3 Steps to Choosing the Perfect Location for Your Retail Store
by Carrie Hinkel on January 23rd, 2008
When opening a retail store, choosing the right location is of the utmost importance. Depending on the type of business, the building you select could put your store on the path to success or failure.
Step 1: Know your customers – The first step in choosing the best location for your store is defining your target market. Who are your prospective customers? You’ll need to know everything you can about them: gender, age, income, education, etc. Once you have defined who your customers are you’ll want to make sure your store is located where they live. You’ll be able to take a look at the census demographics for your local area by visiting the library, Chamber of Commerce, and the Census Bureau. It would be foolish to set up shop where only 10% of your target audience lived – so don’t take that chance, know for sure that your new business will be surrounded by potential customers.
Step 2: Know your store type – There are three basic types of retail stores, and each has their own criteria for what a good location is.
* A convenience store sells lower priced items that appeal to a wide range of customers and are purchased on a regular basis – things like milk, soda, cigarettes or candy. It’s crucial for convenience stores to be located in a visible, high-traffic area where customers can easily walk in or park.
* A specialty store tends to sell specific products or brands that are more upscale and unique. Examples would be stores like Sephora, the Gap, or Betty’s Gingerbread Cookies. Generally, consumers won’t mind travelling to go to these types of stores because they are usually going with a specific purchase in mind. Many times, specialty stores do well when they are located next to other specialty stores.
* A shopping store carries high-priced products that are purchased infrequently by their customers – things like cars, furniture, and men’s suits. Before deciding on a purchase, many times customers will comparison shop on price. In this case, it may make sense to have your store located next to stores selling similar merchandise. Now you know why local car dealerships tend to be clustered together on an “auto mile”.
Step 3: Know your neighbors – If your store carries upscale merchandise, it’s best to make sure that it’s not next door to a 99 cent store or thrift shop. Never sign a lease without first doing a thorough check of your retail neighbors within a two-block radius. You want to make sure that your customers won’t be “turned off” by any nearby stores. It may help to increase store traffic if your store is located nearby stores within the same category. For instance, if you sell beauty items, being near a spa or nail salon may bring in extra customers who fit into your target market.
It’s important to put enough time and research into choosing the perfect location for your retail business. Don’t just assume that your target market will visit your new store. Do the research and know for certain that they live or work nearby. It’s not always easy to get out of a lease, so you want to be sure that the storefront you choose will bring in the most customers.