MAR3231 FSU Hopkins Exam 3

Publix Greenwise Market in College Town

Greenwise is trying to distance itself from Publix:

- customers mad b/c Greenwise locations don't carry all Publix products

- geared more towards the local demographic

- don't need a car to get there

Publix Greenwise in College Town (CON)

Parking situation in Collegetown is already bad and it would take away traffic from Ocala store

Publix Greenwise in College Town (PRO)

Will attract health-centric consumers

What is the difference between Greenwise and Publix?

Fresh produce and no packed products

Domino's Wedding Registry

- An excuse not to cook

- Post honeymoon adjustment life

- Thank you, card-a-thon

- Great idea to use as a gift and get the buzz talking

Q: Domino's Wedding Registry

- Originates from discounts on newlywed pizza

- Originated from gifts

What should you consider when choosing a retail location?

- Market segment: population size & traits (target)

- Noise

- Nearby competition: is it good or bad?

- Transportation access

- Parking availbability

- Nature of nearby stores

- Length of agreement

- Legal restrictions

- Property costs

Q: What to consider when opening a new retail location?

- Parking

- Noise

- Target Market

Nature of nearby stores (location criteria)

Huge factor for retailers

Cluster and Hops location

EX: one of the best restaurant's in Tallahassee, but people don't know about it b/c of its location

EX: Run-down strip mall, with the main retailer being a mattress shop

- location hurts them dramatically

Legal restrictions example:

At the border of Georgia there are a lot of pawn shops

Why? Probably because it isn't legal here

Toys R Us in Times Square (property costs)

- Location was losing money

- Essentially a billboard and amusement park

- Too expensive so they shut it down

(42 million a year, over 3 million a month in rent)

How is competition good?

- Spurs competition for larger companies

- Consumers have more options in a smaller area

- Big ticket items: more thought process and decision making (want to price shop ex. with cars)

- Increases overall foot traffic (ex. when a Walmart is introduced to a smaller area...becomes a destination)

- Consumer gets bargaining power

Competition: good or bad? Walmart Example

Walmart tends to wipe out the stores around it

Benefits:

- It creates a destination

- Town can expand in retail b/c a lot of people are buying around there

Competition: good or bad? Car dealership Example

Car dealerships tend to be very close to each other

- Good for customers b/c they can leverage prices

How is competition bad?

- Can drive out smaller businesses

- Depends on the pricing and the nearby competitors

Trade Area Analysis

A trade area is a geographic area containing the customers of a particular firm

Benefits of the Trade Area Analysis

- Discovery of consumer demographics and socioeconomic characteristics

- Opportunity to determine focus of promotional activities

- Opportunity to view media coverage patterns

What do you get from Trade Area Analysis?

- Assessment of effects of trading area overlap

- Ascertain whether chain's competitors will open nearby

- Discovery of ideal number of outlets, geographic weaknesses

- Review of other issues (i.e. transporation)

Trends from Trade Area Analysis

- Show you economic trends

- Understand what types of promotions are working/not working

- Want to be careful when opening another nearby store...don't want to cannibalize your consumers

Trend of major US stores opening

- Most new retail outlets opening are PRICE affordable

- Shows trend of consumers wanting a good deal

Discount oriented retailers

Dollar General, Dollar Tree, and ALDI

Dunkin Donuts

(Trade Area Analysis)

Strict restrictions on location

Mercedes Benz Stadium in Atlanta

(Trade Area Analysis)

Have the largest Marta station: TRANSPORTATION IS KEY

Geographic Information Systems (GIS) Software

Digitized mapping with key location-specific data used to graphically depict trading-area characteristics

GIS trading-area characteristics:

- Population demographics

- Data on customer purchases

- Listings of current, proposed, and competitor locations

Other types of GIS maps

- Drive time

- Crime rate

- Areas of influence (income, industry, etc.)

What's next for Retail Trade Area?

- Trend analysis

- Mixed-use retail

- Delivery services

- Customer Experience

What's next for retail trade area: Trend Analysis?

