Having a suitable retail location is a critical factor in the business’s marketing strategy, as the actual placement of the retail business influences many important long-term decisions and responsibilities. Choosing an appropriate site for a retail business is key in attracting a growing customer base and opportunities.
At times, a favorable retail site can also lead to a competitive edge because, in the retail marketing mix, location is a vital parameter that cannot be duplicated by competitors in any way. In this post, we will explore the significance of location and explain why store location is crucial for any business.
Varieties of Goods Sold
When deciding on a retail store location, consider the types of products you intend to sell. Different goods necessitate specific types of locations. For instance, convenience goods require easily accessible locations to facilitate quick purchases.
Specialty goods cater to unique needs beyond general products, prompting customers to travel further to obtain them as they are not readily available at convenience or general stores. Such specialty stores often thrive when situated near other shopping destinations where their offerings complement each other.
On the other hand, big-ticket retail stores offer high-priced items that customers purchase less frequently. Examples include upscale clothing, furniture, and cars. Customers in this category typically compare prices before buying, leading retailers to position their stores far from competitors to attract their discerning clientele.
Enrich with Additional Contextual Information
Augmenting the analysis with more data allows analysts to distinguish between different store locations and better understand why one location excels over another. Since various brands have unique requirements, the relevant contextual data will vary accordingly.
For instance, a gardening store might find it beneficial to cross-reference residential property data to ascertain the potential customer base near the store, distinguishing between those with space for gardening and urban residents without land. You could get retail tenant representation from brokers who understand how to find retail space for lease in a suitable location and can provide the necessary data insights to aid this process.
Visibility, Accessibility, and Traffic
A common mistake when selecting a retail store location is confusing foot traffic with actual customer numbers. This assumption doesn’t always hold. Retailers should aim to be situated near shoppers who match their desired customer profile. Small retail owners can often benefit from the flow of customers coming from larger retail stores. Consider the following factors:
- Pedestrian activity
- Accessibility of public transportation in the vicinity
- Sufficient parking for both customers and deliveries
When choosing a retail location, consider it from the customer’s perspective. Your retail store should be easily visible to customers, as increased visibility can reduce the need for extensive advertising efforts.
Utilization of Marketing Budget
A retail store’s marketing budget should align with its location’s cost to attract a larger customer base. Typically, a retail business in an ideal location with a steady flow of customers can be quite costly for the retailer.
In these instances, the marketing budget required may be minimal as the store is visible to most customers and passersby. Conversely, a store located further away from the main street will need to intensify marketing efforts and allocate budget towards marketing campaigns to attract more clients.
Evaluating Foot Traffic
Foot traffic is a crucial element in the triumph of a retail store because a greater number of individuals passing by your establishment heightens the potential for customer engagement and sales. Assessing foot traffic potential in diverse locations can help you determine the visibility and exposure your store can attain.
Key locations that consistently draw potential consumers include pedestrian zones, shopping centers, and areas with high visibility. To evaluate foot traffic, monitor the area at various times, conduct pedestrian counts, or acquire foot traffic data from local authorities. Opting for a location with substantial foot traffic enhances the likelihood of attracting a broader customer base’s attention and interest.
Engaging in Lease Negotiations
Invest the necessary time in negotiating favorable lease terms that align with your objectives and requirements. When discussing rent, strive for fair and competitive rates informed by market research and the specific value of the location.
Consider the lease duration carefully and aim for a term that offers stability without committing you to a lengthy agreement if it doesn’t suit your future plans. Maintain the ability for your store to respond to evolving circumstances and seize growth opportunities by incorporating flexibility for potential expansion or relocation. Thoroughly examine additional lease terms such as maintenance responsibilities, permitted alterations, and any extra fees or clauses.
Examine the Current Performance of the Stores
The culmination of the preceding stages leads to this pivotal point. Here, you will identify the most successful locations to understand the reasons behind their success and pinpoint comparable locations. For instance, if stores near universities exhibit the highest success rates, you can focus on areas with similar demographics.
The traits of prosperous stores unveiled in the previous phases (such as their proximity to your existing stores, competitors, complementary businesses, target customer base, etc.) will guide you in determining the key attributes to seek in future store locations. This data can also assist in identifying underperforming stores and making decisions on closures, site selection involves a dual approach of expansion and consolidation strategies.
Endnote
Take your time when selecting the location for your retail store. Conduct thorough research and carefully assess the area. If necessary, consider postponing the store’s opening date on your calendar. It’s better to wait for the perfect store location instead of hastily settling for the first option available.