When it comes to running a profitable business, your location is one of your biggest assets. It can determine your store’s foot traffic, the demographics of your shoppers and even your customer experience.
To paint a picture on how important your location is: You’re the customer. You’re traipsing through a desolate mall that was once roaring with traffic in its heyday, but now boasts only a few dilapidated storefronts of outdated brands, an arcade and a fountain that has been out of order for a decade. In the main mall area, the floor tiles are cracked, the lighting is dim, there’s trash on the ground and no cleaning crew in sight. Not only is the mall visually unappealing, but it’s difficult to get to, as no public transportation hubs are nearby, and inconvenient once you do, since very little parking is offered. If one of your favorite stores just opened here, how likely would you be to make a trip to this graveyard of retail?
Now picture this: You’re still the customer. You’re walking through a lively downtown open-air marketplace. Street performers draw hoards of shoppers to the pedestrian center, where there are well maintained sidewalks, trees, flowers and potted plants, mini play areas for the kids, sculptures and artworks, foodcarts and store after store of popular and up-and-coming brands. The area is prime – full of life, energy and enthusiasm. It’s the beating heart of the community. There’s ample parking, a nearby metro and plenty of public bus routes that drop off in front of the center. People come here not only for the shopping, but for the experience, and they come from all walks of life, all ages and all backgrounds. This shopping district is a multicultural and multi-generational town center. If one of your favorite stores just opened here, how likely would you be to make a trip to this lively location?
It’s pretty clear the latter is a more appealing option, which is the underlying theme of this article: location can either choke your success or breathe life into it.
In the following sections, we’ll discuss how to breathe life into your business through foot traffic, access to transportation, accessibility, demographics and customer experience.
1. More Traffic
Foot traffic is important for most businesses, but particularly for retail. The reason for this is pretty simple: the more customers who enter your store, the more sales you can convert.
If you’re socked into a dark corner of a shopping mall where no one can find you, then potential customers will pass you by. Even the busy and lively town center in our intro is bound to have dead spots. So when you’re looking at locations, consider the logic of its locale against its financial viability. Even if a space is affordable, it doesn’t pay to lock yourself down in a location where you’ll be missed completely.
The types of services and businesses within walking distance to your store can also drive more traffic to you. If, like in the first example illustrated above, your neighboring stores are nearly obsolete, you can’t benefit much from their foot traffic, as they’re unlikely to have any. On the other hand, if your neighboring stores are busy, when they draw in the same target demographic, your business can draft off of theirs and vice versa. While they may be your competition, more foot traffic to your shared venue means more sales opportunities for all.
2. Easier Transportation
Depending on your type of business, you’ll need to know whether you’re catering to automobile or foot traffic. A city coffee shop would yield more foot traffic than auto, while a car wash would obviously bring in vehicles. In either case, you must ensure that your location caters to the likely transportation of your customers.
If pedestrians are your ideal customer, then look for nearby transport hubs and ensure that there’s enough bicycle parking space within walking distance from your store. Smart cities, like Amsterdam and the future Gramercy District development in D.C., are designed to better cater to pedestrian traffic which will make retail environments safer, more convenient and eco-friendly. We’ll discuss smart city locations more later in this article.
The availability of public transport hubs, like metros, bus stops, train stations, etc., can also greatly impact a business’ bottom line. According to Real Estate Weekly’s article regarding New York City foot traffic, John Brod, Partner at ABS Partners Real Estate, states: “‘The Broadway Corridor that connects Union Square Park and Madison Square Park has seen pedestrian foot traffic skyrocket over Fifth Avenue…a trend that will continue to grow, as people’s tendencies to walk from park to park in order to experience the various cultural and culinary options – from Shake Shack at Madison Square Park to the Union Square Farmer’s Market – take them along Broadway. According to the Flatiron 23rd Partnership, there are seven subway stations, nine bus lines and a Path station nearby, all of which are contributing to the influx of pedestrians.’”
While you may not be able to afford a location on the Broadway Corridor, this clearly illustrates how transportation hubs can contribute to greater volumes of traffic in and out of your store.
3. Better Access
Like transport availability, ease of access can significantly impact your store’s sales and your customer experience. If your store isn’t easily accessible, then not only will your business fail to meet its potential in foot traffic numbers, but it may be more difficult to convince employees to work for you. When you’re considering a venue, think about how accessible the location will be for everyone using it, including your customers, employees and suppliers.
Does your store have a drive-thru? Then you must ensure that it’s easily accessible from the main roads and not confusing to get to. Does your store offer convenient employee parking? Employees will grow disgruntled if they have to hoof it to and from work, because there aren’t enough parking spaces nearby. Does your store require a shipping dock for suppliers to load and unload product? Take the convenience of the dock into account when choosing a location.
