It can be said that store location is one of the most important factors in selling retail; store location exerts absolute influence on retail management, with success in business depending on store location. That is, if a store is well located, problems occurring due to inefficient management can be overcome; with bad location, however competent managers cannot exert their competence fully. So location selection by store area analysis is a very important factor in retailing management.
The first-priority task to select location for retailing is to screen location types and conditions for maximizing sales, analyze the target market, and establish criteria for selecting location. Later, a series of technical processes follow before selecting the final location by carrying out store area analysis and assessment to select a region and district to estimate the expected amount of sales and review location validity. Therefore, it will be possible to reduce risks of failure through store area analysis suitable for business and validity analysis for location selection before selecting location for a store taking comparative advantage, along with appropriateness of demand, according to the principle of supply and demand within the store area.
Fixation of geographical location is one of the natural properties of real estate. Once determined, location is followed by much capital expenditure and fixed investment, with environmental restrictions making revision impossible practically. Despite such restrictions, however, retailing beginners and store developers in some businesses have a high tendency to rely on intuition based on experiences. Therefore, this study intended to review prior researches on the theories of store area analysis and location analysis and present a strategic development direction in terms of location selection through empirical case analysis for a certain category of business. The empirical case analysis, first, examined acceptance of drugstore businesses and, then, investigated strategies of selecting location for relevant businesses through cases of store area analysis and location selection.
This study tried to present a direction for objective and rational store area analysis and location selection in terms of store area properties and location of distribution and retailing business on the basis of drugstore business, which is the fourth new distribution channel following department stores, discount stores, and convenience stores, and, on this ground, confirm importance of location and present a practical framework to make a strategic approach.
Considering the large-size specific to the business, higher-dimensional consumption life due to improvement in the income level, and population decentralization due to expansion of satellite cities, large retail businesses exert significant effects on national economy. To satisfy consumers' rights to select, retail businesses as goods and service providers enter into multilateral competition to provide goods and service to satisfy consumers' needs. While greater importance is given to the framework for location selection and store area analysis by practical methodologies to disperse risks and secure comparative advantage in heated environment in consideration of properties of retail and distribution businesses accompanying large investment, the direction approached in this study has limitations with results of a exploratory study, but the methodology of researching new distribution channels and quantitative store area analysis can be presented as a practical method.
With limited data of analysis through various cases of location selection, however, the results of this study have limitations to be generalized. So it is necessary to conduct consecutive researches step by step to derive a location selection strategy through digitalized store area analysis for various businesses along with sales validity analysis.