Trend: Online stores

- To determine how online impacts brick and mortar stores

- More and more people are shifting towards online purchases

Trend Analysis examples

- 80% of people would rather buy costumes in person than online

- Predicting this year may be the first year that more is spent on Cyber Monday than Black Friday

What's next for retail trade area: Mixed-use Retail?

Mixed-use: buildings w/ apartments & retailers underneath

EX: College Town, Apartments on Gaines St → increased the price of retailers located in underneath apartments

What's next for retail trade area: Delivery Services?

- More consumers want delivery service

- Some think location is more/less important with the increasing demand for delivery

What's next for retail trade area: Customer Experience?

Customer's want the total retail experience

EX: New Starbucks in Chicago: over-the-top location → build the brand and customer loyalty (add to the experience)

Flagship Stores

- Most prominent location

- Store that holds/sells the highest volume of merchandise

- A chain's largest store

- Companies can have one or multiple flagship stores

Examples of a Flagship Stores

- Saks Fifth Ave- the location on 5th Ave

- Apple store in Chicago

- H&M in Barcelona

Example of a company with multiple Flagship Stores

REI Seattle: climbing is popular (destination retailer)

vs.

REI Denver

vs.

REI DC: good fit b/c a lot of people commute on bikes (real estate is expensive for a smaller store)

- Different product offerings to match consumer needs

REI Seattle Flagship

- Brand that has tremendous customer loyalty

- Large community following

- Loyalty program: purchases go toward buying stock in the company and you receive dividends

- Geared towards outdoor activities (large selection of kayaks—some stores have pools that you can actually test out the kayaks, bike selection, etc.)

- Flagship—one of the larger or the largest store in the area

REI Denver Flagship

Location based flagship stores

- The customer in Denver is different than the customer in Seattle

- The products available in one store will be based off the needs of that customer in that location

- People will travel to see this store

REI Washington DC Flagship

- Bikes (location based- some function of location)

- Minimalist, average customer in DC is very different

- Changed their merchandise focus to compare with this new location

Example of a Flagship Store: Tiffany & Co.

- Have Tiffany yellow diamond at this location (not for sale, but on display)

- Famous history: the first mercantile building that was air conditioned in NYC

- Building can embody an entire brand

Steps in Site Selection

1. Determine what type of location is desirable (dream location)

2. Select the general location

3. Evaluate the alternative specific store sites

3 Types of Locations

1. Isolated Store

2. Planned Shopping Center

3. Unplanned Business District

+ String

3 Types of Unplanned Business Districts

1. Central

2. Secondary

3. Neighborhood

Isolated Stores

A freestanding retail outlet with no adjacent retailers

- Aren't attached to other buildings

- Not located near other stores

What is rare about Isolated Stores?

Rare to see a store that is:

- Not a part of another store

- Doesn't share a parking lot with another store

Examples of Isolated Stores

- Dollar General

- 7 Eleven

- Shell Gas

Dollar General as an Isolated Store

Find the tiny market Walmart can't occupy and offer products there

Advantages of Isolated Stores

- No direct competition

- Flexibility

- Good for convenience

- Adaptable facilities

- Easy parking

- Excellent for stores that GENERATE THEIR OWN TRAFFIC

Disadvantages of Isolated Stores

- Difficulty attracting customers: not a lot of foot traffic

- Lack of cumulative attraction for customers: can be inconvenient for them

- High advertising expenses: no one to offset a lot of the advertising

- No cost sharing for promotions: no other stores around to split the cost

Planned Shopping Centers

- Centrally owned or managed and well-balanced

- One company owns or manages them

Examples of Planned Shopping Centers

- Outlet malls

- Strip malls

Factors of Planned Shopping Centers

- Architecturally unified: buildings look similar across all formats (same roof, same colors)

- Centrally owned (or managed): someone owns the entire center and rents it out to specific businesses

- Operated as a unit: decisions made include every business/unit

- Based on balanced tenancy: high end outlets with different segments

- Accompanied by parking: always free public parking around the center

Balanced Tenancy

(Planned Shopping Center)

Diverse options for customers to choose from

- Don't need 3 shoe stores in one center

- Complement each other as to the quality and variety of their product offerings

Advantages of Planned Shopping Centers

- Well-rounded assortments: balanced

- Strong suburban population

- One-stop, family shopping

- Cost sharing of promotions (ex: outlet promotion books)

- Transportation access

- Pedestrian traffic

What is the aim for Planned Shopping Centers?

