Finding the Right Retail Location Part II
This is designed to give the new retail and/or on-line business the general idea of possible locations for a store. This is designed to give a brief overview but each situation and each area is different and you need to find the right spot for your business by researching your area.
Here are the basic types of locations with some advantages, disadvantages, and general comments:
OK, almost everyone has been to a mall at one time or another. Most have anywhere from 500,000 to 1.5 million square feet of retail stores. Until the last few years, most have been enclosed.
- Lots of Foot Traffic
- Major Retailers to Draw Customers in
- May draw in the wrong type of Client for your store
- High Rents
- Your store may not be wanted
For most new retail stores, the mall is not the place to be. While it may be attractive because of the foot traffic, the cost of getting the foot traffic is most likely not worth it. In addition many large malls do not want local retailers because they donâ€t â€śdraw enoughâ€ť people. Usually the malls that welcome local retailers are the ones who are on their deathbeds or having other troubles.
Also, a fact that many people donâ€t know is that the smaller stores in the mall subsidize the rent for the department stores. Often stores such as Nordstromâ€s and others pay very little or no rent which means that you make up for it. (The thought is that you benefit enough from the traffic they bring in for you to pay it).
The other thought to consider is that many malls are not as attractive for stores as they where even 10 years ago with fierce competition from lifestyle and other types of malls.
Power centers are a smaller than mainline malls but bigger than strip centers. Usually they include one or more big box retailers such as Wal-Mart, Target, Home Depot, Loweâ€s, or many others. They usually are not enclosed and all the retail stores all have outside entrances.
- Main attract good foot traffic
- Less expensive than Malls
- Wrong type of traffic
- Market may be wrong
While located in a power center will be less expensive than the mall, it could still be out of the price range of many new retailers. Also, you need to research and see if the power center has the right mix of retailers to draw customers into your store. If youâ€re an upper class store a Wal-Mart or a Super Saver Grocery Store is probably not the right type of neighbors to have.
Strip Centers are the next step down from a power center. They can be anywhere from a two or three stores up to 10 or many. Some will have a major grocery store in them but many will not.
- May not have enough foot traffic
Like all the choices, you must make sure you do enough research to ensure that you are finding the right location for you. Who are the other tenants? Are they going to attract the right customer that will also shop in your store? What are the demographics of the shopping center and are they compatible with yours? Just because a place may be cheaper, make sure that you are not being penny wise and pound-foolish.
Lifestyle centers are a relatively new creation in retailing in the last few years. They are opening air centers that are designed to give a more â€śMain Streetâ€ť shopping experience. They are Hybrid centers coming out which are basically malls that are now taking their roofs off and others that are built with housing components.
- Foot Traffic
- More Smaller Stores
- Once again many centers donâ€t want the local retailers
You would think with the â€śMain Streetâ€ť feel that the developers of lifestyle centers are trying to create, you would think that they would be more open to smaller local retailers but once again many are unfriendly to them.
You do have the advantage of better foot traffic than most strip centers but you must weigh whether the cost is worth it for the customer you are trying to attract.
Sorry to sound like a broken record but research, research, research.
Factory Outlet Malls:
The Factory Outlet Centers usually include stores than represent different manufacturers, which can either be like a showroom, or a place to sell outdated and discontinued merchandise.
- Foot Traffic
- Store may not be wanted
While Factory Outlet Stores had a surge in popularity in the mid-90â€s, they have quickly faded. The centers that seem to be doing well are the ones located primarily in tourist areas such as Park City, Utah; Lincoln City, Oregon and Las Vegas.
Once again you may run into the situation where the mall managers may not want your business in their center but for a different reason that most of the others. In some cases stores where told that because they where not owned by a manufacturer that they where not wanted in the center. However, with some selling you might overcome this obstacle.
As in the case of all locations, you will want to research to see how well the center your looking to locate in is doing. Like stated above, they seem to be dying in non-tourist oriented places. Once of the causes of the downfall is that some retailers have signed agreements with one of the big boxes that states they will not sell anything for a lower price than the big box has it.
Transit Oriented Development:
Transit Oriented Developments are centers located at a major transportation station: Light Rail, Commuter Rail, etc. They are designed for commuters and people living near the station in order to reduce car trips.
- Located at a major transportation port
- Good foot access
- Nearby Residential
Transit Oriented Development (TOD) can take many shapes and forms. If they are being developed right, not only will you have the transit riders coming through the area you should also have a good selection of residential neighborhoods in the area in order to attract traffic during non-peak travel periods.
As I keep on saying, you need to do the proper research in order to insure that the center will attract the right type of customer to your store. Many different kinds of retailers can work in a TOD but each one is different.
This is the type of facility that you find in more industrial areas of the city. They usually have a small office/showroom facility in the front with warehouse space in the back with a large door.
If a major part of your business is going to be online, you may want to consider this type of facility. It will give you more room to store your merchandise but still offer you room to have a showroom or displays in the front plus some office space.
This option is less expensive so if your are not depending on foot traffic, this could be an excellent alternative for your business.
I hope you found this to be helpful in your search to create your successful business. Next week I will go over what you should be looking for in mall management and some of the warning signs you should look for before you sign your lease.
Dornoff Consulting Group