Picking the right retail location for your business can make or break you. We all know location, location, location is the real estate mantra but different businesses prosper from different locations.
There’s a shop on a busy corner near me that was turning over leasers and businesses at a heart breaking rate until a business that has little competition, a customer base that is constant and growing who is happy to go outside of the local shopping mall to get their products moved in. It is prospering and successful. The shop itself has a relatively cheap rent because the location isn’t the most desirable even though it has a high visibility position.
This business sells motorised wheel chairs and accessories. It has passing traffic of locals who use these vehicles and a wall facing a prominent intersection with large sign showing their products. For them and their product it’s a great location. It is a block away from a large shopping mall with parking, it has a ramp for people to easily access it and plenty of room for the vehicles to move around. It is across the road from a chemist, doctors and specialists that cater for people who are their key target market. It is a prime example of a business that has picked the perfect location for it’s customers and products.
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So here are the top 10 tips to go through when picking the right location for your business:
- Know your target audience – define them so you can determine if there are enough of them in the area and you can meet their needs. How do they shop and when? What do they want and what are you offering where?
- Find out how people use the area – is there pedestrian traffic that will stop to shop, is there a high enough density of traffic, is it increasing, decreasing, static? Spend time researching by sitting and recording the number of people in the area and going into the shop – even if you’re going to have a different product range. Get your hard numbers to make informed decisions.
- How and when do people get to the area – public transport, cars – what’s the parking conditions and costs, walking, and how does this affect the business? Is it a 7 days a week shopping district or a business district where a food shop would rely on breakfast and lunch sales 5 days a week? When are the busy times of the week, are people spending money or being social and window shopping? A shopping mall might look busy but remember that women use shopping as a social event and can spend more time looking and less time spending.
- How accessible is the location? If it is too hard people just won’t make the extra effort. Do you have customers with wheels for strollers or wheel chairs and can they get into the shop and move around? Is there cover or shelter to access the shop during inclement weather? What are the extra marketing and promotional costs to overcome poor access? What advantages do you competition have with access?
- Very few stores have no competition, even if their owners think they have a unique product so sensibility and honestly review local competition. Is there too much? How do you want to compete with other businesses – on price, product, service?
- Research the local area using maps, population statistics, where your customers will come from and what other shops and malls are in the district. Determine what are the boundaries people use – many don’t go over bridges for regular shopping trips, there’s socio-economic considerations, road access (consider if there’s direct access or going round the block with one way street limitations), work locations and patterns, physical boundaries like rail lines, industrial parks and more.
- Talk with local shop owners in the area and with similar shops in other locations for their advice and ideas as it is amazing how much information people will share. From doing this I found out that the local shopping mall was making money for the mall owners but the small businesses and franchises where having a hard time due to the high rents and till cuts the mall is taking. You’ll also be able to find out about local trade patterns – when people are about, what they spend and when they spend. There’s a wealth of information free for the taking if you approach other retailers the right way.
- Determining whether you’ll be best suited for a shopping mall or street strip shopping with the differences in costs and custom. Shopping malls might seem to be the busiest location but their leases, rents and business structures might strip out the profits for a small business leaving you working for the shopping mall owners rather than building a profitable business for you and your family. Whereas a street location might have less traffic, exposure to weather and a cheaper lease. There are down sides and upsides for both options so go through them carefully and know where the money is.
- Is there a right side and a wrong side of the street or mall? What are the differences in the rent and the income? How long will it take you to get into the right side of the location? Do you have to wait or do you have the option of key money? What are the plans for the area, will there be changes that will impact the location and for how long? If there is construction work planned how will this impact the access, the local noise and dirt pollution and how long will this go on for?
- How much experience do you have with negotiating leases and researching a location to make an informed and intelligent choice that will be the best setup for your business? Usually retailers have a limited range of experience and to build an understanding of the local market it’s best to look at as many properties as possible to get a solid understanding of lease rates, terms, facilities and considerations. Bringing on board a retail property consultant can make a real difference to how successful your business will be – remember your life savings are usually on the line and investing in an expert is much cheaper than loosing all your money.
Doing your research makes all the difference. Location is vital but that doesn’t mean it needs to be the most prominent position with the highest rent. Location works when your customers come and spend money with you.
All the best,
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