To create a one-stop shop experience

Disadvantages of Planned Shopping Centers

- Limited flexibility: due to landlord regulations such as required hours

- Higher rent

- Restricted product offerings in lease

- Competition: shopping center

- Requirements for association memberships

- Domination by anchor stores

- Impact of store closings on affinities

Anchor Store: Whole Foods

- Dominates this parking lot: parking is an issue (threat to other stores)

- Traffic issue: WF causes traffic, people won't go to other stores

- If not balanced well and the anchor store leaves → the entire shopping center can go out of business

Impact of store closing affinities: Whole Foods

- Parking at Whole Foods plaza because one store pulls all of the customers

- Can actually discourage customers

Unplanned Business District Definition

- A type of retail location where two or more stores situate together (or in close proximity) in such a way that the total arrangement or mix of stores is not due to prior-long range planning

- Stores located based on what is best for them, not the district

- Organizations trying to revitalize a downtown business area

- They develop over time

Example of an Unplanned Business District

Nashville and Memphis Tennessee

Central Business Districts (Unplanned)

- Formed around a geographic point where all public transportation systems converge

- The hub of retailing in a city; synonymous with downtown

- Exists where the greatest density of office buildings and stores exist

- Commercial and business center of a city

Central Business Districts Characteristics

- City often times "revitalizes" its central business district to add more retail options

- Originally constructed for transportation, not retail (not built around shopping)

- Reason it exists is because it was a transportation center (hub)

PARKING IS AN ISSUE

Example of Central Business Districts

Downtown Tallahassee

Secondary Business Districts (Unplanned)

- Revolves around a major street intersection

- Have evolved with the spread of the city

- Second ring around the main district

Examples of Secondary Business Districts

College Town: Madison Social

- Reason it popped up as a second option: because people weren't going downtown

Publix with apartments:

- shared living

Tallahassee Mall (Secondary Business District)

- Close to Downtown Tallahassee

Revitalization:

- concert venue

- food market

- ice skating

- theater

Isn't taking off because they can't get key businesses to come in

Neighborhood Business Districts (Unplanned)

- Formed to satisfy the convenience-oriented shopping needs of a neighborhood

- Large amount of convenience-based companies

- Smaller groups of retailers based around residential areas

Examples of Neighborhood Business Districts

- Dry cleaners

- Nail salons

- Wing-Stop

- CVS/pharmacy

Central Business Districts Advantages

- Access to public transportation (b/c parking is an issue)

- High(er) pedestrian traffic

- Near commercial and social facilities

Central Business Districts Disadvantages

- No parking

- Expensive

- Less offerings, more offices

- High traffic

Secondary Business Districts Advantages

- Closer to residential areas

- Higher level of convenience oriented products

- Access to main roads: Thomasville, Monroe, Mahan

Secondary Business Districts Disadvantages

- Certain demographic

- In the middle location (not close, not far)

- Parking issues

- High competition

Neighborhood Business Districts Advantages

- Convenient location

- Parking

- Less hectic than other business districts

Neighborhood Business Districts Disadvantages

- Less traffic

- Less customers

- Less sales/revenue

- Specific customer: not diverse

- No public transportation benefits

- Off the beaten path

String

- An unplanned shopping area comprising a group of retail stores

- Often with similar or compatible product lines

- Located along a street or highway

- Little extension of shopping on perpendicular streets

Which format would work best for a fine dining restaurant?

Central

- It's a commute, planned ahead, and willing to travel

Which format would work best for a dry cleaners?

