Have you ever wondered why some big brands pull down the shutters of their shops even though their products are good, the price is right and the customer service is A-one? Well, if you take a poll, I am sure, along with other reasons; bad location or imperfect location will get more heads nodding in approval.
Location cannot be arrived at at whims; it is a tactical and long term speculation which needs deliberate decision, because once invested, the capital is irreversible. Hence, a good research involving financial, technical, commercial, social and political viability before zeroing on on the desired location will save one from taking a wrong decision and suffer consequent losses.
Let us now see some factors that should be considered before arriving at a location:
Trade analysis: First and foremost, do a trade analysis to know population characteristics, trends, purchasing power, business climate, competition in the speculated area. Also carry out a thorough search of the area to know where your customers live. So, knocking the doors of Census Bureau and Chamber of Commerce to get information on area’s population, age etc would be a good idea!
Accessibility, visibility and traffic: Know the accessibility of the shop, what is the traffic on that particular road, its visibility from main flow of traffic, status of public transportation( from customer, self and employee point of view) there, parking space, police station, fire station etc. Accessibility should also be considered from the point of view of employees.
Development plans: Know the development plan of the area. For example, if there is a planning of an airport coming up in near future, it may increase the footfall of high end buyers. And if you are buying a place, the real estate price will boom increasing the worth of your shop and you will benefit.
Location cost: Consider all costs before deciding on the location, maintenance, utility and security etc. And also calculate expected returns while keeping in mind the time of break even. Also add personal costs like time and money spent in reaching the location and in reverse order etc, restrictions on community can also make a lot of difference. For example, Ulhasnagar in Maharashtra is famous for Sindhi ( Ulhasnagar Sindhi Association)retailing community, in this case, a Bengali may find it difficult to sit his shop amidst them and vice versa.
After you have taken into account the above, narrow the search category wise.
Categories of location:
Mall: Mall is synonymous to hip culture and it certainly increases your market worth. What’s more, the benefits are manifold like good visibility, great footfall, ample parking and good promotion. Moreover, new and happening promotional gimmicks adopted by new age malls give them a chance to connect with the customer and engage their senses which is possible because they have big area to carry out such activities. But the disadvantage is high rent and there is also a danger of overstored trading, i.e more than one competitor may be housed under same roof and pose competition to you. So a little scratching below the surface to know the distribution plan from builder before giving your seal of approval on that lease agreement will not hurt you.
Free standing locations/Big Box: This type of location is any stand alone building. The unit size is large and allows ample parking at a reasonable rate. But this is suitable for old traditional retailers or for a business that is really attractive or specialty trading and people will not mind coming from any part of the city, provided they know the route. For example, if one is looking for a particular brand, say Fab India, he will not mind driving that extra mile to the Free Standing location where the shop is situated. The advantage can be found in low rent, value image and lower overheads.
Downtown area: This is one premium location and is a busy street so business can rock here as it will give good transit and has the advantage of being in established market. But parking will be a problem here.
Shopping centre: Shopping centres are thriving places and old face of the mall. One can expect good footfall and good accessibility as it is situated in established market areas.
Office building: The business park of office building suits retailers if they cater to other businesses. Here tenants share maintenance expenditure to keep it looking neat. Basically, these are very old building and tenants are very old. Courier companies and textile retailing are some businesses that can be found housed here.
Country wisdom: Good market and demand, low rent, cheap labour, local production are some factors which may lure a retailer to travel overseas for business. And if you have already planned to open a store in a foreign country, consider the following to avoid any mishap later:
Political policies, political stability, government policies like trade barriers, economies of scale, regulations, competition, government aid etc, and study the location region wise, whether it will be in east, west, north or south. Also consider the infrastructure, transport, climatic conditions, subsidies and sales tax extra, labour and wages policies, traffic flow, historical issues, banking facilities, existence of supporting stores etc.
As I wrap up the article, there is a piece of news, ‘South India is considered an attractive retail location because of a higher economic growth and high literacy rate’. I hope this rubs on other regions as well so that the affluence spreads all over equally.