What factors do retailers consider when deciding on a particular site

Turning your entrepreneurial spirit or hobby into a retail business is an exciting proposition. However, putting a plan into action is much more overwhelming than dreaming about a business. You need to consider factors that impact your marketability and long-term profitability.

Retail Store Location and Site Selection

One of the key starting points in putting up a retail store is the right location. Getting into an ideal business location is a sustainable advantage since a competitor can't copy or steal your spot. The challenge is deciding what location is ideal.

Factors influencing in the location of a new retail outlet include the amount of passing foot traffic and local parking availability, as well as rent costs. If you plan to sell a large assortment of goods, a standalone store in a high-traffic business district might make sense. With a more niche store or boutique, a premier spot in an enclosed mall or strip plaza often makes more since you rely on passers-by. Building cost or lease fees play a role as you want to find the best value possible.

Target Market

The ideal location is also one that is close to your target market. You should assess the local marketplace before signing a building contract. If you operate a niche shop, the size and traits of the local marketplace play a key role. If you don't have enough customers that match your target market characteristics, your business model won't work. If you invest in a larger discount or department store, you have to pull customers from a broader geographic area to make enough revenue and profit. This factor influences how much you need to invest in marketing.

Competitive Factors

Competitive factors also impact effectiveness of a retail start-up. The ideal scenario exists when you start a distinct business that offers a sizable marketplace goods or services they value and can't get elsewhere. In general, starting a business in a market with little to no competition is idea. However, the lack of competition may result from barriers to entry, lack of market demand or failed attempts by previous players. Management learning website Mind Tools suggests that you conduct a SWOT analysis to see whether your current strengths and weaknesses, combined with future opportunities and threats, give you a good competitive position.

Financial Capital

You have two basic ways to start a retail business. You can build one from scratch or invest in a franchise, where you purchase the rights to an existing model. In either case, you need some financial capital to start. If you don't have enough savings on your own, you can raise money from investors or lenders, though they must recognize the viability of your business plan. Along with start-up money to open the doors, you need enough capital to buy inventory and to comfortably sustain operations while you work to achieve profit.

Legal and Regulatory Environment

You also need to understand legal and regulatory facts that impact your industry. Some industries are heavily regulated, while others have minimal government regulations. PESTLE Analysis recommends that you run a PESTLE exercise to figure out the political, economic, social, legal and environmental factors that might impact the viability of your business.

Loose regulations make it easier to open up shop. However, you may need to get professional or business licenses in some cases. To sell insurance, for instance, you need various licenses. If you want to open a pet shop, you need to understand federal and local laws on proper care and sale of animals.

Posted by Retail Attractions Blog on December 13, 2018 in Blog | No Comments

When you’re making decisions about retail site selection, there are several important factors to consider. Selecting the right location for new retail expansion is key to success. As such, it’s vital that you understand all the factors involved.

The better you understand these important factors, the more likely you are to make a good site selection. We’ll talk about five key factors in this blog post, and five more in Part Two.

Customer Demographics

To look at relevant customer demographics in a certain area you need to know what type of customers will frequent your business. In other words, What is your target demographic’s customer profile? Knowing this will let you determine whether or not the customer base in the area you’re looking at is large enough to support your business.

Once you know what your customer profile looks like you can take this factor into account in retail site selection. Take a look at median household income, average age, marital status, family size, education level, etc. in the location you’re considering. The better a location’s population matches your target demographics, the better this site will be for your business.

Customer Psychographics

Demographics are about who your buyer is. Psychographics tell you why they buy. It takes into account “your buyer’s habits, hobbies, spending habits and values” (from “How to Use Psychographics in Your Marketing: A Beginner’s Guide”).

Once you understand more about why your customers buy your products, you can make sure that you’re selecting a location that will appeal to them. For example, if most of your customers are health-conscious they’re more likely to find your store if you build near a gym than near fast-food restaurants.

Trade Area Population

You also need to look at how many people live in the area you’re considering for your next retail site. There has to be a large enough population in your trade area to support your business or there’s no point in building. You’ll also need to make sure that a high enough percentage of this population fits your customer demographic.

There’s more to defining an accurate trade area than just using concentric rings. You need to take into account population density, competing communities, natural barriers, traffic flow, accessibility, and other real-world factors.

Location Quality

If the trade area population matches your customer demographics and psychographics, then it’s time to start considering specific locations. You’ll want to look at how far each location is from residential areas and how visible it is from the road. Also, consider whether or not nearby businesses will draw-in customers who fit your profile.

You’ll also want to consider whether or not you’re going to plan for multi-location growth. If the trade area can only support one store or restaurant, then you’ll want a central location. But if the community, and your customer base, is growing you’ll want to plan ahead for the possibility of opening other locations in the future.

Location Access

People are far more likely to visit your business if it’s easy to get to. You want people who see your sign or look you up online to be able to find your business easily If it’s too hard to access, then there’s a good chance potential customers will give up on finding you.

An ideal location makes it easy to turn in from the nearby roads and get into the parking lot. It should also be easy to get out of the parking lot, and if there isn’t a traffic signal in place you’ll want to find out whether the community is willing to put one in.

If you liked this article on important factors in retail site selection, be sure to check out the other articles on RetailAttractions.com. And if you want any help with retail site selection, get in touch with us. We have extensive experience with helping retailers find the best possible locations for their next expansion.

Also, be sure to pick up a copy of my new book The Devil’s In the Details: Things that Challenge City Government and the Language of Development. It addresses glaring problems and issues that destroy foundational economic development efforts for cities and provides guidelines for how to overcome those issues. Click here to order.

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