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2015-03-02

General Schema of Retail Site Location Assessment_part 2
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Let's discuss microanalysis that can help you formulate a location strategy for prospective sites.

Fig. Classification of assessment location explanatory variables

Previously we have talked about what elements to look at when evaluating a retail site in a macro perspective. Now we will formulate a location strategy of prospective sites into micro analysis.

Micro Problem
Micro problem is the other main component of assessing a site location. Retailers have always understood location as paramount, but understanding all aspects of store performance, site potential in addition to consumer behavior demands a great amount of information. This involves an understanding of the geographical, demographic, socioeconomic, and competition data in the area. The figure above suggests a possible classification of assessment location explanatory variables. In opposition to trade zone evaluation (demand and competition), the site and store variables intend to evaluate internal factors or the new store offerings.

The retail sector is going through a restructuring phase, driven by factors such as increasing consumer mobility, increasing electronic commerce, changing household size, concentration of market power, market saturation, and changes in planning legislation. These changes require retail groups to invest strongly in stores of smaller dimension while focusing on a strategy that prioritizes proximity to the target customer and quality of goods and services. This investment has a long – run as well as smaller economies of scale, which forces careful decision-making.