How to Find the Right Retail Location | SMB Compass
Ezra Cabrera | July 14, 2020
Finding the right retail location can make all the difference to the success of your brick and mortar business. With ecommerce businesses on the rise, physical retailers need to pay particular attention to how they market their products—and that starts with the right location. Although online shopping has accelerated at astronomic speed, studies have shown that not only do consumers prefer to shop in store, but they tend to spend more money on average as well. But finding the right location is easier said than done. Here are a few tips to steer you in the right direction:
Retail Compatibility
One of the first questions you’ll have to ask yourself is what other retailers are around you. Very few stores will be able to survive in an isolated retail location. What businesses in the area are the main traffic generators? Are their target demographics similar to yours? If so, you have a good opportunity to piggyback off of that traffic. Ideally, you’ll be surrounded by established businesses that aren’t also searching for their market.
One aspect that plenty of retail store owners do not consider is the ease of access to the parking lot. There are certain stores that make it a nightmare to get out of the parking lot to the highway or can be difficult to navigate. Finding a location that has easy access as well as healthy foot traffic is going to be imperative in building the most successful location possible.
Healthy Competitor Distance
You should aim to keep a healthy distance from your competition. This doesn’t mean that you can’t be near them. Maintaining a healthy distance means that you want to calculate the right amount of space between you and them; not too close, but not too far. This retail approach is called store clustering, where similar stores with different characteristics are bundled together.
In terms of store clustering, if a store similar to your own does offer the product or customer service needed, your store will assume that responsibility. Because your store is a healthy distance from competitors, it will also help save on marketing and advertising, too, since that business is essentially contributing to your traffic as well.
With all of this being said, if a competitor that offers less quality products at higher prices is close. This can help your retail business reduce their revenue so keeping customer experience is a priority. Offering products that a competitor does not can be a great way to get customers in the door. Once they see the difference in pricing, they will make the informed decision.
Work With Wholesalers
The actual process of searching for the perfect store location—even after you’ve nailed down demographic and what you’re looking for in a location—is tedious. The commercial real estate industry is complicated, and if you’ve never purchased commercial properties before, you may find yourself overwhelmed with complex legal and real estate jargon.
Wholesalers work directly with sellers to find the right buyers for their property, so you never have to deal with sellers yourself. “Working with a wholesaler allows you to better navigate the real estate industry, target specific types of property, and saves you time and money,” says Skystone USA, a company that specializes in Atlanta wholesale properties.
Customer Demographics
Every business owner needs to go where their customers are. Finding a phenomenal location at a great price does nothing if your target market doesn’t live in or frequent that area. Even if you live in the general area, it’s important that you don’t make assumptions about demographics—when it comes to retail locations, every decision should be backed by data.
Fortunately, there are plenty of tools that reveal demographic insight for communities across the country. For instance, you could use real estate platforms like NeighborhoodScout, which reveals detailed culture insights for local areas. You could also quickly create demographics maps with the ESRI tool.
These platforms show you the income level of local residents, education, age, and shopping habits. Armed with these demographics, you can better position yourself in front of your target market. Keep in mind that your market will likely be in more than one place; you can shortlist several geographic areas that align with your ideal customer base, and work your way out from there. You do not want to open a luxury clothing retail store in a neighborhood where the income rates are low.
Space to Scale vs. Space for Now
Every business owner will of course want to grow. However, unlike digital native business owners, scaling shouldn’t be your priority when it comes to brick and mortar businesses. Just because you think you’ll grow and need more space five years from now doesn’t mean you should focus on investing in a property that caters to a dream vision later down the line. Too much space can easily make your store feel empty. For now, focus on the resources you need today and how you can leverage that space to your advantage. There are always creative ways to build in the future when your budget is a guarantee.
Space also plays a huge role in storage as paying to store products eats into overall profit margins. Other retail stores in a strip mall might also be willing to pay to store some of their items in your location. Clutter is not the worst thing as long as employees can find products and the clutter cannot be seen by customers. Customers do want to feel like they have space to move around a store comfortable so make this a focus. Remote workers like that of marketers can help reduce the required space of the retail location.
All owners of retail businesses understand the need for a prime location. Balancing this with the budget and overall revenue needs to be done to avoid any type of cash flow issues. There is another option to consider as well that can keep costs relatively the same and increase overall sales. Ecommerce can be another way to sell products even if it is a less popular option for your demographic of customers.
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