Decision-Support Framework for Location Planning of New Markets in the Retail Industry

Abstract

Location selection can be a complex decision involving several factors at various levels and a good location can be a source of competitive advantage for the firm. Retail Location planning is still in its nascent stage within India, which has become the target of many international retailers, due to the huge potential it offers. A list of location determinants that affect retail location selection at the regional (city) and intra-city (trading area) levels is developed. The regional determinant are evaluated and analysed for twenty cities (with highest average household incomes) in India. The analysis is based on a combination of Factor-Rating and Analytical Hierarchy Process (AHP) and scenario analysis. The megacity - Delhi (tied with Mumbai), boomtown - Surat and, niche city - Chandigarh were seen as the top-performing cities within their categories. The top-performing niche city - Chandigarh - is chosen for the intra-city analysis (due to the time constraint) although all the four cities mentioned above are recommended for intra-city analysis. The intra-city analysis is based on a combination of Geographic Information System (GIS), Factor-Rating and AHP. The trading areas within Chandigarh are compared across the three dimensions of cost, quality and target population and ‘Industrial and Business Park’ is recommended as the most favourable trading area for site-selection. A detailed discussion explains the reusable conceptual framework for retail location planning developed as part of this study. The data collection process at the regional level was an extensive exercise. Reliable indicators were chosen from various authentic sources, for the qualitative location selection factors within the study. Due to data availability issues at the intra-city level, primary data sources such as surveys and interviews have been used. Due to similar issues around data availability, a set of factors that can be explored further have been recommended