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Types of Location

There are four major types of location:

  • Retail
  • Retail warehousing
  • Industrial
  • Office space

Each of these will have different requirements and priorities. Retail and retail warehousing will approach the location decision with contrasting objectives. Retail warehousing will require a large area with access to major distribution networks and safe access for large heavy traffic volumes, whereas retailers will be seeking locations convenient for their target market. Unlike retail warehousing, retailer may well locate in city centres, but both may end up in cheaper out-of-town locations, but it is unlikely that the two will be located together.

Industrial locations are likely to be the cheapest option as they can be located well away from centres of populations in existing 'brownfield' sites (sites already developed). Conversely, office locations may be very expensive as headquarters of large corporations tend to be located in large capital cities such as Paris, London, New York, Beijing and Tokyo.

In determining a business location, the following questions can quickly narrow down potential choices.

  1. Do your customers come to you?
  2. Do you have to go to your customers?
  3. Do you have employees?
  4. Do you manufacture products for distribution?

A good starting point for a firm deciding on location options is to research where their customers are based and where their competitors locate. Subway, for example, saves many millions of dollars in market research by basing its location decisions on where McDonald's restaurants are placed and are most successful, on the basis that customer profiles and demographics are similar for the two firms.