SA8912 Spatial Technologies in Strategic Planning

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SA8912 Spatial Technologies in Strategic
Planning

• The course is concerned with the application of
  spatial technologies (particularly GIS) to
  strategic planning to address the issues that
  affect the commercial sector of the economy.
•  
• The focus is on analysis of retail and service
  activities from the perspective of both the
  private and public sector policy makers.
•  
• Specific issues include
• spatial impact analyses
• use of GIS as a corporate management system
• site selection and trade area analysis
• retail and services network planning
• Location-Allocation modeling.

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Lecture 1 Retail Location Overview and
Business Geomatics

• commercial activity (and retail) in the Canadian
  economy
• Importance of commercial activities
• major changes in Canadian retailing since the
  1990s.
• importance of location analysis
• business Geomatics

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Table 1 Retail and Commercial Activity within
the Canadian Economy
Sector Employment in 000s (2005) Growth rate in (1991-2005) No. of firms (000s) Share of GDP ()
Agriculture, finishing, forestry 423 -29.6 194 2.3
Mining 164 7.1 16 3.7
Manufacturing 1953 9.2 98 17.1
Construction 683 37.7 265 5.9
Transportation utilities 675 10.1 115 7.4
Wholesale 752 35.7 121 6.3
Retail 1597 15.7 214 5.7
Finance and real Estate 826 9.9 292 19.9
Business services communication 1774 41.5 528 10.6
Commercial service (education,health) 1711 29.8 316 5.5
Community service 1711 15.8 120 10.1
Public administration 784 1.9 8 5.4
Total 14168 21.0 2285 100
Source Simmons, J. and S. Kamikihara. 2006.
Commercial Activity in Canada.
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Definition of Commercial Activity

• private sector activities that provide goods and
  services directly to consumers. (Retail is part
  of Trade).
• In the SIC system, they include the groups of
• 4022 (shopping centre developers and offices)
• 500-599 (wholesale)
• 600-699 (retail)
• 700-769 (financial services)
• 771-780, 911-999 (commercial services)
• In the NAICS system, they include the groups of
• 44-45 (retail)
• 51-56 (business and professional services)
• 71, 72 and 81 (consumer services).

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S.I.C.

• SIC stands for Standard Industrial
  Classification.
• It is a four-digit code system that identifies
  the type of economic activity.
• similar activities have the same first-two
  digits.
• SIC codes were designated by Stats Can. It was
  first developed in 1948. Since then, it was
  revised 3 times 1960, 1970, and 1980. It should
  have been revised again in 1990, but the revision
  was postponed.
• Eventually, the SIC system was replace by a new
  systemNAICS.

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N.A.I.C.S.

• NAICS stands for North America Industrial
  Classification System.
• It is a six-digit code system, developed by the
  statistics agencies of the U.S., Canada and
  Mexico to identify types of economic activity.
• It was developed in the mid 1990s, and was
  revised in 2002.
• The first 2-digits designate the sector
• The 3rd digit designates the sub-sector
• The 4th digit designates the industry group
• The 5th digit designates industries
• The 6th digit designates national industries
  (used by individual countries).

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Canada has moved away from an industrial economy
towards a service economy

• Explanations
• Consumers become more affluent in the past 20
  years. Demand for goods and services increased.
• Household become smaller, more women now take
  paid jobs outside their homes. People have less
  time to do things themselves. Instead, they pay
  for services done by professionals in businesses.
• New technology increased levels of automation,
  which led to reduction of workers in
  manufacturing. Fewer workers can produce the same
  amount of consumer goods. As a result, many
  workers left manufacturing and found employment
  in commercial activities.

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Table 2 compares retail with wholesale in the
Trade sector
Sector Employment (in 000s) 2005 Employment growth (in ) 1991-2005 Establishment (in 000s) 2005 Revenues (in billions ) 2004
Wholesale 751.9 35.7 121.3 (36) 431.8
Retail 1597.0 15.7 215.6 (63) 413.3
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Major Changes in Canadian Retailing since the
1990s

• American invasion
• Big box and power centers
• Corporate merger and restructuring
• Changes in distribution channels and e-tailing

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American retailers seeking international
expansion often adopt different strategies

• green field development
• Acquisition/merger
• Joint ventuers/franchising

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Table 3 Market Share of Department Store Chains
in Canada (1998)
Chain Stores Floor Area (millions of Sq. ft) Sales (b) Market share () Sales/Sq ft ()
Wal-Mart K-Mart Zellers Sears Eaton?s The Bay 144 112 298 110 69 108 15.8 12.0 21.0 14.0 13.0 16.6 4.1 1.2 3.7 3.0 1.7 2.4 25.5 7.4 23.0 18.6 10.6 14.9 260 130 175 215 128 145
Total 841 92.4 16.2 100.0 174
Source Globe and Mail, Report on Business,
February, 1998
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General Characteristics of New Format Stores

• Highly specialised concentrate on specific
  sub-sectors of retailing within the sub-sector,
  they provide a wide selection of brand-name
  products
• much larger in size than conventional stores in
  the same sub-sector
• often serve the whole region, but in the form of
  a chain.
• mostly located at highway intersections,
  accessible only by car (began to move downtown)
• usually separated from shopping centres (some
  began to move into shopping centres.
• several new format stores are clustered in a
  planned plaza called a power centre.
• prices are substantially lower

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Types of New Format Stores

• Membership club
• Warehouse retail store
• Superstore (hypermarket/supercenter)
• Discount department stores
• (also known as Category Killers)

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Examples of Corporate Mergers and Restructuring

• Loblaw's (Ontario) acquired Provigo (Quebec)
• The Bay and Zellers were soled to an American
  interest
• Future shop sold to Best Buy
• Loblaws is closing traditional supermarkets and
  opening super stores
• Wal-Mart has begun to open supercenters in
  Ontario.

