Most modern consumers think about online shopping when they hear the term “retail.” While smaller retailers are finding success online, there is still a market for brick-and-mortar retail stores. Most of these businesses also maintain a web presence, but many shoppers still value the in-person shopping experience that cannot be replicated online.
Choosing a retail store location and layout is a crucial decision for any business that wants to attract customers, optimize sales, and reduce costs. There are many factors to consider, such as the market, the competition, the accessibility, the design, the layout, and the legal aspects.
Below, we will discuss some of the key factors to consider when choosing a retail store location and layout, and how they can affect your success.
Types of Retail Store Locations
When retailers expand their presence with new stores, as we know, the key factor is location. Whether it is a densely populated or rural area, it is important that the retailer stays relevant. Location can also enhance or decrease the ability for a retail store to market itself and handle any competition from other businesses.
Shopping Centers and Malls
Shopping centers or malls contain several units and lots of space for retail stores to be located. This type of retail store location is ideal because they generally offer adequate parking space and high visibility. They are also often served by public transport routes as customers come here specifically to shop. A disadvantage of this style of retail location is that your retail store will sit next to a lot of competition and the rent is likely to be higher than in other locations.
Free Standing Retail Locations
This type of retail location includes any stand-alone building. It can be tucked away in a neighborhood or right off a busy highway. Free-standing locations come in many sizes and can be appropriate for any type of retail business. Many of the food and non-food retailers use this type of solitary sites.
The primary advantage of having a solitary site is that it is away from the competition and provides the services to the customers, which help the customer to zero down on the product offered by that particular retailer.
However, the shortcomings of having a solitary site are the pedestrian traffic will always be so as compared to a shopping center or a convenience store and the visibility will also business along with the huge amount of investment since the site will be solitary.
Downtown Areas
Many communities are hard at work to revitalize their downtown areas, and retailers can benefit from this effort. You will often find many older, well-established retailers in a downtown area. Since space is usually limited, these locations are often good choices for smaller or specialty stores. However, there are chains and big-box retailers that can make use of downtown retail locations, especially if they are willing to build up rather than out.
Brick-and-Mortar Retail Space
As consumer shopping patterns change, retail stores must choose their location carefully. The term brick-and-mortar retail space refers to a traditional street side business that offers products and services to its customers face-to-face in an office or store that the business owns or rents. The local grocery or the bank on the high street are examples of brick-and-mortar companies.
Retail Location: Things to Consider
Location
If you are opening a brick-and-mortar retail business, you must focus on finding the best retail space. Picking out a prime retail space for your business needs to be a focal point. While it can be tempting to try to pick a cheap location and hope your business generates a steady flow of customers through its marketing efforts, sometimes, there’s no substitute for being in a busy part of town. Picking a location downtown might be pricier than an option a few miles away from town, but the pricier option might bring in thousands more customers per year.
When determining a location, find where your customers spend their time. If your customers live primarily outside of town, opening a downtown location might be more expensive and bring in fewer customers. Try to place your retail location in an area where your target audience spends its time. While that tip may seem simple, businesses often focus on finding a location they think is fantastic, rather than trying to narrow down where their target market resides.
You may also have a location with additional space to store inventory. If you expect to have a lot of inventory, because you sell a lot of items at affordable prices, you may want additional space. Other stores may sell a few high-end items and don’t need a large space to keep inventory. Keep inventory in mind when selecting a location.
Parking and Accessibility
In evaluating your business store location, you need to walk in your customer’s shoes and consider how accessible it is for them. Evaluate how easy it is to find your store on foot. Check if the location is well-connected to public transportation networks such as buses, trains and taxis. The lack of accessibility via public transport can put a dent in customer traffic. Chances are that people may not bother visiting your store since they are usually spoilt for choice in this competitive market.
Additionally, check on average parking fees and the availability of parking facilities in the vicinity of your store. Customers who drive are less likely to visit if they cannot find parking or have to incur steep hourly rates.
Demographics
When considering where to open your store, it is important to think about the demographics of the area. Who is your target market? What is the median income of residents in the area? What is the population density?
