Store Location

British multinational grocery and general merchandise retailer Tesco PLC usually follows a

standalone format for its retail chain formats such as Tesco food store, Tesco extra, Tesco super

stores, Tesco metro, Tesco express and Tesco one stop. When it comes to the operation of Tesco in

India, they have got the following options

Free Standing Sites

City or Town Locations

Inner City

Main Street

Shopping Centres

Strip Shopping Centres

Shopping Malls

Other Location Opportunities

Factors which will affect Tesco in identifying which format to follow are also many. The size of the

trade area (geographic area encompassing most of the customers who would patronize a specific retail

site) is one among them.along with that the occupancy cost of the location should also be considered.

We should also consider the pedestrian and vehicle customer traffic which we can experience in the

area selected. The restrictions placed on store operations by the property manager also play a major

part in deciding the location.last but not the least convenience of the location for customers.

When it comes to advantages Tesco will be getting if it is going for a standalone store setup are

Convenience, High traffic and visibility, Modest occupancy cost, Separation from competition, Few

restrictions etc. But when it comes to the decision to opt stand alone store format Tesco also should

consider the political and social factors which exists in Indian market. For example Reliance started

operations in Lucknow and Varanasi with 14 stores, stores had to be soon closed down following

violent protests by local traders. After the protests, the state government instructed all standalone food

& grocery stores run by corporate companies to close down. Similar things followed in NCR and

Ghaziabad. Companies like Kishore Biyani’s Future group, Subhiksha and Spencer’s have had

operations in this format long before without encountering major problems. The strategic importance

of UP for a large-scale retailer like Tesco was not limited to it being a large consumer market. The

state is extremely important from the sourcing point of view as well.

The next decision criteria will be whether to set up the store in CBD, NBD or SBD. The advantages of

setting up the store in CBD are as follows.

1. Well-developed community and government relations.

2. Consistent pedestrian traffic.

3. Effective downtown promotion.

4. Good central business districts (CBD) have good access to good financial and educational

resources.

5. Reliable Communication Network.

6. Transparent and flexible planning and zoning

The main problem Tesco will be facing while setting up a standalone store in a CBD will be in

regards with parking facilities and other basic amenities which the customers will be expecting. If

Tesco can provide or find solutions in these affairs too setting up standalone store in CBD will be the

best option for them when it comes to format of stores.

Lease or Rent Decision

If Tesco have found an especially favourable location for a retail shop, restaurant where location is

key, deciding on the best lease term is more problematic. If the business does well, the management

might want the right to stay on for an extended period. On the other hand, if the store is not doing well

probably would be nervous about signing a four-year lease.

A good solution is to bargain for a short initial lease with one or more options to renew perhaps a one

or two-year lease with an option to renew for two or three more years. Typically, an option to renew

gives Tesco the right to exercise their option to stay by notifying the land owner in writing a certain

number of days or months before the initial lease period expires.

If the property is particularly desirable, the owner may also want an extra fee in exchange for giving

Tesco the option of staying or leaving after your initial term is up. This is a common arrangement, and

since the location is important to the success of a grocery retail business, seriously considers paying it.