Retail Site Selection
Another important aspect relating to Trading Area is the Site selection. Selecting a site for retail store, be it any kind could be a daunting task as there are multitude of factors to be considered.
Going by theory, there are three types of sites or locations for a retailer to choose from-
An Isolated area
Unplanned trading area
Planned business area
A store in an isolated area in all probability is a retail outlet which is located near or on the highways. In this kind of area, there is no direct competition for the retailer. Another advantage for this kind of area is that the rental cost could be low as the area is underdeveloped or developing. Because of the same, a larger retail format can be established easily as there is no scarcity of space. The other factor which is worth mentioning is that a typical retailer conducting business in these areas have the luxury to experiment in terms of operations as the rules and regulations wouldn't be as rigid as it would be on a high end street.
An unplanned trading district would be a location where two or more stores are situated in close proximity and thus sharing the consumer traffic in the area. One prominent feature of this is that the proximity of the stores is not due to prior planning. This is particularly true in case of India. As a major segment of retail in India is unorganized as well as family owned, not much emphasis is given to location. It is only now that people are realizing the significance of the area in which it operates.
Lastly a Planned Business district or a shopping area would generally have stores which complement each other. It does not mean that a particular retailer would not have any competition, but as the name suggests the whole area would be strategically placed and also very well planned. Like the major shopping districts across the length and breadth of the country. This kind of area does have features which are common to the modern or organized retail formats.
One could easily see a definite path of development not only in terms of real estate but also the perception and the attitude of the retailer about the nature of his business. Nowadays no one would find retailers who wish to place his/her stores in an unplanned business area, unless and until the products that are sold have low unit costs. A fine example is the Cigarette industry. For this sector, population is a much more a predictor of success than the image or the location of the store.