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The Changing Distribution System
Traditional routes
Producers manufacturers, farmers
Distributors (1) importers, wholesalers
Distributors (2) retailers
Consumers
Contemporary routes
Factory outlets
Warehouse retailers (e.g., Costco)
Vertical integration
Producers manufacturers, farmers
Distributors (1) importers, wholesalers
Distributors (2) retailers
Consumers
Direct sales
Internet sales
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Impacts of e-tailing

• 365 days of service
• no restrictions by locations/distance
• will re-shape contemporary retail landscape
• manufactures/suppliers may bypass retailers
• Small retailers are hit the hardest
• tax evasion(?)
• Shopping information is massive, often confusing
  to navigate on the Internet
• chances of refund are high
• a high risk of cyber theft to steal credit card
  numbers
• delivery may not be as fast as you go to a local
  store.
• not everything has the same level of suitability
  for sale on the Internet.

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Popular E-commerce Product Categories, 1999-2000
()
Products category 1999 2000
Books, magazines 37.5 36.6
Travel arrangements 12.4 12.2
Computer software 24.8 16.0
Computer hardware 9.0 8.3
Hobbies 4.8 4.7
House ware 3.3 5.5
Music 18.5 15.4
Apparel jewellery 12.3 17.4
Video, DVD 5.7 5.4
Food 2.3 4.0
Toys 2.3 6.1
Others 12.4 21.4
Source Michalak, W. 2002. Canadian e-Commerce
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What does location analysis do?

• search for a location that has comparative
  territorial advantages
• i.e., a location that has favourable physical,
  socioeconomic and political conditions for a
  specific type of economic activity to receive
  maximum profit (for commercial activities), or to
  generate maximum social well being (for public
  facilities).

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The Ice-Cream Vendor Analogy
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The Roundhouse in Downtown Toronto
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NOTICE OF MOTION Moved by Councilor
VaughanSeconded by Councilor Rae

• SUMMARY
• The John Street Roundhouse is an inappropriate
  location for a big box furniture retailer the
  site is nestled among the Citys top tourist
  attractions, including the CN Tower, the Rogers
  Centre and the waterfront.
•  
• This is a spectacular heritage building with
  amazing potential to add to Torontos growing
  list of museums. Residents of the City support
  this historical asset becoming a train museum. In
  addition to drawing local and international
  visitors, a museum would serve to recognize an
  important time in the history of the country and
  this City.

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RECOMMENDATIONS

• That the City of Toronto and State stay any
  further negotiation or completion of agreements
  until October 2007.
• That staff from the Economic Development, Culture
  and Tourism and Facilities and Real Estate
  Divisions review the Steam Whistle proposal and
  business plan for the renovation of the remaining
  18 bays of the Roundhouse, as well as the
  development of a Rail Museum and other associated
  activities, and report back to the Government
  Management Committee in September 2007.

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Market Players
Demand
Producers (both domestic and foreign)
Consumers

• Distributors
• Importers
• Wholesalers
• Retailers

Supply
government
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Important Factors in Strategic Planning

• Location/site
• lot size/shape
• topology
• drainage
• subsoil
• surroundings
• access patterns
• real estate
• utilities
• zoning regulations
• competition

• Trade area
• population
• income
• age structure
• ethnic composition
• consumption patterns
• spatial extension
• travel distance

• Operation
• logistics/supplies
• marketing
• merchandizing/distribution
• service
• presentation/display

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Geomatics

• a field of activities, which, using a systematic
  approach, integrates all the means used to
  acquire and manage spatial data required as part
  of scientific, administrative, legal and
  technical operations involved in the process of
  the production and management of spatial
  information. (Canadian Institute of Geomatics)

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Business Geomatics

• the activity that uses GIS in combination with
  other data management tools and statistical tools
  (including spatial modeling) to process, analyze
  and present business data for easy
  visualization.

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Data Sources

• Demand Side

• Supply Side

Aggregate census Collected by Statistics
Canada Aggregated at the following
geography CSD CT DA FSA
Aggregate Collected by Statistics Canada
(retail trade, small area retail trade) Revenue
Canada (sales by sectors) Municipal planning
department (employment survey)
Individual customer database Collected by
retailers marketing firms (sample)
researchers (sample data)

• Individual
• Business directory (not geo-coded)
• Shopping centre directory
• Yellow pages
• Street directory
• Collected through field survey by
• research institute (CSCA)
• researchers