7 Things to Know About Selecting a Retail Location

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 bankrupt you.

1.Type of business

Long before you hit the streets looking for a location, take a hard look at the type of business you will be operating. For example, how many different types of products will you sell? Your product mix will have an impact on such things as the amount of square footage and storage space required in the location. If you are a service provider, factors such as office space will be a major consideration.

Start a brainstorm or “whiteboard” of ideas of what your target audience might expect when they enter your store: List as many factors as you can think of, including display space, number of aisles, aisle width, shipping/receiving area, storage space, office space, traffic flow in store, etc. Once you visualize what the shopping experience is like for your customer, you’ll get a better idea of ​​what will be required at a location.

2. Demographics

Another critical component of retail location selection 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 ie gender, age, income level. etc Start researching some of the following information:

• What neighborhoods are home to your target market?
• How far will potential customers travel to shop at your location?
• What are the statistical trends at a proposed location, ie population growth; revenue growth; aging trends, etc.? How might this affect your store 5 or 10 years after you locate it?
• What are the demographics of employees in particular areas? With labor shortages becoming a constant 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 that will have a negative effect on your business. Some examples might 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 area surrounding your store. A good example is the retail “pockets” that exist in many cities: shopping destinations that attract a larger number of consumers by offering complementary stores in close proximity to each other, i.e. fashion districts, areas with a high concentration of art galleries, car malls, etc.

4. Traffic patterns

It is also important to know how vehicle and foot traffic patterns may affect the business at a proposed location. Some things to look for include:

• Access to the store by traffic moving in both directions (both by car and on foot).
• Number of cars passing the store location.
• Number of pedestrians passing through the place.
• Proximity to public transport.

David Gray, director of DIG360, a retail consulting firm in Vancouver, BC, shares some store location tips in a recent BC Business article. “If you’re smart about it, you do a lot of searching. You’d be in a car and you’d do it, and then you’d be on foot. And you’d go on weekends and weekdays, just to make sure there’s not a huge difference in traffic. Find out which side of the street is the busiest and check where the parking is.”

5. Trade Associations

An often overlooked factor when considering a location is the presence and strength of a local trade association. According to The BC Women’s Enterprise Centre, merchant associations can offer a number of benefits to your retail operation:

• A strong trade association can promote and maintain business in a given 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 security measures.
• A strong merchant association can achieve through the strength of the group what an individual store owner could not even dream of. Some associations have induced developers to add freeway exits near their shopping center. Others have lobbied and received funding from cities to redevelop their malls, including expanding parking lots, remodeling buildings, and installing better lighting.
• Merchant associations can be particularly effective in promoting stores using common themes or events and during the festive seasons. The collective draw for these promotions is often several times larger than what a single retailer could have put together.

6. Municipal Ordinances, Zoning and Planning

Understanding all the “rules” and plans your municipality has put in place is very important when it comes to selecting a location; the long-term success of your retail store could depend on it. Some things to consider are:

• Zoning: Are there restrictions that could prevent you from making specific renovations or lease improvements?
• Statutes – 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 on operating 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 so tempting to jump into a place you fall in love with, but just like in residential real estate, “head over heart” is the best approach when it comes to choosing a retail location.

David Gray warns those who want to act on impulse. “It could just destroy your business because it’s in a bad location. A bad place could well be (a really cool area), it could be that you can’t turn left or there’s no parking, so don’t rush into anything until you know it’s perfect, or 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 rushed just to coincide with, say, a loan approval. If you haven’t found a suitable location, don’t plan to open until you’re sure you have what you want. Put your plans on hold; don’t settle for a location you hope will work. A delay of a few months is only a minor setback compared to the massive, often fatal, problems that occur with operating a retail business in a poor location.”