For brick and mortar store owners, there’s no decision more important than choosing a retail location. Location determines the overall perception and ultimate success of your storefront. Location is so important that retail consultants regularly tell their clients they can’t help them unless they change locations.
With all that pressure, it can be daunting to make a final decision. That’s why global technology company Pitney Bowes created a ‘choosing a retail location’ study. It analyzed the most common mistakes retailers make when choosing a new location. By avoiding the misconceptions retailers often fall into, you can make sure you’re choosing the best possible place to open your store.
6) Thinking Generally Instead Of Specifically
Everyone relies on certain instincts and educated guesses when choosing a retail location, but make sure those guesses are about the exact neighborhoods you’re considering, not generalizations.
You may think to yourself that your luxury goods will do great in a rich neighborhood, or that your toy store will do great next to a school. But what if the rich neighborhood is more of a tourist destination and not where the locals shop? What if the school is in an area with no parking, so the families shop near their homes instead?
Make sure you really get to know the dynamics of all the specific neighborhoods you’re considering, not just their first impressions.
5) Not Fully Understanding Your Different Customer Types
Business owners know they have to understand their target market and their customer base, but it’s easy to simplify this group so much that it starts to have negative effects. Once you have a storefront, you’ll start to attract different groups of people, and you want to do what you can to cater to each one of them.
Drug stores are a great example of this, and one of the examples the Pitney Bowes study studied. The front of the store is essentially a convenience store, where people shop for basic household items they need pretty immediately. The back of the store is a pharmacy, and so its customers will skew older and towards people who need prescription meds.
You may know that your main customers are women between the ages of 35 and 55 who have extra income to decorate their homes, but this doesn’t mean they’re your only customers. Depending on your retail location, you may also attract people shopping for gifts, or window shoppers who end up becoming regulars. Keeping an open mind to all the different types of people that may become your customers is a great way to reduce risk and diversify when choosing a retail location.
4) Expectations That Outpace Reality
This may be the saddest and yet most predictable mistake all business owners make, including retailers. When you’re starting a business, you’re excited and pumped. You’re bringing a little business baby into the world, and you want everyone to love it as much as you do. And just like parents, you’re a little rosy-eyed and can’t help feeling like everyone will support you and build your business.
While viral and immediate successes do happen, they are few and far between, and impossible to predict. When predicting future sales, successes, and foot traffic, make sure not to take only the most positive numbers into consideration. It’s worth asking yourself what you’ll do if sales are significantly less than you think they’ll be, and having a plan to enact if that turns out to be the case.
3) Emotion Over Analysis
It makes sense that opening a retail business is a dream come true. The idea of stocking what you want and helping your community discover new products that will improve their lives is a great motivator. You should have your heart in your business; it’s much harder to succeed if you’re only doing this for the cold, hard cash.
With that said, sometimes a cold robot brain is helpful when setting up your business. If you’re opening a retail location, chances are it’s in a town or city you know well. If this is the case, you already have biased opinions on all the neighborhoods available to you. While one neighborhood may jump out at you because of its reputation or your relationship with it, it doesn’t mean it’s necessarily the right one for your business.
In the study, researchers looked at the alluring Manhattan market. Many stores consider it a milestone to open up a Manhattan location; they view it as a symbol of success. However, Manhattan is a strange, extremely specific place, and these stores often flail. When choosing a retail location, let go of your preconceived judgments, and pick the location that really has the best chance of helping your store.
2) Reliance On One Type Of Income
If you’re opening a retail location, obviously, selling at that location is your top priority. But don’t let it be the only priority. There are more ways to make money by selling products than simply with a brick and mortar location.
The most obvious way is online. Every brick and mortar store should have a high-quality website and social media accounts. It should be easy for existing and new customers to find your web presence and purchase directly from there.
Many brick and mortar retailers don’t like how online shopping has depersonalized the shopping experience, but it’s here to stay whether you like it or not. And if having online sales that provide you with 15-20% of your income allows you to stay open and continue to serve customers in person, consider that a win.
You can think past online and your own location as well. Farmers’ markets, art walks, and other local events are great ways to increase exposure as well as sales to your business.
1) Cloudy Competition Analysis
Distance from competitors is a huge factor in considering your retail location, and one of the hardest to predict without any data. Traditional wisdom will tell you to be as close to your competitors as possible. They’ve already proven it’s possible to operate a similar business in that neighborhood, which is extremely valuable information. Plus, they’ll be spending advertising money to get people to come to them, and then your customers will be right in front of your business as well.
The downsides are, of course, that then you’re right next to your competitor. Every customer will have the option of choosing your rival store instead of yours. It’s also possible that the market will become oversaturated, and both stores will suffer.
Whether or not it’s advantageous to choose a location close to your competitor will rely on a myriad of factors. This includes what type of products you sell, how busy the neighborhood is, and whether or not you can truly compete on price and service with them.
No matter where you open your retail location, there will be risks. No one can predict the future, and you’ll most likely have to make some pivots. Once you’ve analyzed as much as you can, start your journey with an open heart full of passion!