Retailers leaving 'wrong' locations

3/16/2012

5 Comments

 
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Sir Philip Green set off alarm bells a few weeks ago when he warned that up to 260 shops in his Topshop-to-BHS fashion empire Arcadia could close.

It was further bleak news for the UK's high streets, where one in seven shops already lies empty and a spate of retail collapses from Habitat to TJ Hughes has left fresh scars.

Like other chains such as Marks & Spencer, Dixons and Mothercare, Arcadia has too many Dorothy Perkins, Evans and Miss Selfridge outlets on the "wrong" high streets as the internet and huge malls redraw the shopping landscape. Green has nearly 300 loss-making stores on his hands.

But he is in the advantageous position of being able to get rid of many of them, as leases on almost 500 shops in his portfolio expire in the next three years, making him the envy of rival chains who are bound by long leases that lock them into year after loss-making year.
Retailers follow the money and customers increasingly demand bigger stores, more choice, and preferably the chance to park right outside – and that means out-of-town retail parks rather than high-street parades.

This inexorable shift means there is a now a mismatch between supply and demand with a quarter of the UK's estimated 271,000 shops surplus to requirements, according to Matthew Hopkinson at Local Data Company, which tracks shop openings and closures around the country.

Hopkinson says Rochdale, with its surfeit of betting shops, pound shops and pawnbrokers is typical of the many high streets around the country that have become second-class shopping areas, eclipsed by the options in nearby larger cities.

http://www.guardian.co.uk/business/2011/nov/25/high-street-retailers-closing-stores?INTCMP=SRCH

Mr Kings Questions:
a) What are the most important factors when considering a location for high street fashion stores like Topshop?

b) Why do you think so many of these high street retailers are failing? Use this article as well as your own research in your answer.
5 Comments
emily
3/16/2012 12:07:23 am

a)First of all, I think the most important problem is the infrastructures, such as transport facilities. This is the communication with the customers, suppliers, employees, if transport links is good. It can easily to delivers products and more convenient to customers. Then beautiful area also is a consider point.
Secondly, if the business already set their target market. eg: top shop( fashion clothes shop) target ( teenage, adults) it is also important to be located where there is a sufficient population of such people.
Thirdly,major point on cost. If cost too high,the business cannot afford the rent.

b) A good location for y business is vital, So many of these high street retailers are failing. From my view, its because they located in wrong location. And then the number of competitors, although some businesses can benefit from being located in a cluster of similar businesses, for many others having too many close competitors can have a severe impact on sales and profitability.On the other hand, high street might cost high rent. Some new business cannot afford high rent.
Nowadays, most of people are shopping in online because of the price and convenient.

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Chantelle
3/16/2012 04:33:42 am

a) The most important factors of it is low rent of the area. Shops like Topshop are mainly selling women fashion clothing, it had a well known brand all around the world. There will be no topshop in the countryside even though the rent of it is much cheaper than it is in the high street. No one will drive a mile away to where only have one fashion shop. If the rent of high street is low, topshop may consider expand the shop, increasing the amount of collecting of clothing, good advertising and atmosphere to attract more customers. Therefore, it can increase profits by lower the rent of high street.

b) It is because customers are now perfer bigger stores, more choice, and preferably the chance to park right outside – and that means out-of-town retail parks rather than high-street parades. Some high street in London need to pay a huge amount of money for only get into town, including the fee of parking hours, hedge about the time of shopping. Because of the increasingly of strong competition from online shops, even the difficult economic conditions press upon the retails closing down the shops due to decreasing the amount of selling.

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Marco
3/25/2012 04:45:09 am

a. One of the most important factor for fashion stores like Topshop to consider where to locate their shop is the costs. Rent is a kind of fixed costs that don't change when output changes, it is really important for the company to consider the options they might have for it. Although locating a shop in high street is usually quite expansive, different high street still gets different level of rent. If the company set their shop in a high street which are cheaper, they can save the money for doing other things to help the company to grow like advertising.
Another important factor is the market. Fashion stores like Topshop is a fashion stores that targets on women, the company should consider if the shop is close to their target customers ( women ) or not and are they usually go that location for buying fashion products. Also, the company need to think about competition as well. Are their main competitors near them?? If yes, they will affect the sales of the company as well.

b. The reason for the failure of high street retailers is because their setting of location for their shops are wrong, their location of the shops didn't meet customers' needs. Just like customers nowadays prefer bigger stores, more choice, and preferably the chance to park right outside which means out-of-town retail parks rather than high-street parades. A lot of retailers doesn't fit these customer needs like only set their shops in high streets instead of setting some of their retail stores out-of-town which doesn't fit the customers' need of the chance to park right outside. And this is the reason why so many of them are failing.

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Aaron
3/25/2012 10:55:15 pm

a) The most important factor that the fashion shop like Topshop to think about is the rent problem. Because the business needs to consider the location carefully.If the high street have lots of people around,they have lots of customers. Rent is a kind of fixed costs that doesn't change when they haven't got enough profit. So they may consider the business in the countryside,because there have lots of space and the rent is cheaper than high street.So they can havemore space to increase the amount of clothing and attract the customers.also they may have more money to advertising through the internet and telvision.
b) The reason for the failure of high street retailers is because the rent of high street is very high. for examle in HK, the street in central is very high.So many new business won't set up their business in central.Also many people like shoppong in the biggest shop,customers nowadays prefer bigger stores and more different choice such as nike town in London. Nowadays, most of people are shopping in online because of the cheaper price and convenient.People is lazy and they like the cheapest to buy the stuff.Although they can't look exactly the product, some people buy stuff in the internet instead of going shop.So many shop are falling down every year.

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Jason Lam
3/27/2012 04:10:10 am

A) One of the most important factoer for high street fashion stores like Topshop is the transport link , which means that is the place more convienient for their consumer and supplier . Because they are not a new business who would not to worry about the rent of the shop because they will have enough capital for keep the business run. So, when the transport link in good which means that it is more consumer will willing to go and have a look.
Another factor they want to consider about is the market , image when the shop is near their competior which is much easier for their consumer to compare which one is better, if the shop's quality is much better than other shops which means they are likely more consumer therefore more profit.

B) I personally think the problem is the transport link and the people income who are living in that place. Firstly, i think transport is not convienient enough for consumer and supply , which means that the high distribution cost within the fixed cost which may likely makes the profits shows decreasing and the break even point may increase as well . this means that the margin of safety will decrease and this shows they want to sell more or increase the pirce to increase the profit margin and margin of safety.Also, transport link is not conveinient enough therefore much less comsumer pass through the shop so they will likely less sales. This means that the less sales and reduction the margin of safety which means shops failure. thats what i think.

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