Transcript Lecture 1: Retail Location Overview and Business Geomatics

SA8912
Spatial Technologies in Strategic Planning
The course is concerned with the application of spatial technologies
(particularly GIS) to strategic planning to address the issues that affect the
commercial sector of the economy.
The focus is on analysis of retail and service activities from the
perspective of both the private and public sector policy makers.
Specific issues include:
•spatial impact analyses
•use of GIS as a corporate management system
•site selection and trade area analysis
•retail and services network planning
•Location-Allocation modeling.
Lecture 1: Retail Location Overview
and Business Geomatics
– commercial activity (and retail) in the Canadian economy
– Importance of commercial activities
– major changes in Canadian retailing since the 1990s.
– importance of location analysis
– business Geomatics
Table 1 Retail and Commercial Activity
within the Canadian Economy
Sector
Employment
in 000’s
(2005)
Growth rate
in %
(1991-2005)
No. of firms
(000’s)
Share of GDP
(%)
Agriculture, finishing, forestry
423
-29.6
194
2.3
Mining
164
7.1
16
3.7
Manufacturing
1953
9.2
98
17.1
Construction
683
37.7
265
5.9
Transportation & utilities
675
10.1
115
7.4
Wholesale
752
35.7
121
6.3
Retail
1597
15.7
214
5.7
Finance and real Estate
826
9.9
292
19.9
Business services &
communication
1774
41.5
528
10.6
Commercial service
(education,health)
1711
29.8
316
5.5
Community service
1711
15.8
120
10.1
Public administration
784
1.9
8
5.4
14168
21.0
2285
100
Total
Source: Simmons, J. and S. Kamikihara. 2006. Commercial Activity in Canada.
Definition of Commercial Activity
• private sector activities that provide goods and services
directly to consumers. (Retail is part of Trade).
• In the SIC system, they include the groups of:
–
–
–
–
–
4022 (shopping centre developers and offices)
500-599 (wholesale)
600-699 (retail)
700-769 (financial services)
771-780, 911-999 (commercial services)
• In the NAICS system, they include the groups of
– 44-45 (retail)
– 51-56 (business and professional services)
– 71, 72 and 81 (consumer services).
S.I.C.
•
SIC stands for “Standard Industrial Classification”.
•
It is a four-digit code system that identifies the type of economic
activity.
•
similar activities have the same first-two digits.
•
SIC codes were designated by Stats Can. It was first developed in
1948. Since then, it was revised 3 times: 1960, 1970, and 1980. It
should have been revised again in 1990, but the revision was
postponed.
•
Eventually, the SIC system was replace by a new system—NAICS.
N.A.I.C.S.
•
NAICS stands for North America Industrial Classification System.
•
It is a six-digit code system, developed by the statistics agencies of
the U.S., Canada and Mexico to identify types of economic activity.
•
It was developed in the mid 1990s, and was revised in 2002.
– The first 2-digits designate the sector
– The 3rd digit designates the sub-sector
– The 4th digit designates the industry group
– The 5th digit designates industries
– The 6th digit designates national industries (used by individual
countries).
Canada has moved away from an industrial economy
towards a service economy
Explanations:
– Consumers become more affluent in the past 20 years. Demand for
goods and services increased.
– Household become smaller, more women now take paid jobs
outside their homes. People have less time to do things
themselves. Instead, they pay for services done by professionals
in businesses.
– New technology increased levels of automation, which led to
reduction of workers in manufacturing. Fewer workers can
produce the same amount of consumer goods. As a result, many
workers left manufacturing and found employment in commercial
activities.
Table 2 compares retail with wholesale
in the Trade sector
Sector
Employment
(in 000’s)
2005
Employment growth
(in %)
1991-2005
Establishment
(in 000’s)
2005
Revenues
(in billions $)
2004
Wholesale
751.9
35.7
121.3 (36%)
431.8
Retail
1597.0
15.7
215.6 (63%)
413.3
Major Changes in Canadian Retailing
since the 1990s
• American invasion
• Big box and power centers
• Corporate merger and restructuring
• Changes in distribution channels and e-tailing
American retailers seeking international
expansion often adopt different strategies
• green field development
• Acquisition/merger
• Joint ventuers/franchising
Table 3 Market Share of Department
Store Chains in Canada (1998)
Chain
Stores
Floor Area
(millions of Sq. ft)
Sales ($b)
Market
share (%)
Sales/Sq ft
($)
Wal-Mart
K-Mart
Zellers
Sears
Eaton s
The Bay
144
112
298
110
69
108
15.8
12.0
21.0
14.0
13.0
16.6
4.1
1.2
3.7
3.0
1.7
2.4
25.5
7.4
23.0
18.6
10.6
14.9
260
130
175
215
128
145
Total
841
92.4
16.2
100.0
174
Source: Globe and Mail, Report on Business, February, 1998
General Characteristics of New Format Stores
•
Highly specialised; concentrate on specific sub-sectors of retailing; within
the sub-sector, they provide a wide selection of brand-name products
•
much larger in size than conventional stores in the same sub-sector
•
often serve the whole region, but in the form of a chain.
