Chapter 8

Retail Locations

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Levy/Weitz: Retailing Management, 4/e Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.
PPT 8-2
Shopping Centers

A shopping center is a group of retail and other commercial

establishments that is planned, developed, owned, and
managed as a single property.

Two main configurations: strip centers & malls

Strip centers have parking in front of the stores and do not
have enclosed walkways linking the stores.
Malls have a pedestrian focus; customers park in outlying
areas and walk to the stores. Traditional malls are enclosed
with walkways between two facing strips of stores.

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Levy/Weitz: Retailing Management, 4/e
PPT 8-3a
Shopping Center Definitions

Type Concept Sq. Ft. Including Number of Type of Trade

Anchors Anchors Anchors Area *
SHOPPING CENTERS
Neighbor- Convenience 30,000-150,000 1 or more Supermarket 3 miles
hood

Community General 100,000-350,000 2 or more Discount dept. 3-7 miles

Merchandise; store; super-
convenience market; drug;
home
improvement;
large specialty/
discount apparel

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Levy/Weitz: Retailing Management, 4/e
PPT 8-3b
Shopping Center Definitions

Type Concept Sq. Ft. Including Number of Type of Trade

Anchors Anchors Anchors Area *
Power Category- 250,000-600,000 3 or more Category killer; 5-10
Center dominant home improve- miles
“Las Tiendas” anchors; few ment; discount
small tenants department
store; ware-
house club;
off-price
SHOPPING MALL
Regional General 400,000-800,000 2 or more Full-line dept. 5-15
Merchandise; store; junior miles
fashion (mall, dept. store;
typically mass merchant;
enclosed) discount dept.
store; fashion
apparel

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Levy/Weitz: Retailing Management, 4/e
PPT 8-3c
Shopping Center Definitions

Type Concept Sq. Ft. Including Number of Type of Trade

Anchors Anchors Anchors Area *
Super- Similar to 800,000 + 3 or more Full-line dept. 5-25
regional regional but store; junior miles
has more dept. store;
variety and mass
assortment merchant;
fashion apparel
Fashion/ Higher-end, 80,000-250,000 N/A Fashion 5-15
specialty fashion- miles
oriented
Outlet Manufacturers’ 50,000-400,000 N/A Manufacturers’ 25-75
outlet stores outlet stores miles
Theme/ Leisure; tour- 80,000-250,000 N/A Restaurants; N/A
festival ist oriented entertainment

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Levy/Weitz: Retailing Management, 4/e
PPT 8-5a
Relative Advantages
of Major Retail Locations
Location CBD Neighborhood Strip Shopping Free
Issues CBD Center Mall Standing
Large size + - - + -
draws people
to area
People + + + - -
working/living
in area
provided source
of customers
Source of ? - - + -
entertainment/
recreation
Protection - - - + -
against weather

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Levy/Weitz: Retailing Management, 4/e
PPT 8-5b
Relative Advantages
of Major Retail Locations
Location CBD Neighborhood Strip Shopping Free
Issues CBD Center Mall Standing
Security - - - + -
Long, uniform - - + + +
hours of
operation
Planned - - - + -
shopping
area/balanced
tenant mix
Parking - - + ? +
Occupancy ? + + - +
costs
(e.g. rent)

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Levy/Weitz: Retailing Management, 4/e
PPT 8-5c
Relative Advantages
of Major Retail Locations
Location CBD Neighborhood Strip Shopping Free
Issues CBD Center Mall Standing

Pedestrian + + - + -
traffic

Landlord + + + - +
control
Strong + + + - +
competition
Tax ? ? ? ? ?
incentives

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Levy/Weitz: Retailing Management, 4/e
PPT 8-8
Fixed Rate Leases

Fixed rate leases - used by community and neighborhood

centers.
• Retailer pays a fixed amount per month over the life of
the lease.
• Not as popular as percentage leases

Graduated lease - a variation of the fixed rate lease

• Rent increases by a fixed amount over a specified
period of time.

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Levy/Weitz: Retailing Management, 4/e
PPT 8-11
Exclusive Use Clause

Prohibits the landlord from leasing to retailers

selling competing merchandise
• Specify no out parcels
• Specify if certain retailer leaves center, they can
terminate lease.

Escape clause
• Allows the retailer to terminate its lease if sales don’t reach a
certain level after a specified number of years, or if a specific
co-tenant in the center terminates its lease.

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PPT 8-12
Environmental Issues

“Above-ground” risks - such as asbestos-containing

materials or lead pipes used in construction.

Hazardous materials - e.g. dry cleaning chemicals,

motor oil, that have been stored in the ground.

Retailers’ Protection
• Stipulate in the lease that the lessor is responsible for
removal and disposal of this material if it’s found.
• Retailer can buy insurance that specifically protects it
from these risks.

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Levy/Weitz: Retailing Management, 4/e
PPT 8-13
Other Legal Issues

Zoning and Building Codes

• Zoning determines how a particular site can be used.
• Building codes determine the type of building, signs,
size, type of parking lot, etc. that can be used
Signs
• Restrictions on the use of signs can also impact a
particular site’s desirability
Licensing Requirements
• Some areas may restrict or require a license for alcoholic
beverages

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Levy/Weitz: Retailing Management, 4/e