03 Identify and explain two possible reasons why Cheung thinks the shop is in a good location. [4]

[BASEL Moderator]

Cheung owns a small retail shop in the city centre selling fashion clothing for children. As it is a competitive market, Cheung knows market research is important. Cheung is worried about the effect of an increase in shop rent on his costs. Cheung said: ‘I will have to pay this higher rent as it is a good location. I need to increase revenue or reduce other costs.’ Cheung buys all his supplies from a wholesaler located in a nearby town. He is thinking of buying directly from a clothing manufacturer in another country.

03 Identify and explain two possible reasons why Cheung thinks the shop is in a good location. [4]

Possible KN Points:
• Near potential target market OR customers
• Busy area or high footfall
• Good access OR there is parking
• Good Image of site
• There are utilities or other facilities
• Proximity (far from or near) to competitors
• Near to other shops and services
• Low transport costs OR already has relationship with supplier