Despite the challenges that brick-and-mortar locations have had in recent years, a majority of consumers still prefer to shop in person. Data from 2021 shows that more than 80% of sales occur offline from shoppers visiting a physical retail location.
Whether your business is finding its first offline storefront, looking to expand to a new neighborhood, or building from the ground up, location is everything. Here’s what to consider as you look for a brick-and-mortar location for your next grand opening.
Know your customers
Your location should be convenient for existing customers and positioned for new customers to find you easily. Dive into your customer data to understand who your best customers are. Or, if you’re opening a new venture, refer to your customer personas to understand who you will be serving. Then, evaluate prospective locations using demographic data: age, education levels, economic base, and other characteristics of the area. The SBA has a list of market research resources to help you get started.
[Read more: Considering Opening a Retail Store? The Pros and Cons of Brick-and-Mortar Locations]
Check out the competition
Canvas the area to see if there are any competitive businesses that have already set up shop. Finding a similar company in the area isn’t necessarily a deal breaker. Consumers love to comparison shop for certain goods, which could be an advantage to opening near a competitor. New restaurants, bars, and cafes can also capture overflow business in busy nightlife districts.
However, if you’re finding multiple competitors, you may want to choose a different location where you have a better chance of gaining traction.
Consider accessibility and foot traffic
How easy is it for visitors (and employees) to come to your location? Is there public transportation nearby, free parking, and space for delivery trucks to drop off inventory? Evaluate the area to see whether your storefront will be welcoming to everyone. Consider things like safety, accessibility to people in wheelchairs, and hours of availability.
Your location should be convenient for existing customers and positioned for new customers to find you easily.
“A beautiful office building at a great price is a lousy deal if you plan to work weekends but the building is closed on weekends—or they allow you access, but the air conditioning and heat are turned off so you roast in the summer and freeze in the winter,” noted Entrepreneur.
Calculate your budget
The lease and building utilities are obviously a big consideration when evaluating different brick-and-mortar locations. But there are other costs to running a business that you need to factor in. Insurance, renovations, IT, and taxes are other budget line items to consider. Some locations may even come with tax incentives or credits. Explore local zoning ordinances to see if there are economic benefits you can claim and to make sure your business is legally allowed to operate in that neighborhood.
Understand how much space you need
When you’re just starting out, it can be difficult to estimate what size location you need. Too small a floor plan will make your storefront feel cramped. But get too big a spot and you risk overspending.
One option for existing retailers is to figure out your sales per square foot. This calculation uses the following formula: Sales Volume ÷ Sales per Square Foot = Selling Space. This can give you a benchmark by which to make your decision. The higher your dollar per square foot, the better. Even if you’ve never had a brick-and-mortar location before, you can use this formula with your forecast sales volume to see if your sales per square foot estimate is realistic.
Then, use your sales per square foot to benchmark against others in your industry. To find data to compare with your figure, check out similar businesses, ask retail trade associations or trade analysts, or do some research at the public library. If your sales number seems low for the amount of space, consider choosing a smaller location where your sales targets are more achievable.
[Read more: Want to Open Your Own Retail Store? Here's Where to Start]
CO— aims to bring you inspiration from leading respected experts. However, before making any business decision, you should consult a professional who can advise you based on your individual situation.
CO—is committed to helping you start, run and grow your small business. Learn more about the benefits of small business membership in the U.S. Chamber of Commerce, here.
