An approach to selecting a good location for a supermarket.

Location is amongst the most important or THE important criteria for selecting a supermarket. Because all other things at a retail premise can be changed viz. merchandise, prices, people, infrastructure, but one can never decide to go for another location as the cost involved is too huge or virtually nil for big supermarkets.

Some of the criteria for selecting a store location are as follows.

First it should have an immediate catchment of 2000-3000 customers. This is because these 3000 customers will be situated in the vicinity of 1- 1.5 kms, and a consumer will not travel more than a kilometer to purchase his daily grocery. This is especially true in the Indian market since every street has some kind of food retailer servicing that locality. The trading area for this particular store is from where 60-70% of the sales will be generated.

Stores are always profitable when on the main roads or the roads adjoining the main roads. This ensures that not only does it attract its core customer but also attracts fleeting population. The moment they see the store, consumers think that they have to do shopping and replenish their kitchen. Another advantage of keeping the store in the main road is that it can be easily found or its signage can be see easily from a far distance. This will promote impulse stop overs resulting in more walk-ins.

Not only should the store be in a good location but should be of an optimum size. The optimum size of a store for a supermarket should be between 4000-5000 sft. Lesser than 4000 will mean a less assortments and more than 5000 sft means losing on sales /s.ft. One does not want to have fewer assortments as this might make the consumer move to a different shop to buy his other needs whereas getting more than 5000 sft will mean providing too much more comfort to the consumer at the cost of profitability.

All other criteria being same, one should finally look into the sales that the store will generate to sustain the business.

Other than the above, conditions that determine the location of a good retail store is the presence of competitors in the vicinity. Technically no competition means the customer has no choice but to shop in one place.

But it has also been found in some cases that competition bodes well for the retail outlets. This is not very surprising as consumers will travel further if there are more stores to choose from when they get to a particular location. This idea is know as the principle of cumulative attraction.