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Choosing the right location is a monumental decision that can make or break your business. It is the key to ensuring the long-term success of brick-and-mortar stores that rely on accessibility, foot traffic, and the right clientele. Whether you are a well-established company considering business expansion, a startup, or an online business expanding into retail stores, the process of choosing a business location is fraught with myriad challenges and pitfalls. It is a complex endeavor that involves extensive research, detailed planning, significant investment, and a duration spanning many months. This article breaks down this arduous task into 9 simple steps to help you choose the best location for retail expansion. Let’s get started!
The industry type, nature of your business, and its operational needs are some of the major determinants when choosing a business location. For example, as retail businesses sell directly to the end-users, they must be located in the vicinity of their customers. If you are into high-end fashion business, an appropriate location would be ahigh street or downtown area with high-profile visitors. Manufacturing businesses, on the other hand, require a location with warehouse storage space and easy delivery options for clients. So, create a list of the offerings, goals, priorities, and distinctive traits of your business and use them as factors to select the right location.
Conducting in-depth customer research is crucial as it can have a big influence on your choice of business location. Gather the most up-to-date information on your target audience. Learn about their shopping habits, preferred mode and place of shopping, choice of transportation, residential locality, proximity to office, etc. Research about demographic trends and geographic patterns to understand where your customers are. Analyze if the location you pick will be convenient and accessible for them to reach your business. The more customer information you have, the easier will be your search for profitable locations.
Every locality has a specific type of community and culture. Demographic data refers to the socio-economic characteristics of the community in a particular location. It includes details like gender, age, employment, literacy level, income, and homeownership. Studying the demographics of the locality is critical to determining the success of your business in that area. Include other relevant location data to your analysis, like customer footfall of the area and the types of businesses that have found success there. This way, you can differentiate store locations and comprehend why one is better than another.
While the demographics of the location might suit your interest, there may be certain hidden facts that might not work in your favor. One way to mitigate this risk is to analyze the performance of current stores in that area. Track key metrics like foot traffic and revenue for every store location. You must talk to the locals to gauge their impressions of running a similar business in the area. Discovering what makes the store successful in that location will help you define the characteristics of the next store location.
Don’t just choose a location because it fits with regards to your customers. Always check if your competitors are located nearby. By locating a business near your competitors, you can either catch the overflow from existing businesses or end up losing your customers to the competitors. Estimate the amount of market share you can capture relative to the number of competitors within the location. If you see a sizeable opportunity, then the location can have immense potential. Likewise, map and visualize complementary brands to discover locations where your target audience may already be. You can collaborate with such brands to benefit from the customer traffic they generate. In all, an area that has high demand for your products or services and a healthy level of competition is recommended.
Your customers, employees, vendors, and suppliers must be able to access your business location easily. To avoid frequent issues with inventory levels or significant delays, choose a location near your suppliers. Ask yourself the following questions when considering the options:
The fewer the obstacles, the greater the potential the location has.
Examine the availability of commercial properties in the area to assess its future growth potential. Find out what types of commercial buildings are available and how local zoning laws may affect your business. In areas where there are primarily residential or government-owned properties, it can be challenging to lease or purchase commercial property. Moreover, they may not have the necessary infrastructure in place for commercial use. Redeveloping or repurposing a residential property for commercial use can be costly and often requires obtaining the necessary permits and approvals. When planning to construct, rent, or buy abuilding, you’ll have to ensure that your property conforms to the local zoning ordinances. Be mindful of bans and restrictions, and avoid signing on the dotted line until you’re sure it’s legal for your business to operate in the chosen location.
Before you choose a location, consider the following factors to assess the health of the property:
Securing a location that fits your budget and profit margin should be one of your major priorities. You cannot afford to spend more on rent as it will take away a substantial portion of your earnings. Additionally, every location has certain hidden costs that must be taken into account: utility upgrades, taxes, renovations, economic incentives, and minimum wage requirements. Factoring in all these costs will help you make an informed decision for your business location.
Once you consider all the factors mentioned above, you’ll be in a much better position to select the best business location. Here’s another pro tip that can further simplify the process for you:
While business location selection was previously based on experience and intuition, it now relies heavily on robust data, rich analytics, and location intelligence. Many companies choose to outsource this strenuous task to experienced companies like Spatic.
Spatic assists in identifying profitable locations for your business based on your preferences and requirements. With Spatic Studio, Smart Locate, and Site Report, the platform offers data-driven intelligence solutions to support retail expansion. To learn more about our services, schedule a demo with us today!