Are you in the exciting position of planning a 2nd store opening for 2019? Perhaps you have reached the point with your first store where you feel ready to expand and now comes the task of choosing a location! It can be almost more daunting than buying a house because there is a lot more at stake than whether or not you can have a guest room!
Here are my top 5 things to consider when choosing a new store location for your retail business:-
1) Distance from your existing store.
You need to consider the clientele that currently come to your store. How far do they travel to visit you? What’s the likelihood of them coming more frequently if you were nearer to them? The main goal here is to limit the disruption to your existing sales. It isn’t about it being convenient for you to travel to, although I understand why that is a factor. Decide on your business goal. Is it to be known more within your town/city/state? Is it to gain a whole new set of customers who can’t currently access your existing store? Is it to fend-off a competitor who has opened up? It will help if you identify the real goals for your new store.
2) Square Footage.
Size really does matter – at least when it comes to the size of your retail store. Many many independent retailers start off with a small store and when it succeeds and it comes time to look for a 2nd location, they fall for the mind game that they need more space. They have some great ideas, their existing location is crammed and they truly believe they can make twice the sales in double the space if they had it. Sometimes this works of course but many times it doesn’t. Twice the space means higher rent, more furniture required, more inventory to fill it with, higher electric bills and usually more employees to run it. And it doesn’t always mean you will sell twice as much. Due to the higher costs, you need to sell more than twice your small store sales to make profit. So, before you fall for that luxuriously spacious unit with a great big stock room, write down exactly HOW you plan to double your sales. Be honest and write it all down in detail. Maybe the ideal unit size is just a little larger than your existing one or it is the same but has a better layout. Perhaps consider off-site storage for inventory rather than using the expensive floor space of your stores.
3) The neighbours.
As with buying a house, in retail, it matters who your neighbours are. Your neighbouring stores will help bring you potential customers so try to find synergies with your target audience. My first store was in a community mall that catered very much to ladies which was ideal for my baby & children’s store. I was also next to a party/balloon shop which brought many parents to it and we worked well together as stores. Also monitor the area to see how many stores have closed, are there many vacant units, how many stores have been there for a long time and ask around to see how many are doing well and thriving. Most retail owners will happily talk to a potential new neighbour as they know it will affect their business too!
4) Parking and other barriers to customers.
It may sound obvious, but many small stores are very difficult to visit based on the parking/accessibility situation. Aside from major cities such as NYC where it is more important to be close to a subway, parking is an important factor in choosing your store location. The easier you make it, the more likely customers will ‘pop-in’, so visit the potential location at various times of day, check the traffic, the parking options and anything you can see that might become an issue later on. Try to find out if there are any future construction plans for the area or things that might affect your business further down the line. I remember opening a store in a small residential mall which was still under construction when I signed for it. I based my decision to take it on the target geographical market of the wider area but mistakenly overlooked the fact that it was a gated community and therefore very few people who didn’t live in there, attempted to visit the mall unless they were specifically coming to our store. It affected our sales enormously and the mall refused to do anything to help so always be very cautious about not overseeing the potential barriers to customers.
5) Your landlord.
In most cases, retailers rent space rather than buy it and as with renting a home, you have to be cautious who your landlord is. Running a retail store is a long term business so try to get a renewable lease with a fixed rent, however it is equally important to have a reasonable notice to vacate clause in your lease so it’s usually a balance of both. Your landlord can make things difficult for you so the more professional they are the better. If you are working through a broker, request to meet the landlord directly for a meet & greet. Try to check the state of the maintenance of the building & general upkeep as those things will affect the running of your store.
It’s nerve-wracking but a very exciting time to be growing your retail business. Another consideration once you have more than 1 location is your inventory. If you don’t have one already, you absolutely will need a point-of-sale software with inventory location built in.
For more support with the growth of your retail business, consider working with me 1 on 1 through my consulting services. Having opened and operated 10 stores in my multi-million dollar retail business, I can help you reach your next steps and achieve success with your concept.