Consider these factors when narrowing down your search for the perfect store location. Finding the perfect location on paper means nothing if you do not have any customers or potential customers in the area. For newer businesses without an established consumer base or demographic stats, create a profile of your audience demographic. This should include the generation of the customer you are selling to, their expendable income, and shopping habits.
Competition
When deciding where to open your store, you need to consider the level of competition in the area. If there are already a lot of stores selling similar products, you will need to find a way to make your store stand out. On the other hand, if there are not many other stores in the area, you may have a better chance of being successful.
Here’s how to determine the level of retail competition in an area:
- Visit the site in-person to see which other stores are nearby
- Search online for information about the businesses in an area
- Reference research and data from third-party firms like IPA COMMERCIAL REAL ESTATE
- Partner with a site selection advisory firm to get access to proprietary data
It can also be helpful to talk to other businesses in the area — competitors or not — to get an inside read on what it’s like to do business there.
Proximity to Other Businesses
Look out for complementary businesses in the vicinity, because their customers and employees could also become your customers. This makes it very convenient for them to get products and services from your store since you’re in the neighborhood.
Take note of other businesses that will enrich the quality of your company. Are there many reputable brands nearby? Are there popular shops, services and restaurants drawing adequate traffic to the location? These are telltale signs of customers who might visit if you set up your business in the locale.
Traffic Flow
Many retailers are currently using traffic flow analysis in retail management to discover the distribution of traffic by hour, day of the week, store location, seasonal periods, promotion periods and total chain. With traffic counting, retailers can make sure they are in the best location possible. Tracking traffic flow in retail allows you to create initiatives that increase the likelihood of sales. Sensors and infrared technology can be used at the entrance areas to count the number of visitors to the store. Some technology is even so sophisticated that it can tell whether the customer is entering or leaving. Counts will be generated and sent to a database. Some software systems allow reports to be generated by store, time, entrances, and segmentation groupings.
Growth Potential
Do you need a location with room to grow? As you hire more employees, how many more will fit in this location? You do not want to pay for more space than you need, but if you have to sign a three-year lease and think you will outgrow the space in year two, breaking your lease and moving will cost a lot of money.
If you own a store, do you plan to add additional products to your inventory mix? Is there room? Is your restaurant planning to add catering services? Is the kitchen big enough to handle both?
Signage, Zoning and Planning
Before signing a lease, be sure you understand all the rules, policies and procedures related to your retail store location. Contact the local city hall and zoning commission for information on regulations regarding signage. There may be limits on the size and imagery used in signs that advertise your business. Ask about any restrictions that may affect your retail operation and any future planning that could change traffic, such as highway construction.
Location Costs
When deciding where to open your store, price is an important factor to consider. The cost of rent, utilities, and other expenses can vary greatly from one location to another. You will need to do some research to find out what the average costs are in the area you’re considering.
Along with the base rent, consider all location-based costs involved when choosing a retail store location.
- Who pays for lawn care and security?
- Who pays for the upkeep and repair of the heating/air units?
- Will you need to do any painting or remodeling to have the location fit your needs?
- Will the retailer be responsible for property taxes?
The location you can afford now and what you can afford in the future may vary. It is difficult to create sales projections for a new business. One way to determine how much rent you can pay is to find out how much sales similar retail businesses generate and how much rent they pay.
Why Choose IPA Commercial Real Estate?
Selecting the best Retail Location and negotiating an acceptable lease can be a “minefield” of potential challenges. Doing this on your own is very dangerous. It is critical to choose a broker well experienced in Retail properties and one that has local knowledge and a long history of success. Also, for people who own commercial real estate properties, working with a respected local retail broker can be a great resource. With 30+ years of experience in the Inland Empire, the experience of the IPA Commercial Real Estate team provides a depth of knowledge regarding all facets of Commercial Real Estate.
IPA Commercial Real Estate is very focused on client properties and tenants and we have the skills and knowledge to make your ownership experience easy and pain-free.
Call IPA COMMERCIAL REAL ESTATE at (951) 686-1462 ext 325 to discuss how we can help you. Let us show you how to add value to your property.