the average expenditure per person for the product expenditure per person for the product
in in the trading areathe trading area
RF = RF = Retail facilities = the total square feet of Retail facilities = the total square feet of selling space allocated to the product in selling space allocated to the product in the trading area the trading area
IRS = IRS =
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 14 - 13Ch. 14: Location and Layout
Location Criteria for Location Criteria for Retail and Service Retail and Service
Trade area size – the region Trade area size – the region from which a business can from which a business can expect to draw customers. expect to draw customers.
Retail compatibility.Retail compatibility. Degree of competition.Degree of competition. Index of retail saturation (IRS).Index of retail saturation (IRS). Reilly’s law of retail gravitation. Reilly’s law of retail gravitation.
(continued)(continued)
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice HallCh. 14: Location and Layout
Reilly’s Law of Retail GravitationReilly’s Law of Retail Gravitation
Where:Where:
BPBP = = Distance in miles from location A to the Distance in miles from location A to the break pointbreak point
d d = = Distance in miles between locations A and BDistance in miles between locations A and B
PPaa = = Population surrounding location APopulation surrounding location A
PPbb = = Population surrounding location B Population surrounding location B
a
bP
P1
dBP
14 - 14
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 14 - 15Ch. 14: Location and Layout
Location Criteria for Location Criteria for Retail and Service Retail and Service
Transportation networkTransportation network Physical and psychological barriersPhysical and psychological barriers Customer trafficCustomer traffic Adequate parkingAdequate parking ReputationReputation VisibilityVisibility
(continued)(continued)
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 14 - 16Ch. 14: Location and Layout
Retail & Service Location OptionsRetail & Service Location Options
Central Business Districts (CBDs)Central Business Districts (CBDs) Neighborhood locationsNeighborhood locations Shopping centers and mallsShopping centers and malls
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 14 - 17Ch. 14: Location and Layout
Shopping Centers and MallsShopping Centers and Malls
Neighborhood shopping centersNeighborhood shopping centers 3 to 12 Stores; anchor is supermarket or 3 to 12 Stores; anchor is supermarket or
drugstore; serves up to 40,000 people.drugstore; serves up to 40,000 people. Community shopping centersCommunity shopping centers
12 to 50 stores; anchor is department or variety 12 to 50 stores; anchor is department or variety store; serves 40,000 to 150,000 people.store; serves 40,000 to 150,000 people.
Power centersPower centers Combine drawing power of a mall with Combine drawing power of a mall with
convenience of neighborhood shopping center; convenience of neighborhood shopping center; anchor stores typically occupy 80% of space.anchor stores typically occupy 80% of space.
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 14 - 18Ch. 14: Location and Layout
Shopping Centers and MallsShopping Centers and Malls Theme or festival centersTheme or festival centers
Employ a unifying theme, often involving Employ a unifying theme, often involving entertainment, to attract tourists. entertainment, to attract tourists.
Outlet centersOutlet centers Feature manufacturers’ and retailers’ outlet Feature manufacturers’ and retailers’ outlet
stores selling name-brand goods at discount stores selling name-brand goods at discount prices; usually follows “open air” design.prices; usually follows “open air” design.
Lifestyle centersLifestyle centers Located near affluent residential Located near affluent residential
neighborhoods; designed to look more like neighborhoods; designed to look more like a central business district than a shopping a central business district than a shopping center or mall.center or mall.
(continued)(continued)
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 14 - 19Ch. 14: Location and Layout
Shopping Centers and MallsShopping Centers and Malls Regional shopping mallsRegional shopping malls
50 to 100 stores; anchor is one or more major 50 to 100 stores; anchor is one or more major department stores; draws customers from a department stores; draws customers from a large trading area, often 5 to 15 miles or more. large trading area, often 5 to 15 miles or more.
Super-regional shopping mallsSuper-regional shopping malls Similar to a regional mall but bigger; trading Similar to a regional mall but bigger; trading
area is 25 miles or more in all directions.area is 25 miles or more in all directions. ExamplesExamples
Mall of America (Bloomington, MN), the Mall of America (Bloomington, MN), the largest mall in the U.S.largest mall in the U.S.
West Edmonton Mall (West Edmonton, West Edmonton Mall (West Edmonton, Canada), the largest mall in North America.Canada), the largest mall in North America.
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice HallCh. 14: Location and Layout
FIGURE 14.1 Shopping Mall Patterns Source: International Council of Shopping Centers.
14 - 20
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 14 - 21Ch. 14: Location and Layout
Retail and Service Retail and Service Location OptionsLocation Options
Near competitorsNear competitors
Inside large retail storeInside large retail store
Outlying areasOutlying areas
Home-based businessesHome-based businesses
(continued(continued))
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 14 - 22Ch. 14: Location and Layout
Location Decisions for Location Decisions for ManufacturersManufacturers
Foreign trade zonesForeign trade zones
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice HallCh. 14: Location and Layout
FIGURE 14.2 How a Foreign Trade Zone (FTZ) Works
14 - 23
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 14 - 24Ch. 14: Location and Layout
Manufacturing LocationsManufacturing Locations
Foreign trade zonesForeign trade zones
Empowerment zonesEmpowerment zones
Business incubatorsBusiness incubators
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 14 - 25Ch. 14: Location and Layout
Business IncubatorsBusiness Incubators
Organizations that combine low-cost, Organizations that combine low-cost, flexible rental space with a multitude of flexible rental space with a multitude of support services for their small business support services for their small business residents.residents.
More than 1,100 in operation across the More than 1,100 in operation across the U.S.U.S.
