Choose your retail location wisely as it can have an effect on your profitability. You may want to consult with your municipality to find out about laws related to signage, zoning and land use, and do other research about the demographics and environment.
Consider these five factors when choosing a location:
- Zoning: Ensure the area is zoned for retail businesses.
- Demographics: Determine if the demographics of the local population are a good fit with your business (age of the population, income, family size, etc.).
- Traffic analysis: Ensure that you are in a high traffic area and that the store is easily accessible (public transit, parking, etc.).
- Competition: Make sure that nearby stores are complementary to your operations and not in direct competition with your business.
- Future development: Find out if zoning or road changes are expected in the near future or if new development is planned. Such activities could help or harm your operation.
Consider the best scenario for your type of store:
- Convenience stores (supermarkets, hardware, bakeries, drug stores, etc.): Your business may benefit from being in a busy mall or other high traffic area that offers easy access for quick purchases. Since many people enjoy one-stop shopping, you can attract customers from co-located complementary stores.
- Specialty stores (selling unique, hard-to-find products): If you have a specialty store, your products are more unique and often customers do not mind travelling out of the way to purchase your specific products. You could take advantage of lower rent, free parking, and larger warehouse and display space.
- Shoppers' stores (clothing, major appliances, etc.): With a shoppers-type store, you may actually benefit from being near your own competition. You could sell your goods in a shopping centre or mall where consumers can easily compare quality, price, and service offered by a few competing stores.
Consider these issues before signing a long-term lease:
- Do you plan to operate your business indefinitely or for a set number of years?
- Will you be able to expand your business at this location?
- Is the lease flexible? Can you opt to renew or seek another location if need be?
- Is the rent fixed or must you pay a percentage of gross sales to the landlord?
- Make sure any promises the property owner has made to you are in writing (repairs, construction, alterations and maintenance).
Making the decision
You may wish to hire a consultant to analyze 2 or 3 potential locations for your business, or talk to people who have been through the process and are willing to offer advice. Take your time when making your decision; weigh the pros and cons, and make sure it’s the best decision for you, as well as the business.
Get data that sheds light on population characteristics such as location, age, income, education level, and more.
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