Location, location, location, that is the mantra that you always hear. Your location is a critical part of your retail business success, so you must choose wisely. But, how do you choose the right location?
One common mistake is to select the least expensive place available to keep overhead costs low. Containing costs is important, but remember, no amount of advertising dollars will make up for a bad location. If people can’t find your business, they can’t spend their money with you and this will be even more expensive for you in the end. Think of it this way. What you don’t spend on rent you will spend in advertising.
A second mistake is using a retail location for offices and storing inventory. Retail space is expensive and the vast majority of the space should be used to display your merchandise, not house your bookkeeper. Put your back office staff in a different, less expensive location.
When selecting a location for your business, the first task you want to take on is identifying your specific customer. Yes, I know everyone can use what you are offering, but who is most likely to visit your business? Corporate workers, stay-at-home-moms, college students, retirees, tourists, and the list continues. Just like Nike and Red Bull, you have to select and target your specific customer.
Once you have identified your customer, you should decide when they are most likely to shop with you. Will they come before they go to work (as they would for child care services), will they shop with you on their way home from work? Will they shop with you on the weekend? Will it be more convenient for them if you locate near where they work or near where they live?
Do you need to be located near a freeway or near the center of town? Do you need to be located at the mall, near the business district or near an office complex? All of these decisions will come from identifying your specific customer.
Once you decide whom you are selling to, and when they will patronize your business, you will know, generally, where you should locate. Now you can start looking for space to lease or purchase. Whether you use a commercial realtor or search on your own, it is time to focus on the space itself. Once you find a space ask yourself the following:
Do the businesses nearby attract the specific customer you have identified? If you have decided that young people ages 18 – 25 are your target demographic do the other businesses in the shopping center or the area attract that particular customer? If not, move on. You are far more likely to have success if you cluster with businesses catering to the same customer.
Is the location easily reached by car, on foot or via public transportation? Does the driveway to the location offer convenient access from all directions of traffic? If the location is at or near a traffic signal, that is a good thing. If the location is on a street that is divided, or is a one-way street you might want to reconsider.
Can the stores in the center be seen from the street? If your customer is on foot or driving in their car, would they be able to see your sign from the street? Is there sufficient parking for your customers? Will they have to fight for a parking space near your location?
Is the location convenient for you personally? Is it near your home and easy for you to reach? A long commute to work really adds to your stress.
Where are your competitors? Are they in the same center, just down the street, a mile away? There are a couple different thoughts on locating near your competition. If you have a restaurant, it is frequently suggested that you locate near other restaurants. You will help each other be successful. As potential customers visit the other restaurants, they will see your restaurant and eventually check you out. The advertising dollars that each restaurant spends will benefit all of the restaurants in the center.
If you have a dry cleaning business, you probably don’t want to go head to head with another dry cleaner in the same center, unless you are sure you can either draw customers away from the competing business or that there are enough of your target demographic in the area to make you both successful. You could end up hurting their sales but not pulling enough customers to make your business successful either.
Check with the landlord. Many landlords will not rent to competing businesses, and some larger firms have a clause in their lease that specifically prohibits the landlord from renting to competing businesses. As an example, if you have a bakery you may not be able to lease a space in a center that has a Panera Bread. Many national chains have a clause in their lease that prevents the landlord from renting to any business that could be considered a competitor to them.
Visit the location at different times of day and on different days of the week. You want to watch the traffic flow. Which business has the most traffic? What time of day is the busiest? If your business is time sensitive (like a breakfast café) are any of the other businesses in the center open during that timeframe. The hardest thing to do is to change a person’s habits. If people are not used to visiting the location during the early morning hours, it will cost you more advertising dollars to change their habit.
Talk to the other store owners. How long have they been there? Are their businesses successful? Are their businesses growing or maintaining? Where are their customers coming from; the surrounding neighborhood, the surrounding office buildings or do they come from outside of the area? Do the customers in their store resemble the customers you have targeted? How do they advertise? Which advertising vehicles have they had the most success with; direct mail, flyers or local magazines?
While talking to the store owners, also ask how long the space you are looking at has been empty. What business was there previously? Why did they leave? How frequently do spaces come available in the center? Are the businesses leaving for larger spaces or closing because they failed? You should also ask these questions of the landlord.
Do the demographics of the area match your requirements? Is there sufficient density in the local population to meet your sales projections? Is the area safe? Will your employees feel comfortable going to and from their cars? Will they feel safe inside the building? Will your customers feel safe coming to the area in the evening? Is the lighting in the parking lot adequate?