Positioning is key in almost everything and the same is true for a brick-and-mortar retail business. The right location is a combination of visibility, affordability, and lease terms. You need to be where the action is, so deciding where to put your business is every bit as important as the business you decide to go into.
You have to take the time to analyze the areas that appeal to you. Study the business and consumer pages to see where you can find business support services and a growing community of people with regular incomes and interest in the goods or services you plan to offer.
There are two phases of choosing a location for your retail business: choice of an area or type of location within a city, and identification of a specific site.
Once you have a general idea of what city you like, choose an area or type of location within that city by evaluating these:
- Customer attraction power
- The nature of competition
- Availability of access routes to the stores
- Zoning regulations
- Geographic direction of the city’s expansion
- General appearance of the area
- Sales and traffic growth prospects of the trade area
- Demographics of neighborhoods
These are factors in narrowing down your site choices:
- Traffic flow
- Complementary nature of neighboring stores
- Adequacy of parking
- Vulnerability to competition
- Cost of the site
Picking a specific site is particularly important. In central and secondary business districts, small stores depend on the traffic created by large stores or a group of stores. These stores depend on attracting customers from the existing flow of traffic. However, where sales depend on nearby residents, selecting the trading area is more important than picking the specific site.
Another factor that affects site selection is the customer’s view of the goods you sell or the services you offer. Customers tend to group products into three major categories: convenience, shopping, and specialty goods.
These are usually low-priced, frequently purchased items that require little selling effort, are bought by habit, and are sold in numerous outlets. Candy bars, newspapers, cigarettes, and milk are examples. Quantity of traffic is most important to stores handling convenience goods.
These have a high unit price, are purchased infrequently, and require an intensive selling effort. The customer does price and feature comparisons, and products are sold in selectively franchised outlets. Examples include men’s suits, automobiles, and furniture.
These usually have a high price tag, are bought infrequently, and require a special effort to make the purchase. Precious jewelry, expensive perfume, and rare antiques are in this merchandise category. Specialty goods are often sought by customers who are already “sold” on the product, brand, or both. Stores catering to this type of consumer may use isolated locations because they generate their own consumer traffic. In general, specialty goods retailers should locate in neighborhoods where the adjacent stores and other establishments are compatible with their operations.