There are lots of moving parts to making a good decision about a retail location and it goes beyond the obvious. Sure, you have to make sure your store has good foot traffic and you definitely have to control the cost of your commercial lease but there are other things to think about too. Here’s a quick guide to the things you probably haven’t considered:
1. Know Your Customer
The first step in choosing a location is defining your average customer. What kind of person are they? What do they do for a living? When do they work? What do they do in their free-time? This information might not seem relevant but for many businesses a great location is one that weaves itself into the average customer’s day-to-day life. The right location will be different if you’re targeting students than if you’re targeting young professionals. Choose your customer first and your ideal location will start to become obvious.
2. Embrace Competition
Ever notice two neighborhood grocery stores pretty much next to each other? Ever wonder why the second one chose to open yards away from the competition?
Far too many first-time retailers are scared off by potential competition. If two grocery stores are right next to each other, chances are it’s a great spot to have a grocery store! And just because the neighborhood doesn’t have a grocery store now doesn’t mean one won’t open months after you open shop.
Don’t worry too much about the stores that are already there. Base your location decision on a careful understanding of the available demand and how you can meet it better than anyone else. Embrace competition – it brings more customers to your area.
3. Think About the Supply-Side Too
Every business decision should always consider two things: the money coming in one end and the costs going out the other. Customers should always come first when deciding on a location but make sure to consider your supply plans, not just the perceived demand.
4. ‘Location, Location, Location’ should actually read ‘Customers, Customers, Customers.’
As a rule, I think of location as a function of customer acquisition. It’s essentially a question of marketing and how your customers find you. If you’re a coffee shop, even the tiniest difference in location, like being on the wrong end of the block, will kill you. If you’re a purveyor of bathroom suites however, it might actually be worth saving some money on rent as customers are more likely to research and find you online than just happen past your store. Again, it comes back to knowing your customers.
Four Things That You Probably Were Thinking About Or Should Be If You Weren’t!
- Be on a Corner: It might be the visibility, it might be the sun but study after study show you’ll be better off on a corner location.
- Assess Foot Traffic: Every time I’m considering a new location, I head down there with a big flask of coffee and a clicker to count all the people that walk past my potential new store.
- Don’t Overpay: Make sure to thoroughly research the going rate for commercial space in your area. Keep your rent to a small percentage of sales – single digits if possible.
- Transportation: If you’re in a city with a subway system, being near or on top of a subway stop is invaluable. For most of America, perhaps the single most important thing for a retailer to consider is access and parking for customer vehicles.