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practice 7

A trade area is the geographic area encompassing most of the customers who would patronize a specific retail site.
T
Gross leasable area (GLA) is the real estate industry’s term for the total floor area designed for the retailer’s occupancy and exclusive use, including any basements, mezzanines, or upper floors.
T
The inner city is the traditional downtown financial and business area in a city or town.
F
Power centers are shopping centers that have an open-air configuration of specialty stores, entertainment, and restaurants, with design ambience and amenities such as fountains and street furniture.
F
Outlet centers are shopping centers that contain mostly manufacturers ‘and retailers’ outlet stores.
T
Pop-up stores are stores in temporary locations that focus on new products or a limited group of products.
TRUE
When consumers are engaged in comparison shopping situations, they are primarily concerned with minimizing their effort to get the product or service they want.
F
When consumers go specialty shopping, they know what they want and will not accept a substitute.
T
Urban sprawl is the increased expansion of residential and shopping center development in suburban and rural areas outside of their respective urban centers.
T
Building codes are legal restrictions that specify the type of building, signs, size and type of parking lot, and so forth, that can be used at a particular location.
T
The maintenance of common facilities, security, advertising, and special events to attract consumers are handled by the shopping center management and are covered under _____ costs.
common area maintenance
Jake is looking to rent a retail space in a shopping center for his restaurant business. He is looking for a space of around 250,000 square feet with annual occupancy cost of around $50 per square feet. An ideal space should be high on pedestrian traffic but low on vehicular traffic. Which of the following locations will best suit Jake?
Theme/festival centers
Which of the following locations is typically the best for a supermarket?
Neighborhood and community shopping centers
A supermarket requires a large amount of operating space. Therefore, it is most likely to be located in a:
freestanding site.
Which of the following is an advantage of freestanding locations?
High vehicular traffic
Which of the following is a disadvantage of freestanding sites?
Limited trade area
Where is a central business district typically located?
Downtown area
James, a store manager, works at Fresco LLC. His store is located in the traditional downtown financial business area in the city. In which of the following classifications of retail locations is James’ store located?
Central business district
Which of the following statements is true of central business districts?
It has limited vehicular traffic.
The inner city is a _____.
low-income residential area within a large city
Which of the following statements is a reason why U.S. retailers avoid opening stores in the inner city?
The retailers think these stores are riskier and produce lower returns than other areas.
Urban customers typically place more importance on _____.
reducing their shopping time
Which of the following is a disadvantage of main street locations?
Small overall draw
The retailers that attract a significant number of consumers and consequently make the center more appealing for other retailers are _____ stores.
anchor
The major retailers, typically a large department store or big-box store in a shopping center is referred to as the _____ store.
anchor
Which of the following statements is not a responsibility of the shopping center property management firm?
Provide temporary holiday sales staff for retailers.
On his way home from work, Phil stopped at a shopping center. He parked in front of the dry cleaner, where he could pick up his suit. He did not have to move his car because next door was a gift shop where he could pick up a gift for his niece. Conveniently enough, next door to that store was a supermarket, where he purchased essentials like milk and cornflake cereal. Phil was shopping in what type of shopping center?
Neighborhood center
As Leah drove down Fairfax Road, she noticed a group of adjacent stores. In the group, she saw a hair salon, a pizzeria, a supermarket, an optometrist, and a grocery store. All the stores had entrances into a parking lot, which was landscaped with trees and flowers. What type of shopping center is this?
Neighborhood and community shopping center
Discount department stores are typically located in _____.
Discount department stores are typically located in _____.
_____ are shopping centers that consist primarily of collections of big-box retail stores, such as full-line discount stores, off-price stores, warehouse clubs, and category specialists.
Power centers
Lowe’s and Best Buy would most likely be found in a _____ shopping center.
power
Shopping centers consisting primarily of collections of big-box retail stores, such as Walmart, TJMaxx, Home Depot, Dick’s Sporting Goods, and Borders are called:
power centers.
