3 Real Estate Tricks Small Businesses Can Adapt from the Biggest Companies
Choosing a location for your retail space can be an overwhelming undertaking, but taking the proper steps in selecting where you set up shop can demystify the process tremendously.
One of the best ways to do that? Taking a page from how big companies establish their strategy. Here are three lessons every business—big or small—can learn from the largest sellers when it comes to dipping their toe into the world of retail real estate.
1. Stay close to your competition.
While it may seem counterintuitive to choose a retail location near a prime competitor, retail game theory tells us this is the best approach you can take, says real estate professional Beth Cristina, commercial committee vice chair for the National Association of Realtors®. When competing businesses set up stores close to one another, they are able to feed off each other's foot traffic and therefore maximize the number of customers interacting with their store as a result.
Game theorists refer to this sweet spot as the Nash Equilibrium—the optimal location where competitors can’t improve their prospects further. If your coffee shop is close to a Starbucks, for example, it is guaranteed to attract customers who are heading to that area looking for coffee, Cristina says. "The more competition, the more people, and the more foot traffic and driving traffic," she says.
2. Study how the big players design their stores.
According to 2016 retail data, 94 percent of total retail sales are still generated in brick-and-mortar stores, which means that as a small business, you simply can't afford to overlook the particulars when it comes to store design.
When you purchase a retail space, it typically comes as a vanilla box that requires you to make additions and improvement in order to accommodate the needs of your business, Cristina says. But if you are running a brick-and-mortar shop for the first time, chances are you might not be familiar with exactly how to best organize that space.
Take a close look at what additions your competitors have made to their retail location. What kind of tenant improvements did they invest in? Look at how your competition has chosen to set up their inventory. What types of displays are they working with and where have they chosen to set up specific types of products around the store?
For example, if you own a café and you see that a larger competitor nearby has built out an outdoor seating area, take a closer look at how they've chosen to design and set up that space. It might help inform how much square footage you choose to dedicate to outdoor seating and what kind of configuration you use.
3. Foster a professional work environment.
It's not just location and construction that play a vital role in your retail store. Making sure you're offering consumers an environment and ambiance they find welcoming is also crucial. In fact, data has shown that U.S. brands lose around $41 billion each year as a result of poor customer service.
Often, small businesses make the mistake of not emphasizing professionalism enough to their employees. Take a page from the big players in the marketplace in this case. How can you make your retail space more professional and polished by simply changing up the way employees dress and interact with consumers, or how shoppers experience your products? For example, something as simple as enforcing a dress code or uniform can give your staff a more cohesive and polished look.
You don’t have to reinvent the wheel when it comes to setting up and operating your own retail space. You just have to know where to look and who to observe as you put together your strategy.
Big businesses have invested tons of money, manpower and resources into researching and figuring out the best approach. Be sure to pay attention to what they are doing to make the best decisions as you setup your store.
A Realtor®—a member of the National Association of Realtors®—can help you find the right place to grow your business.