Location, location, location is usually the most important factor
in choosing your retail site. However, what may be a good location
for a convenience store or fast food restaurant may not be a good
location for a clothing store, jewelry store or car lot.
If you own a convenience shop, such as fast food or a gas station,
the quantity of traffic is the most important factor because the product
has a relatively low unit price, is bought by habit and is sold in
numerous stores. Therefore, the intersection of two major highways
would be a prime location because the product that you are selling
would grab traffic from all directions.
Retail and specialty goods, on the other hand, usually have a higher
unit price, are purchased infrequently, and more intensive selling
efforts are usually required on the part of the storeowner. Examples
of this category include men's suits, automobiles, jewelry and furniture
stores. For these stores, the quality of the traffic is more important.
This type of retailer can have a much wider trading area. Without
a heavily trafficked location—but with the help of adequate promotion—this
type of store can generate its own traffic. The site you choose can
experience lower traffic density but must be easily accessible from
a residential area, have good parking and a pleasant general appearance
in the surrounding neighborhood.
In many cases, buyers of retail goods like to compare the items in
several stores by traveling only a minimum distance. As a result stores
offering complementary items tend to locate close to one another.
That is why most car dealerships cluster near other dealerships or
complimentary clothing stores are located in the same malls.
Other considerations in choosing a retail site include:
- What are the traffic patterns in the area you are considering?
Where is the growth of the town directed?
- What are the zoning regulations? Make sure the property is
zoned commercial before you choose the space by calling your zoning
administrator at the city hall. If it is not, you need to request
a variance that may or may not be granted.
- Are stores in the area compatible with your product or service?
Would their clients shop in your store?
- How responsive is the landlord? Is the general appearance of
the area neat and in good shape? Make sure the contract mentions
who is responsible for utilities, snow removal, repair and maintenance
on the building. Get everything in writing to avoid problems in
the future.
- What is the history of that location? If three other restaurants
have failed in that location, maybe you should think twice before
you locate another restaurant there.
Selection of a retail location requires time and careful consideration.
It should not be done in haste just to coincide, say, with a loan
approval. A few months' delay is only a minor setback compared to
the massive—often fatal—problems that occur from operating
a retail business in a poor location. Remember if you locate in haste,
then you may repent at leisure.
