Case 13 Choosing a Store Location for a Boutique Analysis Paper Instructions: Read the case study “How to Choose a Location for a Boutique” located in the

Case 13 Choosing a Store Location for a Boutique Analysis Paper Instructions: Read the case study “How to Choose a Location for a Boutique” located in the Lessons area (Case #13). For each location, address the following:

– List the positives and negatives

– Analyze what type of a retail store would be more appropriate

– Select which one site is best for Stephanie and explain why

The paper must:

– be 5-7 pages (including the Title and Reference Pages)

– follow APA Style

– contain four academic references

– DO NOT WRITE THE QUESTIONS INTO YOUR PAPER. Cases
EXHIBIT 2
SECTION V
553
Strategic Profit Model
Net Sales
Gross Margin
Cost of Goods Sold
–
Net Profit
Operating Expenses
Total Expenses
/
Net Profit Margin
Interest Expenses
Net Sales
Taxes
Return on Assets
Cash
Net Sales
Accounts Receivable
/
Current Assets
+
Inventory
Asset Turnover
Total Assets
Fixed Assets
Other Current Assets
C ASE 13
Choosing a Store Location for a Boutique
Stephanie Wilson must decide where to open a ready-towear boutique she’s been contemplating for several years.
Now in her late 30s, she’s been working in municipal government ever since leaving college, where she majored in
fine arts. She’s divorced with two children (ages five and
eight) and wants her own business, at least partly to be
able to spend more time with her children. She loves fashion, feels she has a flair for it, and has taken evening
courses in fashion design and retail management. Recently, she heard about a plan to rehabilitate an old arcade
building in the downtown section of her midwestern city.
This news crystallized her resolve to move now. She’s considering three locations.
THE DOWNTOWN ARCADE
The city’s central business district has been ailing for some
time. The proposed arcade renovation is part of a master
redevelopment plan, with a new department store and several office buildings already operating. Completion of the
entire master plan is expected to take another six years.
Dating from 1912, the arcade building was once the
center of downtown trade, but it’s been vacant for the past
15 years. The proposed renovation includes a three-level
shopping facility, low-rate garage with validated parking,
and convention center complex. Forty shops are planned
for the first (ground) floor, 28 more on the second, and a
series of restaurants on the third.
The location Stephanie is considering is 900 square
feet and situated near the main ground-floor entrance.
Rent is $20 per square foot, for an annual total of $18,000.
If sales exceed $225,000, rent will be calculated at 8 percent of sales. She’ll have to sign a three-year lease.
TENDERLOIN VILLAGE
The gentrified urban area of the city where Stephanie
lives is called Tenderloin Village because of its lurid past.
Today, however, the neat, well-kept brownstones and
comfortable neighborhood make it feel like a trendy enclave. Many residents have done the remodeling work
themselves and take great pride in their neighborhood.
About 20 small retailers are now in an area of the village
adjacent to the convention center complex, along with
some vegetarian and nouveau cuisine restaurants. There
are also three small women’s specialty clothing stores.
The site available to Stephanie is on the village’s main
street on the ground floor of an old house. Its space is also
about 900 square feet. Rent is $15,000 annually, with no
extra charge based on the level of sales. The landlord
knows Stephanie and will require a two-year lease.
APPLETREE MALL
This suburban mall has been open for eight years. A successful regional center, it has three department stores and
100 smaller shops just off a major interstate highway
about 8 miles from downtown. Of its nine women’s clothing retailers, three are in a price category considerably
higher than what Stephanie has in mind.
554
SECTION V
Cases
Appletree has captured the retail business in the city’s
southwest quadrant, although growth in that sector has
slowed in the past year. Nevertheless, mall sales are still
running 12 percent ahead of the previous year. Stephanie
learned of plans to develop a second shopping center
east of town, which would be about the same size and
character as Appletree Mall. But groundbreaking is still
18 months away, and no renting agent has begun to enlist tenants.
The location available to Stephanie in Appletree is two
doors from the local department store chain. At 1,200
square feet, it’s slightly larger than the other two possibilities. But it’s long and narrow—24 feet in front by 50 feet
deep. Rent is $24 per square foot ($28,800 annually). In
addition, on sales that exceed $411,500, rent is 8 percent
of sales. There’s an additional charge of 1 percent of sales
C ASE 14
to cover common-area maintenance and mall promotions.
The mall’s five-year lease includes an escape clause if sales
don’t reach $411,500 after two years.
DISCUSSION QUESTIONS
1. List the pluses and minuses of each location.
2. What type of store would be most appropriate for
each location?
3. If you were Stephanie, which location would you
choose? Why?
This case was prepared by Professor David Ehrlich, Marymount
University.
Hutch: Locating a New Store
In June, after returning from a trip to the Bahamas, Dale
Abell, vice president of new business development for the
Hutch Corporation, began a search for a good location to
open a new store. After a preliminary search, Abell narrowed the choice to two locations, both in Georgia. He
now faces the difficult task of thoroughly analyzing each
location and determining which will be the site of the
next store.
COMPANY BACKGROUND
The Hutch store chain was founded in 1952 by John
Henry Hutchison, a musician and extremely successful insurance salesman. Hutchison established the headquarters
in Richmond, Virginia, where both the executive offices
and one of two warehouse distribution centers are located.
Hutch currently operates 350 popularly priced women’s
clothing stores throughout the Southeast and Midwest.
Manufacturers ship all goods to these distribution centers.
They are delivered floor-ready, in that the vendor has attached price labels, UPC identifying codes, and source
tags for security purposes and placed appropriate merchandise on hangers. Once at the distribution centers, the
merchandise is consolidated for reshipment to the stores.
Some staple merchandise, such as hosiery, is stored at
these distribution centers. All Hutch stores are located
within 400 miles of a distribution center. This way, as
Abell explains, “A truck driver can deliver to every location in two days.”
HUTCH FASHIONS
Hutch Fashions is considered one of the leading popularly
priced women’s fashion apparel chains in the Southeast.
The stores carry trendy apparel selections in juniors’,
misses’, and women’s sizes, all at popular prices. The chain
offers a complementary array of accessories in addition to
its main features of dresses, coats, and sportswear. Located
mainly in strip centers and malls, these shops typically require 4,000 to 5,000 square feet.
HUTCH EXTRA
Hutch Extra stores are primarily located in strip centers
and malls. They bear a strong resemblance to Hutch
Fashions. The difference is that Hutch Extra stores require less space (2,000–3,000 square feet) and cater to
women requiring large and half-size apparel. (Women
who wear half-sizes require a larger size but are not tall
enough to wear a standard large size. In other words, a
size 18½ is the same as size 18 except that it is cut for a
shorter woman.)
HUTCH FASHIONS* HUTCH EXTRA
Although Hutch Fashions and Hutch Extra stores selectively appear as separate entries, the corporate goal is to
position both as a single entity. The combination store
emerged in 1986 and is now used for all new stores. The
Hutch Fashions* Hutch Extra combination occupies a
combined space of 6,000–7,000 square feet, with separate entrances for each entity. A partial wall separates
the two frontal areas of the store but allows for a combined checkout/customer service area in the rear. These
stores are primarily located in strip centers and can occasionally be found in malls. (Exhibit 1 shows a typical
layout.)
MARKETING STRATEGY
Customers
Hutch’s target market is women between the ages of
18 and 40 years who are in the lower–middle to middleincome range. Abell explains, “We don’t cater to any
specific ethnic group, only to women who like to wear
the latest fashions.”
Product/Price
Hutch positions merchandise and price levels between the
mass merchandisers and the department stores. You won’t
find any bluelight specials or designer boutiques in a

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