Retail Location Decision-Making and Store Portfolio Management

Abstract

T. HERNANDEZ and M. BIASIOTTO: Location Decision-Making and Store Portfolio Management. Retailers' undertake a large number of location decisions each year, and in aggregate these decisions determine the nature and extent of the retail landscape. The paper examines retailers' location activities from the perspective of store portfolio management. A conceptual framework of retail decision-making is forwarded that identifies a range of locational options. Survey findings presented illustrate that the majority of location decisions involve managing the existing locational asset as opposed to increasing or decreasing the size of the portfolio. Retail organisations have a large amount of capital invested in their store portfolios, including, the value of land holdings and buildings, the cost of leasehold improvements and contractual leasehold liabilities. The long-term and high-risk nature of location decision-making has promoted the adoption of decision support technologies within the Canadian retail ind ustry. GIS are used by over half of the major retailers in Canada for customer mapping, site selection, sales forecasting and other store portfolio management applications. These spatial technologies promote the objective analysis of retail data and generate intelligence to support decision-making activities. However, integrating the technology and data into business planning provide retail organisations with many challenges. T. HERNANDEZ and M. BIASIOTTO: [much less than] Retail Location Decision-Making and Store Portfolio Management [much greater than] [Le processus decisionnel du secteur de detail et la gestion du portfolio des magasins]. Les detaillants entreprennent un grand nombre de decisions de localisation chaque annee, et globalement ces decisions determinent la nature et l'etendue du paysage de detail. Dans cet article, nous examinerons les activites de localisation des detaillants de la perspective de la gestion du portfolio des magasins. Un schema conceptuel du processus decisionnel du secteur de detail est presente dans lequel on identifie une gamme d'options en matiere de localisation. Les resultats d'une enquete qui sont presentees demontrent que la plupart des decisions de localisation implique la gestion de l'avoir actuel en termes de localisation en contraste avec une augmentation ou une diminution de la taille du portfolio. Les organisations dans le secteur du detail possedent un volume de capital considertable investi dans leurs portfolios de magasins, y compris la valeur de l'immobilier (terrains et batiments), le cout des ameliorations de leurs baux et des courts engages dans les contrats de baux. La nature a long terme et de haute risque de decision de localisation a encourage l'adoption de technologies a l'appui des decisions au sein de l'industrie canadienne de detail. Les SIG sont utilises par plus de la moitie des detaillants principaux au Canada pour cartographier la clientele, le choix des sites, la prevision des ventes et d'autres fins dans la gestion des portfolios de magasins. Ces technologies spatiales encouragent l'analyse objective des donnees concernant le detail et genereront de l'intelligence a l'appui des activites des processus de prise de decision. Toutefois, l'integration de cette technologie et de ces donnees au sein de la planification de l'entreprise soulevent de nombreux defis aux organisations de detail. Introduction The Canadian retail economy has undergone significant structural transformation over the last decade. A number of factors have combined to drive retail change at the local, regional and national level. Corporate concentration has occurred across most retail sectors. This has resulted in a small number of major retailers controlling a large proportion of total retail sales, albeit with significant variation between sectors (Gomez-Insausti 2000). Widespread development of new retail formats and reconfiguration of the traditional nodes of retail activity has taken place, with large format retailers challenging the traditional mall and street-front retailers (Simmons 2000; Yeates 2000). …

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