They work! They work! Companies that “graduate” from incubators Companies that “graduate” from incubators
have a success rate of 87%.have a success rate of 87%. 84% of graduates stay in the local community, 84% of graduates stay in the local community,
creating local job opportunities. creating local job opportunities.
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice HallCh. 14: Location and Layout
FIGURE 14.3 Business Incubator Tenants by Industry Source: National Business Incubation Association.
14 - 26
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 14 - 27Ch. 14: Location and Layout
LayoutLayout
The logical arrangement of the physical The logical arrangement of the physical facilities of a business that contributes facilities of a business that contributes to efficient operations, increased to efficient operations, increased productivity, and higher sales. productivity, and higher sales.
Study: Study: Employees believe that the quality and Employees believe that the quality and quantity of their work would increase by quantity of their work would increase by an average of 25% with better workplace an average of 25% with better workplace design. design.
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 14 - 28Ch. 14: Location and Layout
Layout: External FactorsLayout: External Factors
The size must be adequate to The size must be adequate to accommodate business needs.accommodate business needs.
The appearance must create the proper The appearance must create the proper image or “personality” for the business image or “personality” for the business in the customer’s eyes.in the customer’s eyes.
The entrance must The entrance must inviteinvite customers to come in.customers to come in.
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 14 - 29Ch. 14: Location and Layout
Must comply with Americans with Must comply with Americans with Disabilities Act (ADA).Disabilities Act (ADA).
Pay attention to the business sign, Pay attention to the business sign, the most direct method of reaching the most direct method of reaching potential customers.potential customers.
(continued)(continued)
Layout: External FactorsLayout: External Factors
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 14 - 30Ch. 14: Location and Layout
A Business SignA Business Sign Tells potential customers who you are Tells potential customers who you are
and what you’re selling.and what you’re selling. Contrasting colors and simple typeface. Contrasting colors and simple typeface. Should be visible, simple, and clear.Should be visible, simple, and clear. Should be legible both day and night.Should be legible both day and night. Must be maintained properly.Must be maintained properly. Must comply with Must comply with
local sign ordinances.local sign ordinances.
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 14 - 31Ch. 14: Location and Layout
Building InteriorsBuilding Interiors
ErgonomicsErgonomics is an integral part of any design. is an integral part of any design. Proper layout and design pays off in higher Proper layout and design pays off in higher
productivity, efficiency, or sales.productivity, efficiency, or sales. Proper lighting is measured by what is ideal Proper lighting is measured by what is ideal
for the job being done – the ufor the job being done – the use of natural se of natural light can increase retail sales. light can increase retail sales.
Sound and scent should appeal to Sound and scent should appeal to allall customers and can boost sales. customers and can boost sales.
Environmental-friendly design for efficiency Environmental-friendly design for efficiency and appeal.and appeal.
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 14 - 32Ch. 14: Location and Layout
Layout GuidelinesLayout Guidelines
Know your customers’ buying habits Know your customers’ buying habits and plan your layout accordingly.and plan your layout accordingly.
Display merchandise as attractively as Display merchandise as attractively as your budget will allow.your budget will allow.
Display complementary items together.Display complementary items together. Recognize the value of floor space; Recognize the value of floor space;
never waste valuable selling space with never waste valuable selling space with non-selling functions. non-selling functions.
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 14 - 33Ch. 6: Franchising and the Entrepreneur
FIGURE 14.4 Space Values for a Small Store Source: Retailing, 6e, 1997 Prentice Hall ©Dale M. Lewis
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 14 - 34Ch. 14: Location and Layout
Three Retail Layout PatternsThree Retail Layout Patterns
GridGrid Rectangular with parallel aisles; Rectangular with parallel aisles;
formal; controls traffic flow; uses formal; controls traffic flow; uses selling space efficiently.selling space efficiently.
Supermarkets and self-service Supermarkets and self-service discount stores.discount stores.
In addition to the text
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 14 - 35Ch. 14: Location and Layout
Free-FormFree-Form Free-flowing; informal; creates Free-flowing; informal; creates
“friendly” environment; flexible.“friendly” environment; flexible. Small specialty shops.Small specialty shops.
Three Retail Layout PatternsThree Retail Layout PatternsIn addition to the text
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 14 - 36Ch. 14: Location and Layout
BoutiqueBoutique Divides store into a series of Divides store into a series of
individual shopping areas, each individual shopping areas, each with its own theme; unique with its own theme; unique shopping environment.shopping environment.
Small department stores.Small department stores.
Three Retail Layout PatternsThree Retail Layout PatternsIn addition to the text
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 14 - 37Ch. 14: Location and Layout
Layout for ManufacturersLayout for Manufacturers
Type of productType of product Type of production processType of production process Ergonomic considerationsErgonomic considerations Economic considerationsEconomic considerations Space availability Space availability
within the facilitywithin the facility
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 14 - 38Ch. 14: Location and Layout
Manufacturing LayoutsManufacturing Layouts
Analyzing production layouts: Avoid Analyzing production layouts: Avoid the 7 forms of wastethe 7 forms of waste TransportationTransportation InventoryInventory MotionMotion WaitingWaiting OverproductionOverproduction ProcessingProcessing DefectsDefects
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 14 - 39Ch. 14: Location and Layout
ConclusionConclusion
Location is an important decision for Location is an important decision for businesses in the areas of:businesses in the areas of:
Retail Retail ServiceService ManufacturingManufacturing
The criteria for site selection, layout, The criteria for site selection, layout, design, and ADA considerations design, and ADA considerations present challenges and opportunities present challenges and opportunities for entrepreneurs. for entrepreneurs.
Copyright © 2011 Pearson Education, Inc. Publishing as Prentice Hall 14 - 40Ch. 14: Location and Layout
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.