Copyright © 2016 Pearson Education, Inc. 1. Choosing the Right Location and Layout 14 14-2 Section 4: Growing the Business

Copyright © 2016 Pearson Education, Inc. 1

Copyright © 2016 Pearson Education, Inc.

Copyright © 2016 Pearson Education, Inc.

Choosing the Right Location and Layout

1144

14-2

Section 4: Growing the Business

Explain the stages in the location decision: choosing the region, the state, the city, and the specific site.

Describe the location criteria for retail and service businesses.

Outline the location options for retail and service businesses; central business districts, neighborhoods, shopping centers and malls, retail competitors, shared spaces, inside large retail stores, nontraditional locations, at home, and on the road.

14 - 3Copyright © 2016 Pearson Education, Inc.

Explain the site selection process for manufacturers.

Describe the criteria used to analyze the layout and design considerations of a building, including the Americans with Disabilities Act.

Explain the principles of effective layouts for retailers, service businesses, and manufacturers.


(continued)

Having the right location for a business can be an important source of competitive advantage.

Consider:The right region of the countryThe right state in the regionThe right city in the stateThe right site in the city


Census datahttp://www.census.gov/http://factfinder2.census.gov/faces/nav/

jsf/pages/index.xhtmlZoomProspector

http://www.zoomprospector.com/Zipskinny

http://www.zipskinny.com/


Zip Code Atlas and Market Planner

Lifestyle Market Analyst

Site Selection

Editor and Publisher Market Guide

The American Marketplace: Demographics and Spending Patterns


(continued)

Small Business Development Center http://www.sba.gov/content/small-

business-development-centers-sbdcsPopulation Reference Bureau

http://www.prb.org/Euromonitor International

http://www.euromonitor.com/OECD

http://www.oecd.org/


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Proximity to marketsProximity to needed raw materialsWage ratesLabor supply needsBusiness climate



Proximity to marketsProximity to needed raw materialsWage ratesLabor supply needsBusiness climateTax rates


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Proximity to marketsProximity to needed raw materialsWage ratesLabor supply needsBusiness climateTax ratesInternet access




Proximity to marketsProximity to needed raw materialsWage ratesLabor supply needsBusiness climateTax ratesInternet accessTotal operating costs





Population trends



Population trendsCompetitionClusteringCompatibility with communityLocal laws and regulations



Appropriate infrastructureCost of utilities and public servicesIncentivesQuality of life


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Test the suitability of potential locations by opening “pop-up” stores.

Consider downsizing outlets to lower start-up and operating costs and to allow for more location options that are not available to full-sized stores.Example: Burger King


Trade area size:The region from which a business can expect to draw customers.

Retail compatibilityDegree of competitionIndex of retail saturation (IRS)


IRS = C x RE RF

Where:C = Number of customers in the trading areaRE = 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


Trade area size:The region from which a business can expect to draw customers.

Retail compatibilityDegree of competitionIndex of retail saturation (IRS)Reilly’s law of retail gravitation




Transportation networkPhysical and psychological barriersCustomer trafficAdequate parkingReputationVisibility



Central Business Districts (CBDs)

Neighborhood locations

Shopping centers and malls


Strip shopping centersThe smallest of all shopping centers, but

make up the bulk of all the centers in the United States.

Neighborhood shopping centers3 to 12 Stores; anchor is supermarket or

drugstore; serves up to 40,000 people.


Community shopping centers12 to 50 stores; anchor is department or

variety store; serves 40,000 to 150,000 people.

Power centersCombine drawing power of a mall with

convenience of neighborhood shopping center; anchor stores typically occupy 80% of space.


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Theme or festival centersEmploy a unifying theme, often

involving entertainment, to attract tourists.

Outlet centersFeature manufacturers’ and retailers’

outlet stores selling name-brand goods at discount prices; usually follows “open air” design.


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Lifestyle centersLocated near affluent residential

neighborhoods; designed to look more like a central business district than a shopping center or mall.

Regional shopping malls50 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.


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Super-regional shopping mallsSimilar to a regional mall but bigger;

trading area is 25 miles or more in all directions.

Example:West Edmonton Mall (West Edmonton,

Canada), the largest mall in North America.


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Is there a good fit with other products and brands sold in the mall or center?

Who are the other tenants?Demographically, is it a good fit?How much foot traffic does it generate?What is the average sales per square foot?How much vehicle traffic does it generate?What is the vacancy rate?How much is the rent, and how is it

calculated?


Near competitors

Shared spaces

Inside large retail store

Nontraditional locations

Home-based businesses

On the road



Foreign trade zones



Foreign trade zonesBusiness incubators



Organizations that combine low-cost, flexible rental space with a multitude of support services for their small business residents.

More than 1,250 in operation across the United States.

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.


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.


Size and adaptability The size must be adequate to

accommodate business needs.Construction and appearance

The appearance must create the proper image or “personality” for the business in the customer’s eyes.


Tips for window displays that sell:

Keep displays simple.

Keep displays clean and current.

Change displays frequently.

Get expert help if necessary.


EntrancesThe entrance must invite customers in.

The Americans with Disabilities ActMust comply with Americans with

Disabilities Act (ADA).SignsPay attention to the business sign, the

most direct method of reaching potential customers.



Tell potential customers who you are and what you’re selling.

Should have 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.


Building interiorsErgonomics: the science of adapting

work and the work environment to complement employees’ strengths and to suit customers’ needs.



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.

Environmentally-friendly design for efficiency and appeal.


Building interiorsErgonomics

Drive-through windowsCan be a relatively inexpensive way to

increase sales.Account for 70% of sales in quick-

service restaurants.



Sight, sound, and lightingSupport brand and image using colors and

visual cues.A business’s “soundscape” can have an

impact on the length of time customers shop and the amount of money they spend.

Use scent as a sales tool.Study: Stores using natural light experience

sales that are 40% higher than similar stores using fluorescent lighting.


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Sustainability and environmentally friendly designRecycled materials; high efficiency

lighting, fixtures, and appliances LEED principles


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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.



Type of productType of production processErgonomic considerationsEconomic considerationsSpace availability within the facility


Three basic layouts:

1. Product

2. Process

3. Fixed position


Avoid the seven forms of waste: 1. Transportation2. Inventory3. Motion4. Waiting5. Overproduction6. Processing7. Defects


Location is an important decision for businesses in the areas of:Retail ServiceManufacturing

The criteria for site selection, layout, design, and ADA considerations present challenges and opportunities for entrepreneurs.


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Copyright © 2016 Pearson Education, Inc. 1. Choosing the Right Location and Layout 14 14-2 Section 4: Growing the Business