Where to open a store?
The location you choose impacts your visibility, accessibility, customer traffic, and ultimately, your sales and profitability. Therefore, finding the right space is crucial. The proverbial saying in real estate and retail, "Location, Location, Location," underscores this fact.
The right location can help you reach your target demographic more effectively. For instance, if you've identified your primary customer base to be young urban professionals, a store located downtown, near office buildings, or trendy restaurants, might be more advantageous than a location in a residential suburb. Moreover, the right location can also influence the foot traffic your store receives. A store on a busy street or in a well-trafficked mall can naturally attract more potential customers than a more secluded or less accessible location. In the following article, we will explain what to consider in your search for the right location for your business.
So, what should you consider?
The basics evolve around your target market. The people who should be shopping at your store or visiting your office: young, old, affluent, middle class, etc. You truly need to understand your product or the service that you're offering. You should also consider what operational needs you have. Factors that go into this introspection could include the need for a parking lot, a big storage area maybe even a truck offloading ramp. But also factors such as ceiling height square meters or outdoor spaces should be considered. And last but not least considered the accessibility of your space, this could be especially important for wheelchair users or walking-impaired customers.
Key Factors to Consider When Choosing a Location
The average customer
When deciding on a space make sure you are aware of the customer demographics you should identify your target audience and build an average customer. Analyze a few different characteristics of your customers. This can include average age, occupation, income level, hobbies, etc.
By doing this analysis you will be able to identify what needs these customers likely have but also what obstacles might stand in the way for them to visit your store/shop or office. One example of this could be a wealthy older audience. This group should likely have easy parking access to the store and have an accessible entrance such as a wheelchair-friendly ramp instead of only stairs. This way you make sure to make it as easy as possible for your target audience to use your store or service.
These considerations should also be included when looking for the area you want to open your store in. Study the demographic data and trends of your city to find out in which areas your target audience spends most time i.e. lives in.
You also need to analyze the competition in the areas that are left after these analyses. By looking at what the competition in these areas can offer you can find out if it makes sense for you to continue looking in the area or not.
Also, be aware that it is not only negative to have competitors close by. The competition also has a positive side to it. One, there is an established customer stream in the area, if your product or service can offer an alternative to the already established product some of these customers might change over to you. Therefore, it can be a helpful way to get customers.
Foot Traffic is a crucial factor when determining where to open your store. In some countries you can learn more about the foot traffic around the location from the walk score. Your business's success could hinge on the volume of people walking or driving past your location daily. Conduct an analysis of both pedestrian and vehicular traffic patterns in your prospective areas. Take note of the frequency of people passing by, and if possible, identify if they belong to your target demographic. Similarly, consider the flow of traffic at different times of the day. When is the location busiest? When is it quietest? Peak and off-peak times can greatly influence your store's operational hours and potential sales volume.
Cost vs. Location
The cost of leasing or purchasing a retail location is a fundamental consideration for any business. It's essential to strike a balance between cost and location benefits. While a prime location may command higher lease or purchase prices, it could also provide access to a larger customer base, better visibility, and potentially higher sales. Conversely, a cheaper location might save on expenses but could limit your exposure to potential customers.
Another aspect to consider is the price of a retail space or office. Spaces in highly popular areas with lots of foot traffic will likely be more expensive to rent or buy than other spaces in e.g. the suburbs of a city. When considering cost, you'll want to factor in not only the rent or purchase price but also any potential renovation expenses, maintenance costs, and utilities. It's crucial to create a comprehensive financial projection to ensure your business can sustain these costs. Keep in mind that a less expensive location might end up costing more in the long run if it results in lower foot traffic and sales.
Moreover, while it might be tempting to opt for the location with the lowest cost, remember that the value of a retail location goes beyond its price tag. Its proximity to your target demographic, visibility, and potential to drive high foot traffic is just as important. The key is to find a location that gives you the best return on investment - one that combines affordability with the right features to maximize your store's potential for success.
Checklist for store location searchers:
- Analyze the average customer of your product/service (Age, Occupation, Income, etc.)
- Find out what their needs are (e.g. parking lot, easy access, etc.)
- Where do these people spend a lot of time?
- Is there competition?
- Can you be a viable alternative that takes advantage of the customer stream in the area?
- What are the peak times/days?
- What do you need to do to get people in your store? If vehicular traffic, you might need signs, etc. If it is mainly pedestrians you might focus on a big window with attractive decorations, etc.
- You have to weigh the pros and cons of a location, a location might be expensive due to access to a wealthy audience.
- How much needs to be renovated to get the store to your standard?