Online retail has gotten a lot of attention in recent years, but most consumers still prefer to shop in brick-and-mortar stores. Opening a new retail store includes many challenges, but if store owners make the right decisions throughout the process, their establishments will be sure to thrive. Choosing a location is arguably the most important factor that goes into determining whether customers will flock to a new store in droves or avoid it, so read on to find out how to choose the right space.
Every store has different space requirements. A local gift shop that buys from local artists will only need enough space to display merchandise and accommodate customers, while a craft beer store will need plenty of space to store inventory safely and even accommodate a full brewery.
Determining the store’s space requirements will help business owners narrow down the list of potential locations. When it comes time to outfit the space for retail sales, business owners can get help from Clientron with purchasing POS systems and other essential equipment. Even the most efficient equipment won’t make up for a lack of space, though, so business owners who want to open large stores may need to sacrifice a perfect downtown location for a larger building in a different neighborhood.
Business owners need to know who their intended customers are before they open a new store. Most brick-and-mortar stores perform better when they are located in close proximity to their target demographics.
The first step is to perform some market research to get to know the intended customer base. Once business owners have insight into their customers’ age, economic status, education levels, and other essential characteristics, they can seek out areas where this data is reflected in the local population.
Customers aren’t the only people new business owners need to consider when they open a store. Employees will also require easy access to the location. That could mean access to public transportation in the heart of a city or a large parking lot in the suburbs.
Employers also have to consider the store’s proximity to other amenities like stores and restaurants. If their employees can go out for lunch on their breaks or do their shopping for home after they get off work, it could increase their job satisfaction, which decreases employee turnover.
A Good Fit for the Company’s Budget
Opening a retail store requires a good deal of financial overhead. Investing in a good location, whether it is rented or purchased outright, will improve the store’s chances of success in the long run, so it’s worth devoting a substantial amount of the budget to rent or mortgage payments. However, it’s equally important that store owners not break the bank on monthly payments.
Consider the full range of costs when establishing a reasonable budget, ranging from business insurance to paying taxes, purchasing equipment, connecting utilities, and more. Once store owners have a good idea of how much it will cost to get their companies off the ground, they’ll have a better idea of how to budget for rent or mortgage payments. Knowing what they can afford to spend also helps business owners narrow down their choices when it comes to a location.
If store owners have an idea of where they want to open, they can explore the neighborhood to get an idea of what other businesses provide similar products. In some cases, competition can be beneficial, but most of the time it’s not. If there are already multiple, established stores in a neighborhood selling niche products, it will make it harder for the new store to entice consumers away from the competition.
When scoping out the competition, don’t just look at what products they sell. Consider their target demographics. In some cases, multiple stores can thrive in the same area if each of them caters to a different demographic.
Safety and Security
All store owners should consider the safety of their customers and employees when choosing a location.
If the store is located in a bad part of town, it will discourage potential customers from visiting and may make it more difficult to find and keep good employees. No one wants to patronize or work at a store found in a neighborhood where they have to worry about leaving their cars alone while they work or shop.
It may also be more difficult to get business loans for a store found in an unsavory neighborhood unless its explicit intent is to cater to underserved populations. It’s sometimes possible to get grants to open stores offering essential services in inner cities and other areas known for high poverty rates and the high crime rates that come along with them. If the area isn’t found in a recognized Opportunity Zone, though, traditional lenders might be unwilling to take on the risk associated with providing startup capital.
Stay On Brand
Last but certainly not least, the store’s location should speak to its brand. A company that caters to rural customers won’t succeed in the city, while one meant to attract high-end shoppers will fare poorly in a strip mall. Similarly, a toy store will fare poorly in a district known for its adult-oriented nightlife but will do better in a family-friendly area.
Location says more than new business owners might think. It’s not just about the property itself, but also the other stores and businesses surrounding it. Consider each location and its surroundings carefully to evaluate how opening a store there might impact customers’ perceptions of its brand.
The Bottom Line
Opening a brick-and-mortar store takes a lot of planning and a good deal of startup capital. Plan to invest a large portion of the budget into renting a storefront in a neighborhood that will appeal to customers and employees alike, and consider every aspect of the business’s operations, including its potential for growth. It makes much more sense to spend the time and money on finding the right location when the store opens than it does to accept struggling to attract new customers.
By Elena Swaro – Contributor | 05/07/2020
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