The Impact of Retailers' Store Selection Criteria on the Estimation of Retail Rents

The impact of retailers’ store selection criteria on the estimation of retail rents

Analysis of literature review

Introduction

The retailing industry in the United Kingdom is a major component of the service sector economy making a large contribution to the country’s GDP. The most important determinant of retail success is associated with the location of the store and its impact on customer drawing power as stated by Brown, Davies and Harris.

Rental assessment of shop units are considered to represent a proportion of the excess of income over expenditure of the trade carried out in the location. A criticism of this valuation method is questionable extent to which it takes into consideration the impact of locational, physical and lease term characteristics on retailers’ property selection decisions in the open market.

This research addresses the issue by examining retailer’s evaluation of specific micro scale property selection criteria. The impact of locational, physical and lease term factors on store selection decisions in considered from the retailing perspective. Evidence from surveys shows an evaluation of retailers’ perceptions of property value, enabling analysis of the impact of specialization and market segmentation on the perceived effects of individual property characteristics. This research highlights the relationship between retail function, store selection and rental value by providing an evaluation of retailers’ decision making processes, quantifying the relative importance of individual property characteristics and analyzing the effect of retailing function on store selection.

Location criteria

Store selection decision making is complicated by location consideration, marketing strategy considerations and issues such as stores size, format and pricing. Analysis of location is becoming more sophisticated; there have been few attempts to explore strategic decision taking and the relationship with the processes of structural change in...