Ease of access will affect the flow of business operations, sales and the ultimate success of your company. If you’ve ever worked in the retail or food industries, then you know that during high season, this flow is incredibly important. When the loading dock is blocked or difficult to get to, shipments will take longer to unload, employees will become frustrated trying to transfer product to the sales floor in a timely manner, and customers will be impatiently tapping their feet and looking at their watches, waiting for their request that’s still on the truck. This all leads to poor employee morale and customer dissatisfaction, neither of which look promising for the future of your business.
4. Important Demographics
Your locale should reflect your business and its customers. In order for it to do so, you must know your target customers, their interests, their behaviors and what sort of location they expect from you.
You might also consider how important their proximity to your location is. For retailers, proximity is critical, but for other business types, like a lawyer’s office or insurance company, it might not be as important or may even be insignificant.
In order to ensure that your location appeals to your target demographic, take a look at the community. If you do plan to target the local customer base, does a significant amount of the populous fit your customer profile? Will the percentage be enough to support your business? Does the local economy provide a healthy enough environment for your business to grow?
You must also think about your work force and the skill sets required. Are employees with the applicable skills available in this area? Does the locale offer enough resources at the economic level of your employees? Will they be satisfied living in this community?
All of these aspects related to the demographics of your customers and employees must be considered when choosing your future location.
5. Create Experiences
Ultimately, transportation options, ease of access, demographics and foot traffic all lead to the most important element of location: a better customer experience. Your location should reflect the quality and character of experience that your customer has come to expect from your company.
To understand the customer experience in terms of location, consider your brand image. What are you projecting with your image? Is it formal or casual, youthful or mature, edgy or classical, brick and mortar or kiosk, etc. – this will dictate the style of operation and, therefore, your locale.
For example, if you’re a startup in the food industry, you might not need a traditional storefront to start out. Maybe your style of operation calls for a farmer’s market, a kiosk or a popup shop. Don’t be afraid to break from the mold and benefit from the pricing and location of alternative markets. A newly launched business – like The Cookie Cups, operated by Nicole Bandklayder – can prosper in alternative markets. Bandklayder noted that farmer’s markets can especially help food companies grow in the early years. As reported by Business News Daily: “‘From my experience, working at the farmer’s market will expose your brand to a very loyal customer base who wants to come back each week for new flavors.’”
You should also consider the historical image of your potential site’s location. Investigate the success of previous tenants. If you’re opening a specialty clothing shop where the last three have failed, you might want to look elsewhere. Either the location is not a profitable one, or it’s cursed in the public’s eyes and they assume your company will fail in the same way as your predecessors. Research whether or not it was the failure of the location or the businesses that previously held the space.
Consider the future of the location as well. How has it evolved within the past few years, and how is it projected to evolve? Does the target market match your own? Does the environment suit and benefit your company?
For instance, the smart city revolution can play an important role in the growth of a business. One example is the Gramercy District project – a smart city project in Washington, D.C., slated to be built across 16.8 acres of land next to the Silver Line’s future Ashburn Metro station and in front of the north side of the Dulles Greenway. 22 Capital Partners, a venture builder company and global private equity firm investing in commercial real estate, technology and clean and renewable energy, are invested in building this smart city, which will be the first in the region. The goal of the project is to merge real estate with technology to “create an environment that continuously adapts to the people who are living, learning, working, shopping and playing there.”
According to their plan, nearby retail will benefit from the IoT (Internet of Things), as shoppers’ smart phones instantly feed them special deals, while restaurants reward loyal customers upon recognition. Microsoft has agreed to partner with 22 Capital Partners on this project, so the potential for business growth at this location is huge.
When choosing your location, investigate the smart city options available to you. The future is at hand, and with so many opportunities to run with it, you don’t want to be left in the cold grey dust of the past.
Location, Location, Location!
As we’ve discussed in this article, when choosing your location, you must consider company needs, employee needs and the equipment required to offer the services your store will provide, but you must also consider customer experience. And to determine this last bit, you must know your customer and your brand. The level of quality your customer has come to expect from you should be reflected in your location.
Your location should benefit from public transport options, the foot traffic in the area and other aspects of customer convenience, including parking. Moreover, in regards to operations, you’ll have to consider the equipment needed for your store, the inventory space required, and the square footage needed for your sales floor, as well as the employee livability standards in the community.
While this is all a lot to take in, you must look at location as an asset. Doing your homework and researching a venue thoroughly will ensure that you’ve chosen one that will meet the needs of your company, your employees and your customers and, ultimately, lead to the success of your business.