Sara, a traveler, visits a climate-controlled, lighted shopping center with retail stores on both sides of an enclosed walkway. What type of shopping center is this most likely to be?
Enclosed shopping mall
What type of shopping center is composed of upscale apparel shops, boutiques, and gift shops carrying selected fashions or unique merchandise of high quality and price?
Shopping malls
Shopping malls,
Which of the following is an advantage of enclosed shopping malls?
They have a large trade area.
Which of the following statements is a disadvantage of shopping malls?
Rents in malls are higher than other locations.
What of the following is a challenge faced by malls?
Many aging malls have not been updated and are unappealing to shoppers.
Because of the open-air configuration of upscale specialty stores, coupled with entertainment and restaurants, _____ are very convenient for shoppers.
lifestyle centers
Bea is a young professional living in the suburbs. She and a friend decide to meet on a Saturday for a day of shopping, dining, and movie. With it being a beautiful day outside, they wish to enjoy the weather but also find a place that features upscale apparel shops and boutiques. They most likely will choose to patronize a _______.
lifestyle center
Where would you most likely find a lifestyle center?
In higher-income neighborhoods
What type of shopping center has an open-air configuration of specialty stores, entertainment, and restaurants?
Lifestyle centers
Developers will usually look for _____ to build lifestyle centers.
higher-income neighborhoods
An old factory was converted into condominiums on the top six floors, a health club on the fourth floor, offices on floors two and three, and specialty shops and restaurants on the ground floor. This would be an example of a(n) _____.
mixed-use development
The Watertower Place on Michigan Avenue in Chicago has many high-quality boutiques, amongst office space and residential condominiums. It is an example of a(n):
mixed-use development.
_____ are centers that often include office spaces, hotels, residential complexes, civic centers, or convention complexes on top of or attached to a shopping center.
Mixed-use developments
Mixed-use developments (MXDs) are popular with retailers because they:
bring additional shoppers to their stores.
Which of the following does not describe mixed-use developments (MXDs)?
Developers avoid MXDs because of unproductive use of space.
Which of the following statements best describes outlet centers
They are often located in tourist areas.
The Home Laughlin China Company of West Virginia manufactures Fiesta China in a variety of colors. The factory has a store where they feature Fiesta products that are discounted or discontinued. Patrons come in to shop with crates expecting to purchase the Fiesta products in large quantities. This type of store can be considered as a(n):
outlet store.
Which of the following statements about outlet centers is true?
Outlet centers are in remote locations, located some distance from department and specialty stores.
Ybor Square is a small shopping center located in the part of Tampa known as Ybor City. The shopping center building used to be a cigar factory that prospered at the turn of the 20th century when Cuban and Italian immigrants settled in the Tampa Bay area. Now, it houses small antique stores, bars, and restaurants that have grown to be central to Ybor City’s night life. It is an example of a:
theme/festival center.
_____ can be defined as shopping centers that employ a unifying theme that is carried out by the individual shops in their architectural design and, to an extent, in their merchandise. They are typically designed to appeal to tourists.
Theme/festival centers
The retail tenants in Underground Atlanta are similar to those found in specialty centers, except that they are all small. Their goal is to create a unique shopping environment for customers. What type of shopping center is Underground Atlanta?
Theme/festival center
Breanne was walking across campus to her chemistry lab when she noticed an area that had lingerie merchandise that was not there earlier in the week. This retail format would be an example of a ______.
pop-up shop
When Rebekah took her kids to Kmart, she noticed a Little Caesar’s Pizza restaurant near the entrance, which prompted her to stop for lunch. This restaurant is a great example of a:
store-within-a-store.
Why would a small retailer be interested in a kiosk?
Kiosks are an opportunity to generate rental income in otherwise vacant space.
Why would a small retailer not be interested in selling at kiosks situated in airports?
The rent per square foot is very expensive.
Many companies are capitalizing on people being at the airports longer and not being able to carry many personal health and beauty aids. A vending machine selling cosmetics and perfume at an airport is a _____.
kiosk
As Chelsea walked through the concourse to her connecting flight to Spain, she walked by a place selling CDs to learn a foreign language. Since she needed to brush up on her conversational Spanish, she talked with the person standing with the cart. The cart of merchandise would be described as a _____.
