SA8912 Spatial Technologies in Strategic Planning The course is concerned with the application of spatial technologies (particularly GIS) to strategic.

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.

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

Table 1 Retail and Commercial Activity within the Canadian Economy

Sector Employmentin 000’s(2005)

Growth rate in %

(1991-2005)

No. of firms(000’s)

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.

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).

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 system—NAICS.

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).

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.

Table 2 compares retail with wholesale

in the Trade sector

Sector Employment(in 000’s)

2005

Employment growth (in %)

1991-2005

Establishment(in 000’s)

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

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

American retailers seeking international expansion often adopt different strategies

• green field development

• Acquisition/merger

• Joint ventuers/franchising

Table 3 Market Share of Department Store Chains in Canada (1998)

Chain Stores Floor Area(millions of Sq. ft)

Sales ($b) Marketshare (%)

Sales/Sq ft($)

Wal-MartK-MartZellersSearsEatonsThe Bay

14411229811069

108

15.812.021.014.013.016.6

4.11.23.73.01.72.4

25.57.423.018.610.614.9

260130175215128145

Total 841 92.4 16.2 100.0 174

Source: Globe and Mail, Report on Business, February, 1998

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

Types of New Format Stores

• Membership club

• Warehouse retail store

• Superstore (hypermarket/supercenter)

• Discount department stores

(also known as “Category Killers”)

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• Loblaw’s is closing traditional supermarkets and

opening super stores

• Wal-Mart has begun to open supercenters in Ontario.

Producers:manufacturers,

farmers

Distributors (1):importers,

wholesalers

Distributors (2):retailers

Consumers

Producers:manufacturers,

farmers

Distributors (1):importers,

wholesalers

Distributors (2):retailers

Consumers

Traditional routes

Contemporary routesFactory outlets

Warehouse retailers (e.g., Costco)

Internet sales

The Changing Distribution System

Vertical integration

Direct sales

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.

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

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).

The Ice-Cream Vendor Analogy

A B

A B

AB

The Roundhouse in Downtown Toronto

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 City’s 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 Toronto’s 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.

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.

Market Players

Producers(both domestic

and foreign)Consumers

Distributors•Importers

•Wholesalers•Retailers

government

Demand

Supply

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

Important Factors in Strategic Planning

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)

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.

Data Sources

• Demand Side • Supply Side

Aggregate — census Collected by Statistics Canada: Aggregated at the following geography:

CSDCTDAFSA

Individual — customer database

Collected by: retailers marketing firms (sample) researchers (sample data)

Aggregate

Collected by:

Statistics Canada (retail trade, small area retail trade) Revenue Canada (sales by sectors)Municipal planning department (employment survey)

Individual 1. Business directory (not geo-coded)• Shopping centre directory• Yellow pages• Street directory2. Collected through field survey by • research institute (CSCA)• researchers