Examples of Locate (Distribution Company) Costs

Example 1:

First Nationwide has been installing mini-branches in K-Marts. (
Year 1987-SIC 6021)

Explanation: First Nationwide is making small investments in already constructed buildings, reducing its Locate Cost.

Example 2:

To respond to the growth of Toys R Us, Toys Plus goes to small markets like Wichita Falls, TX and opens 12,500 sq. ft. stores, about 1/4 of the floor space of a typical Toys R Us store. (
Year 1985-SIC 5945)

Explanation: Toys Plus locates its stores in less expensive areas in order to compete with category killer, Toys R Us. This reduces its Locate Costs.

Example 3:

In August of 2000, the CEO of Toys R Us helped negotiate one of the industry's boldest deals, a partnership between toysrus.com and Amazon.com, which should make the Toys R Us site profitable more quickly than it would be on its own. Amazon provides warehousing, order fulfillment, and site design. In exchange, it got warrants to purchase 5% of toysrus.com, as well as up-front cash payments and a share of the site's sales. (
Year 2000-SIC 5945)

Explanation: The partnership between toysrus.com and Amazon.com was part of the Locate Cost for Toys R Us.

Example 4:

Bloomingdales plans to open two shops in New York’s Kennedy International Airport. These will be specialty stores that carry only merchandise with the Bloomingdale’s logo. (
Year 1986-SIC 5311)

Explanation: The investments that Bloomingdales makes to establish these two locations is a part of Bloomingdale’s Locate Costs.

Example 5:

The most ambitious program yet is Simon Live Media, a co-venture between Simon Property Group and Time Warner's Turner Broadcasting System Inc. It aims to merge the experience of retail and e-tail through a network of kiosks (
Year 1999-SIC 6512)

Explanation: The money this co-venture spends on its network of kiosks is part of its Locate Costs.