kiosk
Why are airports such a profitable place to have a retail business?
Changes in security have encouraged travelers to arrive earlier and make more purchases after they go through security.
Clark was late to work one morning and decided to use the McDonald’s drive-through for his morning cup of coffee. Normally, a coffee drinker loyal only to Starbucks, Clark was more interested in speed due to his tardiness. Which of the following best describes Clark’s shopping situation?
Convenience shopping
Rhonda rolled her eyes when she realized how much she had to pay for a pack of gum at the paper stand on her way to reach her departing flight from JFK. With security lines as long as they were, she knew she needed to hurry and pay the $2.75 for her pack of gum. Her purchase situation can best be described as:
convenience shopping.
A critical factor affecting the location that consumers select to visit is the shopping situation in which they are involved. What type of shopping situation should a retailer such as Walgreen’s consider?
Convenience shopping
Which of the following types of retailers does not cater to shoppers who are engaged in convenient shopping situations?
Auto dealerships
A(n) _____ is one in which the merchandise, selection, presentation, pricing, or other unique factors attract customers even if it is in an inconvenient location.
destination store
What type of product will a consumer look for without regard to time, money, or effort?
Specialty product
Diana wanted a German shorthaired pointer after seeing it win the Best in Show Award at the dog show. She searched on the Westminster Kennel Club website for a breeder and found one in Greenville, South Carolina. She was sure this was the breed she wanted; she was willing to pay the expense to travel to Greenville and purchase the puppy. This type of shopping is:
specialty shopping.
_____ is the increased expansion of residential and shopping center development in suburban and rural areas outside of their respective urban centers.
Urban sprawl
Which of the following is a reason for opposing big-box retailers?
It drives local retailers out of business
Local governments in the United States use _____ to regulate land uses in specific areas to prevent any interference with existing uses by residents or businesses, as well as encourage the preservation of a community’s sense of identity.
zoning
Jake, who runs a business on Mint street, wants to open another retail outlet in the business district. He is unable to because of the _____ laws imposed by the local governments in the United States.
zoning
Which of the following is one of the five categories of activities that are accepted by zoning ordinances in urban areas?
Industrial
Which of the following can restrict the size and style of retail signs?
Shopping center management
Burger King in Mequon, Wisconsin, was not allowed to have a sign taller than 10 ft. and could not have any neon lights on the outside of the building. This is an example of the use of a _____.
building code
In a town in Georgia, the McDonald’s restaurant was required by _____ to have no sign taller than 8 feet, no arches, and no garish or bright colors on the outside of the building.
building codes
Why is choosing a good location such an important decision for a retailer?
First, location is typically one of the most influential considerations in a customer’s store-choice decision. Second, location decisions have strategic importance because they can be used to develop a sustainable competitive advantage. Third, location decisions are risky. Typically, when retailers select a location, they have to either make a substantial investment to buy and develop the real estate or must commit to a long-term lease with developers.
Why have many central business districts (CBD) been declining in the United States and what are developers doing to revive CBDs?
Central business districts have been declining for years because of high crime rates requiring retailers to invest in high security, parking is often limited, urban decay, no control over the weather, evening and weekend shopping is slow, and many CBDs suffer from lack of planning. However, developers and cities are reviving their downtown areas as they become gentrified bringing in new retailers and residents that want an urban experience and want to be able to walk to shopping and restaurants.
What are the advantages and disadvantages of strip shopping centers?
The advantages of strip shopping centers are that they offer customers convenient locations, easy parking, and they have relatively low occupancy costs for the retailers. The primary disadvantage is that smaller centers have a limited trade area due to their size, and they lack entertainment and restaurants to keep customers in the center for a longer time. In addition, there is no protection from the weather.
Mention three advantages that shopping malls have over alternative locations.
The three advantages that shopping malls have over alternative locations include the following:

