Let’s say you have two choices before you to select a location for your retail store. You can either choose a location in a busy area within the city, which has a considerably high rent, or, you can choose a location a small distance away from the city with a lower rent. Remember, that for the latter, a good amount of money will have to be spent for advertising campaigns so that it comes to the notice of the public eye. The former has already caught the public’s attention. What would you choose?
Working towards creating the most beautiful dress designs for your new boutique is great. But more effort should go into where these creations of yours will be displayed. Will they be accessible to your target customers? Do not forget that your product won’t reach the customer’s eye if he doesn’t walk in through that door at your store!
I think the answer to the question I had asked above is pretty clear now. Choosing the wrong location for your retail store can have disastrous consequences. Never take a chance and don’t get repelled from this seeing higher rents. They will eventually pay off.
Now that you have realized this, you must be eager to know how you can find that right retail store location. The following factors should help you get there:
Type of store you wish to set up
This is the first thing that you must consider in the process towards finding your location. Your store location should be consistent with the type of product that you want to sell and the type of store you want to put up. By type of store I mean, you might want to have a traditional specialty store, or might want to sell out of a kiosk in a mall, or might even want to open a convenience store.
Now you need to be smart about this. Are you looking to get your brand into the public eye, but at the same time looking for a cost-cutting option in the initial days of your business? Go Pop-Up stores! Or sell out of a kiosk in a mall. You have various options, like malls, fairs or festivals, event spaces, etc. These are great ways to bring your brand to people’s attention.
Do you want to open a convenience store? As the name goes, customers prefer to purchase from here for the convenience of location and fast service. These stores mainly sell high-turnover convenience goods in a limited quantity. The ideal location for these stores would be residential areas.
So, the first step for you would be to decide on what type of store you want to set up before moving onto the other factors to be considered.
Demographics
Retail experts say that 6 months prior to opening your store, you must start your site selection process.
This is not a very tedious process if you know exactly what to research and analyze. To make the whole process easier for you we have listed down the attributes you must be looking into.
You can always take help from firms that can provide you with all the information regarding the attributes stated below.
Target audience attributes
1. Average age: If your store sells modern and trendy outfits, your store should be located in an area which comprises of, or has easy access to, people of a younger age. An area within a good location in the city where there are colleges or offices around would be a sensible option.
2. Income: Stores like Nordstrom are located only in affluent areas. This is simply because if you are selling high-end products, your store should be in a location where the inhabitants will be able to afford it. Hence, the income of people is an important consideration.
Premium vs Cost-friendly location
Talking on similar lines, if you own a store selling high-end products for a niche audience, you should make the choice between setting up your store at a premium location or a cost-friendly one. Having your store at a premium location will obviously cost you a much higher rent per square foot. But at the same time, having it at a cheaper locality where no customer would turn up is a total waste of investment.
Workforce attributes
Are the kind of employees you are looking for living in an area close to your store location? Will it be easy for them to travel to the store? Are there enough eateries and hospitals around so as to make things convenient for your employees?
These are some of the questions you must be asking yourself regarding your employees.
Businesses and competition in the proximity
It is a smart move to place your store at a point which has businesses around that can eventually help drive in traffic into your own store. Any business or category of product that is closely related to yours should help your business too.
Another important aspect to be considered is competition. “Quite simply, the best place to be is as close to your biggest competitor as you can be,” says Greg Kahn, founder and CEO of Kahn Research Group in Huntersville, North Carolina. He has also done location research for Arby’s, Buffets Inc., Home Depot, Subway, and other major and minor players.
Kahn makes a very valid point. He says that your competitors have done good research on the demographics before opening their store there. They have also spent a good amount on advertising to drive traffic there. “Why spend the money when they’ve already [spent it] for you?” asks Kahn.
Footfall
You can make use of sophisticated location analysis tools to understand the traffic pattern in a certain area. You can understand the optimum level of traffic for a particular targeted area. Understanding the footfall at your neighboring stores will help you in a big way to estimate foot traffic at your store.
Companies like ShopperTrak, FootFall and Radiolocus help physical retailers track footfall at their stores and the traffic pattern. Most of the ‘people counter’ devices today use Wi-Fi signals or camera imaging for identification.
Accessibility
Your store should be easily accessible to the common people using public transportation. Having a store with great quality products in a deserted area would serve absolutely no purpose.
Leases
Before you enter into a lease, it’s advisable to hire a good lawyer who can negotiate the lease for you. Before entering into a lease, you need to again ask yourself these questions:
Is this the right location for your store?
Is the condition of the building good?
Are there adequate utilities around?
Is the positioning of your store in the building good enough?
Is there enough space for all the retail, office storage, and workroom space you need?
Once you have found answers to these questions and feel ready to enter into a lease, you must then consider the following aspects:
- It’s advisable to keep the initial term short. At the end of the lease term, you can renew it or move out depending on how your business is performing.
- Your lease should have the option to acquire more room when your business expands.
- You must find out the estimated costs per month that you will have to pay. Common Area Maintenance (CAM) charges mostly include parking lot cleaning, repair, and other common area maintenance charges. Other charges include taxes, insurance, gardening, utilities, security, trash and sewer, litter and repairs.
- Be aware of the clauses mentioned in your lease. The holdover clause is one such clause that is often overlooked. The holdover clause states the amount of rent that you will be obligated to pay for every month past the lease expiration. This can go up to 120% to 300% of your monthly payment. This can be negotiated in the initial stage itself.
Other important factors
Apart from all these, there are numerous other important factors to consider while choosing a store location. They are:
- Is parking space available and adequate?
- Is it convenient for suppliers to make deliveries at this location?
- Is the exterior lighting enough to attract evening shoppers?
- Is the crime-rate in this area low?
- Are there any future plans made for this area which might alter traffic to your store?
In addition to these you must not forget to talk to your neighboring store owners in order to gather maximum information about the traffic pattern and behavior. A lot of useful information can be acquired from this.
It’s said that 2 identical stores of the same chain or same industry stand a chance of having 200% difference in sales only because of the location. Also, remember that today’s customers are spoiled for choice. They have thousands of options to choose from. So, it would not be a wise idea to compromise on your store location. Having your store location at the appropriate spot will undoubtedly give your business a huge leap forward.