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. (Click to read more) Now we will formulate a location strategy of prospective sites into micro analysis.
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.
Crucial aspects for the success of smaller retail stores include location, dimension, services offered, and the targeting of specific market segments. Here we consider a phased decision methodology where we separate decisions about choosing geographic regions from choosing store locations within the region.
In the first phase, define the Macro Problem based on: strategic policy for a network, zone, or region where new stores will be installed; the number of units to be built; along with implementation timing.
In the second phase, make the final store-site choice by narrowing down a selection of available locations, usually with the help of real estate agencies. For this decision level, the number of commercial and academically published models suggests that researchers feel a need for rational and formal use of information.
The third decision level, concerning store and services design is the level most linked to the concept of service quality and customer satisfaction. Focus on models that take into account store location (level 2) and the physical design of the facility. Furthermore, some application can be extended in the store characteristics and services definition (level 3).
Tab. Decision levels involved in the expansion strategy of a retail network
Fast fashion brands on the China market experienced rapid expansion and have become one of the most aggressive market stakeholders. According to getchee’s research, total store numbers for 4 major fast fashion brands, including ZARA, H&M, UNIQLO and GAP, had reached 600 by November 2014. CBRE analysts further indicated that 40 percent of stores are opened in the past 18 months.
Decentralized Development : Opening new stores in decentralized retail facilities
After penetrating stores in the CBD/most busy malls of tier 1 cities such as Shanghai, Beijing, Guangzhou and Shenzhen. Fast fashion brands faced limited supply of retail facilities, increasing rent and competition in original core area. With improving public transportation system, demographics move from city center to suburban areas to get better leverage. Opening new stores in decentralized retail facilities is now the main trend of fast fashion brands in China market, it is called “decentralized development”. Selecting a new location where could reach turnover is not an easy job as before. Team of real estate must integrate information from multiple dimensions to have a more comprehensive understanding.
In previous years, team of real estate works closely with estate agents to reach local knowledge. He/she also relies on variety of survey results from different sources and unequal standard to make right decision. This was both time consuming and expensive. In 2013, getchee presents a brand new concept of mobile process integration, which is not only a mobile survey platform but becoming the solution for visualizing network, predicting revenue and developing roadmap.
Below are five ways how getchee help to optimize business processes and accommodate business needs with mobile integration.
1: Boost team efficiency and information security
To ensures roles of team members and establishes communication standard between different perspectives. Therefore encouraging team efficiency. Mission dispatching system helps administrator protects know-how & core experience when working with third-party agents.
2: Embed into existing business process
All fast fashion brands could say something about their key considerations to open a new store. Mobile solution does not work like a replacement solution to existing experiences & processes, but linking every role more closely therefore saving more costs.
3: Encourage customer profiling
Through mobile integration, fast fashion brands could receive preferences and spatial information from customers simultaneously. Furthermore it gives fast fashion brand the capability to translate this knowledge into additional profit (by targeting) and keep valuable customers.
4: Find out potential site faster
Different from qualitative observations usually adopt by estate agents, getchee combines quantitative (e.g. residential population within 1-km circle) and qualitative measures (e.g. intensity of retail synergy or accessibility) to help executive members have a more clear picture and comparison between different potential sites.
5: Connect local knowledge to location intelligence
Through a narrow-down expansion plan, mobile integration plays the most significant role on collecting & intensifying local knowledge. Location intelligence platform, such as Kiwi, would make you have sense which area is suitable for opening a new store based on potential perspective. getchee provides different angles to look at business needs, such as customer preference, property leasing price and quality of location.
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The e-commerce boom is changing how retailers develop their global expansion plans. According to a brand research report from Linkshop.com.cn(联商网), we see the fastest growing international fast-fashion companies in China first half of 2014. Their networks have been gradually moving to 3-4 tier cities, such as Foshan(佛山), Xiangyang(襄阳), Wenling(温岭), Wuxi(无锡), Linyi(临沂), Weifang City(潍坊). It’s a big challenge for local brand owners to keep up with these aggressive competitors.