How many times have you heard that there are only three things that matter in retail: « location, location, location »? At this point, you know that selecting the perfect location for your retail store will be the most important decision you are going to make. But how? Here are the 5 most important steps to follow.
- Check your demographics
The most important thing is to set-up your store where your customers are. So you must find a location where you have potential customers around you, who are interested in your product and can afford it. Here are some elements you need to pay special attention to:
• Define how many customers you need to have to start being profitable. How many sales you should have per day? If you have calculated your margin, you should answer this question easily (Click here if you need more information about margin)
• Is your target market surrounds your location? Do people you want for customers live nearby? Is the population density of the area sufficient for your sales needs?
• Analyse the income level in the area: It will help you to anticipate how much are they willing to pay for your product.
• Check the spending/shopping patterns: Is it an area with a lot of seasonal business?
• Evaluate the population growth, density and trends: is it a growing area? Does it attract young people, families or retirees?
If you don’t know where to find this information, ask us.
- Check the demand
The best way to check where the demand is for your product or your service is to run a campaign on Potloc. In addition to show you where the people wants you, it will also create you a list of early adopters that you can contact later on, when ready to open.
- Analyze your competition
Determine your competitive environment does not mean to run away from competitors. It is often the opposite. Food courts are a good example: a lot of restaurants gather the same location in order to attract more clients all together. If your market is large enough, you can benefit from your competitor’s marketing efforts. So if you have selected an area where you think the business could be good, it might be possible that a few other businesses are already selling similar products. Your job at this point is to identify their strengths and weaknesses so you can differentiate your store. There are some elements you need to pay special attention to:
• Analyze your « bad competition »: the ones that have negative effect on your business. For example: businesses with the same product at a discount price, or the ones that attract the opposite target audience or seasonal business.
• Determine your « good competition »: the ones that are going to complement your business. Usually there are the businesses that attract similar target audience. You should visit them to observe how they operate, who are their partners, how the shop look like, how many customers they have etc. But the most important is to determine your differentiating factors: what’s you, and only you, can provide?
• Find out the saturation index. At this point you have to be sure if there is a place in this market for your project. How big the market is? What percentage of the market could you gain? Is the market growing or shrinking? You must absolutely be aware of the competitive potential in the area.
- Figure out the building accessibility and visibility
Before you choose a rental space, there are several factors you need to consider. Below are some of them you should evaluate:
• Check the traffic patterns. You must take note of the number of pedestrians walking by the store location and the number of cars passing by. Is there access to the store by traffic moving in both directions? You also have to be sure that your store is accessible by public transportation. You can usually find this information on your city’s website if they are open data oriented. Otherwise, contact us.
• Think about the visibility. Is it easy to find? Is there any tree that can hide your shop in summer? If your street is east-west oriented, how much sun light are you going to have? There is always a sunny pavement and a shadow one, make sure you are on the sunny part of the street. You must visit the store location also at night: is exterior lighting adequate to attract evening shoppers?
• Think about the accessibility. Is the facility easily accessible to your potential customers? Is there ample parking places nearby? Can suppliers make deliveries conveniently at this location? Is it a safe neighbourhood?
• Building considerations: Is the facility large enough for your business? Do you need to do any renovations? Does it offer room for all the retail, office, storage or workroom space you need? Is the facility consistent with the image you’d like to maintain? If your business expands in the future, will the facility be able to accommodate this growth?
A real estate broker can be useful if you don’t think you are able to check all these points on your own.
- Evaluate the costs
Choosing the perfect location also involves thinking about your finances. If you need a more detailed explanation about how to figure out your finances, click here . Here are the most important factors you need to pay attention to:
• Do you need any help? Do not hesitate to ask for some help from a real estate broker: he will find a location that matches your financial reality. He will simplify your work because he will consider all the factors below.
• Purchase/rent cost: Are the lease terms and rent favorable? Be careful, not to be put yourself under pressure from the start with an excessive rent!
• Maintenance costs: Does the building need any renovations? Do the existing utilities (lighting, heating and cooling) meet your needs or will you have to do any rewiring or plumbing work? Is ventilation adequate?
• Security needs: Is the facility located in a safe neighborhood with a low crime rate? Is exterior lighting in the area adequate to attract evening shoppers and make them feel safe?
• Staff availability: Can you find a number of qualified employees in the area in which the facility is located? (Click here if you need more information about HR)
• Promotional costs: Click here if you need more information about Marketing and Communication
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