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Online retailers enjoy the benefits of being able to sell from anywhere at any time, but one of the biggest retail challenges for a brick-and-mortar merchant is knowing how to choose the best location for their store.
Ultimately, the retail store location you choose can make or break your business. The site you pick will largely be dependent on your budget and business type, but there are many other factors to take into consideration.
Let’s go through four types of retail locations, as well as the factors you need to consider to help you choose the right location for your business.
Although shopping malls come in all shapes and sizes, they all have one thing in common -- they host many different types of stores under one roof.
Malls continue to draw large numbers of customers due to the variety of retailers they can access in one trip. Malls offer customers a well-rounded retail experience since the majority of them are also home to other amenities, such as restaurants, bars, cinemas, game arcades, and more.
Typically, shopping malls contain a few anchor stores (a retail term for major retail stores) that serve as one of the main draws for customers and also drive foot traffic to smaller retailers.
Advantages of shopping malls as a retail location:
Disadvantages of shopping malls as a retail location:
Popup stores are temporary and are commonly used by retailers with an existing presence as a means of exhibiting new products or introducing their business into a new geographical area.
As a retail management strategy, popup stores are a great way of generating excitement around new products, concepts, or brands, and they are also an effective means of testing the water without committing to long-term rent or buying retail space outright.
Pantone branched out into the popup cafe space by serving food and beverages branded with its signature color swatches. Although this was a step outside of its usual business model, the popup cafes were perfect for attracting the public’s interest and generating brand publicity.
Advantages of popup stores as a retail location:
Disadvantages of popup stores as a retail location:
Over the past few years, the suburban location of strip malls and their typical mixed-use facilities have been growing in popularity as a site of choice for larger retailers. Even department store giant Macy’s is expanding into strip malls with a new store concept called Market by Macy’s.
Since strip malls tend to house a variety of businesses -- usually gyms, retail shops, hair and nail salons, dry cleaners, and small restaurants -- they are seen to represent another type of “one-stop-shop” customer experience by unifying retail needs and task-based services in one place.
Advantages of strip malls as a retail location:
Disadvantages of strip malls as a retail location:
Main streets and downtown locations are often desirable areas for retailers due to being focal points for residents of towns and small cities. Retailers located on main streets also typically enjoy more control over what they can do with their retail space.
Advantages of main streets as a retail location:
Disadvantages of main streets as a retail location:
When opening a retail store, choosing the perfect location is one of the most important decisions you will make. However, there are more factors to consider than just its actual physical location. Here are a few factors to think about before landing on a location.
Rent is at the top of each retailer’s mind, but there are other costs to consider, too, including average utilities costs and taxes, as well as other “hidden” costs, such as deposits, parking, and maintenance costs. Make sure to research the average business rates in any retail location before signing on the dotted line.
There are many factors to consider before you sign any lease. One of the most important factors is the length of the lease.
While signing a lease for a longer period of time helps secure the price, you don’t have as much flexibility. Conversely, signing a shorter-term lease gives you more flexibility but opens you up to increases in rent should you decide to stay. Always have your lawyer look over any lease contract before signing it.
What’s your ideal customer profile? Do they live in the area of your preferred retail location? If not, there’s very little use in choosing that location, no matter how low the rent might be.
Choosing a retail location involves striking a good balance between ideal customer profiles and general foot traffic.
In almost any retail location you choose, you’re sure to have competitors nearby. What do your future competitors do well, and how can you effectively compete with them? Can you try a click-and-mortar or BOPIS business model to attract more customers?
Will you need to foot the bill for any repairs to the building before you can start selling? Tearing down walls and rewiring buildings will eat up a significant portion of your budget. And don’t forget to check beforehand how much certain modifications, such as adding your branding to your retail storefront, will cost.
Last but not least, check out the zoning restrictions and laws in the area before you commit. For example, there may be parking restrictions, business and land use requirements, and rules about what types of products can be sold there.
Although customers have more choice than ever before, the data tells us that customers still value their in-store shopping experiences. Doing your research before choosing the right retail location is not only beneficial for you, but it will help you find the perfect spot to delight your customers, too.
Technology also continues to drive retail innovation efforts. With so many customers looking for a seamless omnichannel purchasing experience, retailers are turning to retail management tools to help bridge their online channels with their physical stores and offer customers more convenient shopping options.
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