Locating Your Retail Store July 4, 2008Posted by David Dirks in Building Foot Traffic, Retail Locations, Retailer Store Strategies.
Tags: business locations, foot traffic, retail store locations, retail store strategies
How many times have you passed a retail store location that seems to be a revolving door for businesses? I noticed them all the time. It’s the location that has a business for a few months…maybe even a year or two, and then, gone. The ‘for lease’ sign is up the next day and soap covers the windows so you can’t see in (what’s the deal with that?). A couple of months later, a new store selling something different steps in. And the saga continues.
Finding a good location is more than a trick, it’s a science. Many times I’ve seen locations with thousands of cars passing each day but to no good end. Of course, that’s what the landlords are selling…the traffic. “Look at all that traffic that passes by this location each day!”, they’ll say. They may even have some recent traffic studies that back their claims up. Good for them. Not necessarily good for you. If one of the pillars of retail success is ‘location, location, location’, it’s one you have to get right the first time.
Why is it that a location with lots of real traffic can’t seem to work for anyone for any length of time? After studying this for years, I’ve got a couple of reasons for you. First, the location may not have good access from the high traffic road it’s on. This is especially true if the location is on a road that has a legal speed limit that’s higher than 45 mph. Nobody stops unless they have to. Or there may be very limited parking on this high traffic site. Secondly, it may be on a what I call a ‘commuter’ road. This is a road that has high traffic volume in the morning and evening rush hours. Here’s the challenge though: lots of traffic but commuters have one thing on their mind and that’s getting to work (whether they want to or not!). I’ve seen plenty of come and go bagel & coffee shops fall for this one. It would seem logical to put such a store on a high traffic commuter route and it is logical. However, the key is where you put your bagel store along the commuter route that is critical. Now, I don’t have scientific evidence but I do have some experienced insight here. Commuters like to get their morning bagel or coffee at a location not far from their home or at a location that is just a few minutes before they arrive at work. If you open one in the middle, you’re stuck. Don’t believe me? Just study it. Observe what bagel/coffee shops seem to do well and which ones are rotating through that location like every couple of months. Enough on commuter locations.
Another reason that locations can fail is that people can get sold on ‘cheaper is better’. When given a choice of locations and not a whole lot of funding, many business owners will opt for the cheaper lease payment and take a less desirable location. It happens all the time. Just because someone decided to build retail space at a particular location doesn’t mean they knew what they were doing. Or they were ‘on to something’ about that location. There are plenty of retail spaces that have been built or being built in locations that are just plain awful. Sure, the numbers on the surface might look good, but traffic numbers are not the big picture or the only thing.
Of course, if you don’t have a good business model with a compelling reason for people to visit your store or you’re operating from a shoe string, it doesn’t matter how great the location is. I’m certain a great many of the business that go in and out of business fast are in that category.
Here are some basic questions that I’d ask any landlord right from the get go:
- What kinds of businesses were in this location before? How long were they here? Why did they go out of business?
- How long has this location been vacant?
- Do you have traffic studies that I can see?
- How many tenants have you had in this location in the last 24 months?
Questions to ask yourself:
- Who are my customers and where do they come from? How does that relate to this location?
- Have I asked any of the other tenants that are in the area how the location is working for them?
- Does the traffic seem to visit this location? Is it easy for a traffic to get on and off this location? Is there enough parking available?
- Are there any planned construction projects (check with the local municipality) near this location in the next 12-18 months? If so, what will the impact be on this location?
- What new construction projects (if any) are already going on in this area? Are they retail? Office space? Warehousing?
- How far are the neighborhoods (urban or suburban) from this location? What kinds of neighborhoods are they? Upscale, downscale, mix?
We could go on but this is a blog. Again, first comes a solid business plan that has a compelling business model built into it before you worry about a location.
Have a comment or question about this subject? Feel free to email me at: firstname.lastname@example.org and we can chat about it or you can respond to this blog!