Selecting a location for your retail store is one of the most important decisions you will make as a small business owner. Choosing the right location can lead to success and profit; choosing the wrong location for your retail operation could put you out of business.
1. Type of business
Long before you hit the streets to search for a location, take a good look at the type of business you are going to operate. For example, how many different types of products will you sell? Your product mix will have an impact on things like the amount of square footage and storage space required at the location. If you are a service provider, factors such as office space will be an important consideration.
Start brainstorming or ‘white board’ brainstorming of what your target audience might expect when they enter your store – make a list of all the factors you can think of, including display space, number of aisles, aisle width, shipping / receiving area, storage space, office space, store traffic flow, etc. Once you visualize what the shopping experience looks like for your customer, you will get a better idea of what will be required in a location.
2. Demographics
Another critical component of selecting a retail location is understanding your target market, both in terms of your target buyer and the geographic area surrounding your proposed location. Once you have established your target market i.e. gender, age, income level. etc. start researching some of the following information:
- What neighborhoods host your target market?
- How far will potential customers travel to buy from your location?
- What are the statistical trends in a proposed location, that is, population growth? income growth; aging trends, etc. How could this affect your store 5-10 years after location?
- What are the demographics of employees in particular areas? With labor shortages becoming an ongoing challenge for retailers, does your proposed location have access to potential full-time and part-time employees?
3. Competition
Make sure you have a thorough understanding of all the competitors in a proposed location, good and bad.
Bad competitors are those who will have a negative effect on your business. Some examples may include retail stores that might be selling the exact same products (at a discount) or stores that appeal to the opposite target audience than your retail operation.
Good competitors are retail stores that complement your business by attracting a similar target audience to the surrounding area of your store. A good example is the retail “pockets” that exist in many cities: shopping destinations that attract a greater number of consumers by offering free stores in close proximity to one or the other, that is, fashionable districts, areas with a high concentration from art galleries, car malls, etc. .
4. Traffic patterns
It is also important to know how vehicle and pedestrian traffic patterns can affect business in a proposed location. Some things to look for include:
- Access to the store by traffic that travels in both directions (both by car and on foot).
- Number of cars passing the store location.
- Number of pedestrians walking through the site.
- Proximity to public transport.
David Gray, director of DIG360, a retail consulting firm in Vancouver, BC, shares some suggestions on locating stores in a recent article in BC Business. “If you’re smart about it, you look a lot. You’d be in a car and you would, and then you’d be on foot. And you’d go on weekends and weekdays, just to make sure there’s not a big difference in traffic. Find out what side is the busiest side of the street and check where the parking lot is. “
5. Merchants associations
One factor that is often overlooked when considering a location is the presence and strength of a local merchant association. According to the BC Women’s Business Center, merchant associations can offer a number of benefits to your retail operation:
- A strong merchant association can promote and sustain business in a certain area.
- The presence of an effective merchant association can strengthen your business and save you money through group advertising programs, group insurance plans, and group safety measures.
- A strong merchant association can achieve through group strength what an individual store owner could not even dream of. Some associations have induced city planners to add freeway exits near their shopping center. Others have lobbied for and received funding from cities to remodel their shopping centers, including extending parking lots, remodeling buildings, and installing better lighting.
- Merchants associations can be particularly effective in promoting stores that use common themes or events and during the holiday seasons. The collective benefit from these promotions is typically several times greater than what a single retailer could have made.
6. Statutes, zoning and city planning
Understanding all the “rules” and plans your municipality has established is very important when it comes to selecting a location; the long-term success of your retail store may depend on it. Some things to consider are:
- Zoning: Are there any restrictions that may prevent you from making specific renovations or improvements to the lease?
- Bylaws: What are some of the laws that could affect your retail operation? For example, can you use the space in front of your store for promotions … do you have restrictions to operate during certain hours, etc.?
- Planning – Are there any major development plans that could affect your retail operation? Is there any major road construction planned near your store?
7. Don’t rush, be patient
It’s very tempting to jump into a place you fall in love with, but just like in residential real estate, “head to heart” is the best approach when it comes to choosing a retail location.
David Gray guarantees those who want to act on impulse. “You could just destroy your business by being in a bad location. A bad place could be (a really trendy area); it could be that you can’t turn left or there is no parking, so don’t rush inside until you know that it’s perfect, or that it’s close to it. “
The BC Women’s Center has the following tips:
“Selecting a retail location takes time and careful consideration. It shouldn’t be done in a rush just to coincide, for example, with a loan approval. If you haven’t found a suitable location, don’t plan to open until you’re sure you have it. You want. Put your plans on hold; don’t settle for a location that you hope will work. A delay of a few months is just a minor setback compared to the massive, often fatal, problems that occur from operating a retail business in a bad location. “