Retail Location Planning: A Strategic Imperative for the 21st Century Retailer - Essay Example

?Whereas many concepts and theories of business have changed very little over the past several decades, others are almost completely unrecognizable. For instance, many of the economic theorems that had been put forward since the time of Adam Smith have remained virtually unchanged. However, theories relating to personnel management and/or the means through which technology and change it should be facilitated within a given organization have morphed and evolved over the past several years. Another aspect of business management and planning that has changed significantly is with regards to site selection and location determination. Ultimately, within the process of providing a given good or service to the consumer, it is necessary for the service or product provider to determine how they will integrate and provide the service/product to the end consumer. Delineation of the product and an effective strategy of advertisement is in and of itself an incomplete business model. Accordingly, determining a location and a means through which the commerce of business will physically take place, is a determinant reality of how such decisions have changed over the years. As a function of such a level of understanding, the following analysis will seek to trace some of the ways in which location selection is currently defined and the means through which theory and applicable history can be used as a means of differentiating and defining the decisions that help to formulate this process. It is the hope of this author that such a level of discussion will facilitate a further understanding with regards to the ever evolving nature of location decision-making and the necessity of any business entity/firm that engages in it to be receptive to the realities of the community, demographic, and/or changing technological demands of the world around. From a review of the literature, it can be definitively stated that one of the historical models through which site selection and business location was delineated was something of a “one size fits all” approach. This is one dimensional approach was ultimately proven to be ineffective. One need look no further than the litany of different department stores, shuttered around the region, to come to an understanding that an effective level of site and location analysis/research was not performed prior to investing money in expanding to a given location. Ultimately, shifts in the market can also be responsible for changes in the business climate; however, most of these shifts in the business environment take a rather long period of time to be manifested in the actual bottom line of a given entity (Weber & Chapman, 2011). Comparatively, a failure to effectively engage and analyze the trends, and nuanced demographics that exist within a given region, and retroactively compare this to the specific product offering or service offering that the firm/business entity is able to provide, is one of the reasons for why so many of these entities around the globe have closed offices dotting the landscape. A time of economic access allowed these entities to be liberal with regards to the amount of funding allocations for new branches. Another factor that must be realized to have a powerful impact with regards to the way in which site selection and location of business enterprise is affected is with regards to the means through which technology has been shifting the determinants of what is provided to whom and when. One need look no further than the way in which firms such as eBay and Amazon have completely and utterly redefined the retail market that you realize that the prior model of site location is ultimately no longer useful (Torres-Soto & Uster, 2011). Instead, understanding the realities of the way in which technology is constantly shifting is one of the first and foremost methods of selecting a suitable location. Another planning aspect that must be engaged is with regards to cost versus expected profitability. Naturally, this is not so much of a new determinant or one that has been poorly understood as compared to the understanding of how technology has changed location selection; as previously referenced. However, the tools that are available to the business entity as a means of making this decision are more broad and nuanced than they have been previously been witnessed. Similar to the ways in which technology has shifted the way in which decision makers delineate their best interests with regards to determining location, the changes in the available demographic and marketing tools that these decision makers leverage have also provided a fundamentally nuanced approach to the way in which determinations concerning location and/or growth are decided upon (Gabe, 2007). All of the information that is thus far been presented has been concentric upon the way in which the metrics of location determination have changed over the years, it must also be understood that some aspects of this process remain static for instance, one of the greatest levels of importance that must be engaged in such a determination is whether or not the cost versus profitability metrics can be sustained. Whereas the tools of determining this at necessarily become more nuanced and technological, referencing a litany of different databases and studies, an understanding of cost of profitability is ultimately the final decision and the most important with regards to whether or not a firm will seek to open within a given location (Dhar & Varshney, 2011). Without a determined focus upon such a metric, the degree and extent to which a firm can hope to derive profitability once located within a specific region would be limited. Yet, as has been referenced, the tools by which the decision makers engage this specific question have grown considerably since the inception of determining location in seeking out higher profitability. Whereas in the past era a simple understanding of what available population existed from which the business could draw, the current era is replete with different third party contractors, to include the likes of D&B Hoovers and a litany of others, that specialize in being able to provide the business with up to the minute intelligence with respect to the required information that they seek. Building upon this concept, the recent shift in available information has also underscored the necessity for firms to be highly attuned to the local/regional tastes and demands that a consumer base has. Even multinational retail outlets that have a host of different stores throughout the world have come to realize the importance of brand differentiation with respect to appealing to the specific nuances of the demographics that they service (Frenkel et al., 2012). Yet, such a practice did not just spring into existence overnight; rather, it was first realized by individual store managers as they saw that sales could be increased by speaking to the needs and specific demands of a local demographic. As such, in seeking to leverage this same level of intel with regards to location, information concerning how a store can locate itself as a means of tapping into the most lucrative and relevant demands that the serviced population has to offer is tantamount to experiencing a further level of success within the given market (Pope et al., 2012). Rather than merely understanding that a high population density or the availability of market entry will ensure success, the firm or business entity seeking to maximize its location as a potential draw must engage in the necessary background information and seek out the location that most specifically fits the product, demographic, or service offering that they are seeking to engage. Although the information that is thus far been engaged helps to point to the fact that the delineation of effective location for a business is ultimately a process that can take a variety of different forms, it should not be understood that the correct approach is merely to provide a running list of the considerations that a firm/business entity should engage as a manner of choosing a location, such a list would the cumbersome and ineffective in helping to direct the manner in which different firms would approach different markets with different products and different services. In short, the delineations that must be made as a function of choosing a location are not only based upon the local region but upon the way in which the business climate, product offerings, and marketing approach of the firm will coalesce into a singular determination. Although it could be said that location is in and of itself the most important aspect of the entire business process, it must be understood that without a relevant product and without an understanding with regards to marketing to the consumer and integrating with needs, no matter how good the location and no matter how relevant the approach, the ultimate profitability that a firm can hope to engender will not be maximized. Whereas change mechanisms throughout the business cycle provide a continual threat, the slow moving determinants that are defined by location are somewhat more static than the whims of the market and/or the ups and downs of financial profitability. Rather than assuming that location is a constant, it must be understood that a level of time and dedicated analysis must be provided in order to determine whether or not a given location is suitable for a firm or business entity; after such a time, and an effective determination, the overall sustained profitability of a firm with respect to the demographic in case of a given market is at least somewhat secured. References Dhar, S., & Varshney, U. (2011). Challenges and Business Models for Mobile Location-based Services and Advertising.Communications Of The ACM, 54(5), 121-129. doi:10.1145/1941487.1941515 Frenkel, A. (2012). High-Tech Firms’ Location Considerations within the Metropolitan Regions and the Impact of Their Development Stages. European Planning Studies, 20(2), 231-255. doi:10.1080/09654313.2012.651799 Gabe, T. M. (2007). Local Economic Instability and Business Location: The Case of Maine. Land Economics, 83(3), 398-411. Pope, J. A., Lane, W. R., & Stein, J. (2012). A Multiple-Attribute Decision Model for Retail Store Location. Southern Business Review,37(2), 15-25. Torres-Soto, J. E., & Uster, H. (2011). Dynamic-demand capacitated facility location problems with and without relocation.International Journal Of Production Research, 49(13), 3979-4005. doi:10.1080/00207543.2010.505588 Weber, P., & Chapman, D. (2011). Location Intelligence: An Innovative Approach to Business Location Decision-making.Transactions In GIS, 15(3), 309-328. doi:10.1111/j.1467-9671.2011.01253.x Read More