• Shopping malls attract many shoppers and have a large trade area because of the number of stores and the opportunity to combine shopping with an inexpensive form of entertainment.
• Customers don’t have to worry about the weather, and thus malls are appealing places to shop during cold winters and hot summers.
• Mall management ensures a level of consistency that benefits all the tenants. For instance, most major malls enforce uniform hours of operation.

There are seven different identifiable disadvantages that shopping malls have as compared to other locations. Describe at least four of these disadvantages.
The disadvantages that shopping malls have over alternative locations include the following:

• Mall occupancy costs are higher than those of strip centers, freestanding sites, and most central business districts.
• Mall management’s control of operations, rules, and restrictions are stringent.
• Competition with retailers who sell similar merchandise in close proximity can be intense.
• They are not as convenient for customers to get in and out.
• Some mall locations are old and have not been updated making them less desirable for customers to patronize. Some malls are located in undesirable locations because of population shifts since they were built.
• The anchoring department stores companies have merged and consolidated which has decreased the number of potential anchor tenants.
• The growing sales through the Internet channel is cannibalizing sales through the store channel.

Explain mixed-use developments (MXDs) and how they appeal to consumers, retailers, local governments, and developers.
Mixed-use developments (MXDs) combine several uses into one complex, including shopping centers, office towers, hotels, residential complexes, civic centers, and convention centers. They are pedestrian-oriented and therefore facilitate a live-work-play environment. They appeal to people who have had enough of long commutes to work and look for a lifestyle with more time for the things they enjoy. Retailers like MXDs because they bring additional shoppers to their stores. They are also popular with governments, urban planners, developers, and environmentalists because they provide a pleasant, pedestrian environment and are an efficient use of space.
What is a store-within-a-store?
Store-within-a-store locations involve an agreement in which a retailer rents a part of the retail space in a store operated by another independent retailer. The host retailer basically “sublets” the space to the store-within retailer. The store-within retailer manages the assortment, inventory, personnel, and systems and delivers a percentage of the sales or profits to the host. Grocery stores have been experimenting with the store-within-a-store concept for years with service providers such as coffee bars, banks, film processors, and medical clinics.
Why do category specialists or “category-killer” retailers choose to locate their stores in freestanding sites or in power centers?
Category specialists are found freestanding sites or in power centers because (1) these locations are cheaper than central business districts or malls, (2) easy access to parking is important because purchases are often large and difficult to carry, (3) category specialists are destination stores and people will shop there regardless of the location, and (4) they benefit from multiple retailers that attract more consumers and the resulting potential for cross-shopping.
Retail developers need to take into consideration legal aspects when they are evaluating different locations. Describe the main legal considerations.
Category specialists are found freestanding sites or in power centers because (1) these locations are cheaper than central business districts or malls, (2) easy access to parking is important because purchases are often large and difficult to carry, (3) category specialists are destination stores and people will shop there regardless of the location, and (4) they benefit from multiple retailers that attract more consumers and the resulting potential for cross-shopping.
The legal considerations for retail developers include the following:
The legal considerations for retail developers include the following:

• Local governments in the United States use zoning to regulate land uses in specific areas to prevent any interference with existing uses by residents or businesses, as well as encourage the preservation of a community’s sense of identity. In urban areas, zoning ordinances often specify five categories of activities that are acceptable in a certain region or on a particular site: residential, commercial, mixed residential and commercial, industrial, or special.
• Building codes are legal restrictions that specify the type of building, signs, size and type of parking lot, and so forth, that can be used at a particular location.
• Restrictions on the use of signs can affect a particular site’s desirability. Sign sizes and styles may be restricted by building codes, zoning ordinances, or even the shopping center management group.
• Licensing requirements could include alcohol and firearms which can differ from state to state and city to city.

Retail developers need to take into consideration legal aspects when they are evaluating different locations. Describe the main legal considerations.
The legal considerations for retail developers include the following:

• Local governments in the United States use zoning to regulate land uses in specific areas to prevent any interference with existing uses by residents or businesses, as well as encourage the preservation of a community’s sense of identity. In urban areas, zoning ordinances often specify five categories of activities that are acceptable in a certain region or on a particular site: residential, commercial, mixed residential and commercial, industrial, or special.
• Building codes are legal restrictions that specify the type of building, signs, size and type of parking lot, and so forth, that can be used at a particular location.
• Restrictions on the use of signs can affect a particular site’s desirability. Sign sizes and styles may be restricted by building codes, zoning ordinances, or even the shopping center management group.
• Licensing requirements could include alcohol and firearms which can differ from state to state and city to city.

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