Neighborhood

- based on convenience

- can also be CENTRAL if there's high foot traffic in the downtown area

Which format would work best for a Trader Joe's?

Secondary

- can be seen as a destination retailer

Retail Operations: Which-Wich

- Unique ordering process: customer fills out slip themselves & turn it in

- Puts time and work on the customer

- Advantage: product is similar to competitors, but the unique ordering process allows the customer to control their order

Retail Operations: Brazilian Style Steakhouse

- Ordering process: flip the disk from green to red, served on the spot

- Flat fee to eat however much you want

- Separate from competitor: operational process of flipping the disk

Retail Operations: Yo! Sushi

- Conveyer belt sushi- no server and no interaction, start eating immediately

- Use signs to give customers direction (passing customer concerns)

- Use unique concept to anticipate customer needs

- Operation influences if a customer wants to go to the store/restaurant/etc.

Retail Operations: Yo! Sushi (CONS)

- Food may not be as fresh

- No customization

- Hot foods getting cold

- Confusion with the food (ex: sushi)

Operations Blueprinting

The systematic listing of actions performed by employees to customers

- System for how all of the interactions are going to take place

What does Operations Blueprinting do?

- Get around anticipated customer needs

- Interactions between the customers and the firm (their employees)

- Prevents problems and issues

- Do a better job to appeal to the customer

Touch-points

(Operations Blueprinting)

- The ways in which a customer experiences a product or service

- EX: Looking at a brand logo or watching a commercial

- Operational blueprint: every time a customer comes into contact with an employee

Touch-points: Disney

- Interact with the customer a lot to create the ultimate experience

- Customer flies into Orlando and Disney will get their bags from the conveyer and deliver them to the on-property hotel

- Bags picked up by Disney, get on a Disney bus, head to the parks

- GOAL: customers spend more money once at the parks (try to get them there as quickly as possible)

Touch-points: Apple

- Employees walking around everywhere with a hostess directing you (to the genius bar)

- Handling products is a touch-point

- The customer experience: handling the products on clean tables (accessible, hands-on)

- Employees are hands-on and well trained

Line of Interaction

(Operations Blueprinting)

- The point where the customer comes into contact with the employee (face-to-face)

- Between customer actions and onstage actions

- Sometimes forget that so much of the onstage actions are in view of the customers

Q: What happens at the Line of Interaction?

A lot of decisions are made here

Line of Visibility

(Operations Blueprinting)

- Between onstage actions and backstage actions

- Everything is considered because it's directly in view of the customer

Chart: Customer Actions

Above the Line of Interaction

- Patient gives prescription to clerk

- Patient receives medicine

Chart: Onstage Actions

Under the Line of Interaction; Above the Line of Visibility

- Clerk stamps prescription

- Clerk gives prescription to pharmacist

- Clerk receives medicine

- Clerk gives medicine to patient

Chart: Backstage Actions

Under the Line of Visibility

- Pharmacist fills prescription

- Pharmacist gives medicine to clerk

Elements of an Operations Blueprint

- Customer actions

- Visible contact employee actions (on-stage)

- Backstage/employee actions

- Support processes

- Physical evidence

Customer Actions

(Elements of Operations Blueprinting)

Customer steps taken as part of service delivery (customer has a role in the process)

Elements of Customer Actions

- Train your customers

- Co-creation

Train your customers

(Customer Actions)

STARBUCKS

- Train customers to order drinks (Venti not Large)

- Barista repeats the order back to you so you know how it should be ordered (facilitates the process)

- Train customers to use the app for online ordering

- Told customers they were concerned about customer service (actually wanted to eliminate the line)

Co-creation

(Customer Actions)

Customer contributing to the value of the process

- Incentivizes them to get involved

- Managers & owners: need to figure out how to train customers to behave and co-create

Co-creation Example

STARBUCKS

- If you make a mistake on your drink order, that's on you (places fault on the customer)

Q: Even if the drink you ordered is made correctly, you still may not have ordered something you like.

This is an example of:

Co-Creation