•
mostly located at highway intersections, accessible only by car (began to
move downtown)
•
usually separated from shopping centres (some began to move into
shopping centres.
•
several new format stores are clustered in a planned plaza called a “power
centre”.

prices are substantially lower
Types of New Format Stores
• Membership club
• Warehouse retail store
• Superstore (hypermarket/supercenter)
• Discount department stores
(also known as “Category Killers”)
Examples of Corporate Mergers
and Restructuring
• Loblaw's (Ontario) acquired Provigo (Quebec)
• The Bay and Zellers were soled to an American
interest
• Future shop sold to Best Buy
• Loblaw’s is closing traditional supermarkets and
opening super stores
• Wal-Mart has begun to open supercenters in Ontario.
The Changing
Distribution System
Traditional routes
Producers:
manufacturers,
farmers
Distributors (1):
importers,
wholesalers
Contemporary routes
Distributors (2):
retailers
Consumers
Factory outlets
Warehouse retailers (e.g., Costco)
Vertical integration
Producers:
manufacturers,
farmers
Distributors (1):
importers,
wholesalers
Distributors (2):
retailers
Consumers
Direct sales
Internet sales
Impacts of e-tailing
•
•
•
•
•
•
•
•
•
•
•
365 days of service
no restrictions by locations/distance;
will re-shape contemporary retail landscape
manufactures/suppliers may bypass retailers
Small retailers are hit the hardest
tax evasion(?)
Shopping information is massive, often confusing to
navigate on the Internet
chances of refund are high
a high risk of cyber theft to steal credit card numbers
delivery may not be as fast as you go to a local store.
not everything has the same level of suitability for sale on the
Internet.
Popular E-commerce Product Categories,
1999-2000 (%)
Products category
1999
2000
Books, magazines
37.5
36.6
Travel arrangements
12.4
12.2
Computer software
24.8
16.0
Computer hardware
9.0
8.3
Hobbies
4.8
4.7
House ware
3.3
5.5
Music
18.5
15.4
Apparel & jewellery
12.3
17.4
Video, DVD
5.7
5.4
Food
2.3
4.0
Toys
2.3
6.1
Others
12.4
21.4
Source: Michalak, W. 2002. Canadian e-Commerce
What does location analysis do?
• search for a location that has comparative territorial
advantages
• i.e., a location that has favourable physical,
socioeconomic and political conditions for a specific
type of economic activity to receive maximum profit (for
commercial activities), or to generate maximum social
well being (for public facilities).
The Ice-Cream Vendor Analogy
A
B
A
B
B
A
The Roundhouse in Downtown Toronto
NOTICE OF MOTION
Moved by: Councilor Vaughan
Seconded by: Councilor Rae
• SUMMARY:
• The John Street Roundhouse is an inappropriate location for
a big box furniture retailer; the site is nestled among the City’s
top tourist attractions, including the CN Tower, the Rogers
Centre and the waterfront.
•
• This is a spectacular heritage building with amazing potential
to add to Toronto’s growing list of museums. Residents of the
City support this historical asset becoming a train museum. In
addition to drawing local and international visitors, a museum
would serve to recognize an important time in the history of
the country and this City.
RECOMMENDATIONS:
• That the City of Toronto and State stay any further
negotiation or completion of agreements until October
2007.
• That staff from the Economic Development, Culture
and Tourism and Facilities and Real Estate Divisions
review the Steam Whistle proposal and business plan
for the renovation of the remaining 18 bays of the
Roundhouse, as well as the development of a Rail
Museum and other associated activities, and report
back to the Government Management Committee in
September 2007.
Market Players
Demand
Producers
(both domestic
and foreign)
Consumers
Distributors
•Importers
•Wholesalers
•Retailers
Supply
government
Important Factors in Strategic Planning
Location/site
•lot size/shape
•topology
•drainage
•subsoil
•surroundings
•access patterns
•real estate
•utilities
•zoning regulations
•competition
Trade area
•population
•income
•age structure
•ethnic composition
•consumption patterns
•spatial extension
•travel distance
Operation
•logistics/supplies
•marketing
•merchandizing/distribution
•service
•presentation/display
Geomatics
a field of activities, which, using a systematic
approach, integrates all the means used to
acquire and manage spatial data required as
part of scientific, administrative, legal and
technical operations involved in the process
of the production and management of spatial
information.” (Canadian Institute of
Geomatics)
Business Geomatics
• “the activity that uses GIS in combination
with other data management tools and
statistical tools (including spatial modeling)
to process, analyze and present business
data for easy visualization.
Data Sources
• Demand Side
Aggregate — census
Collected by Statistics Canada:
Aggregated at the following geography:
CSD
CT
DA
FSA
Individual — customer database
Collected by:
retailers
marketing firms (sample)
researchers (sample data)
• Supply Side
Aggregate
Collected by:
Statistics Canada (retail trade, small area retail trade)
Revenue Canada (sales by sectors)
Municipal planning department (employment survey)
Individual
1.
•
•
•
2.
•
•
Business directory (not geo-coded)
Shopping centre directory
Yellow pages
Street directory
Collected through field survey by
research institute (CSCA)
researchers