Choosing a Retail Location: 3 Priorities You Might Be Forgetting
For savvy entrepreneurs, the competitive retail landscape offers a great opportunity, especially if you are going into a conventional brick-and-mortar business. Rent is low, inventory is inexpensive and people continue to buy and spend money -- a good recipe for success.
But if you're looking to launch a new business in a retail space, don't let the lure of low rent tempt you into a lease deal. This can kill your business before it ever gets off the ground.
And don't let a higher lease or rent payment scare you. If a location truly offers prime foot-traffic, walk-ins and easy access for your customers, it may be well worth the investment. In this context, your lease is simply part of your overall marketing spending to get people in the door.
Rather than going soley by price, here are three important factors to consider when choosing a retail location:
1. How your space can meet your customer's needs.
What does your target buyer look like? What do they do? Where do they live, work and play? You need to have a space that's easy to see and get to, particularly if you are catering to older or even younger buyer. For example, young parents will have their hands full with kids and baby carriages. If they are your target audience, you'll need a space that accommodates their needs.
Another way to look at this is from your customer's point of view. Where would your customer prefer you to be located? For example, if you're in the building supply business, would it help your customers to be near their projects, or in a low-traffic warehouse space that gives them room to pick up or drop off materials? If you're a doctor or lawyer, would customers prefer a central location near a hospital or the court house? Put yourself in your buyer's shoes.
2. Freedom to set your own rules.
Get familiar with local laws, zoning ordinances and potential highway or shopping center construction that might affect you. You also need to consider rules that might inhibit you on everything from signage to your ability to hold special events to operate during certain hours.
The best way to get these questions answered is to get as much information as possible. Any types of regulations, restrictions or long-term nearby construction projects can kill your business. It always benefits you to ask too many questions, rather than not enough.
3. Exposure that will save you advertising dollars.
One of the most expensive ways to generate a new customer is advertising. The best advantage of a great location is that you can use what could have been outside marketing or advertising money to fund internal rewards and referral programs -- the least expensive way to get repeat business. Every person who enters your store on the basis of location becomes a potential long-term member of your target audience.
Now, what happens if you simply can't find a great location, or are lured into a low-cost rental option you can't refuse? You can turn your unique location into a marketing and positioning asset.
Take the example from a few years ago of a high-end startup bistro located in a strip mall behind -- of all places -- a transmission shop. The owner used this unconventional locale as a central element of his marketing -- complete with maps, long-copy stories about how he found his location and an X marks the spot treasure map for how to find some of the best food in the city.
This can work as long as you are willing and have the advertising resources to get customers to your location.
It's up to you to decide whether you want your resources going into higher rent and a cost-effective referral program, or lower rent and a potentially expensive marketing campaign. Be sure that whichever way you choose, go with the numbers that work best for your business.