Opening a storefront is one of the most exciting aspects of owning a retail business, especially if it is your very first time doing so. But the process of finding and choosing the right space can be challenging and stressful. Not only do you have to consider things like square footage, floorplan, aesthetics, and potential remodel costs, but you also have to ask yourself where your storefront should be.
Choosing the perfect retail location can be particularly difficult because, unlike the considerations mentioned above, there is no way to guarantee that the location you choose will be perfect for your business. However, with some careful consideration and research, you can make a smart, informed decision about your retail location and reduce this degree of uncertainty.
Pro tip: Lean on the experts. Seek professional guidance when choosing a location and negotiating a lease. Speak to real estate agents that specialize in commercial property. Property managers and real estate attorneys can be utilized as well. Utopia Management, a commercial property management company throughout California and the West Coast, suggests that ‘going it alone’ is the number one reason that new businesses have lease and location failures.
Here the most important preliminary questions to ask yourself as you explore your options for a retail location.
1. Is the area zoned for your type of business?
Before you even begin to imagine yourself in a particular retail spot, you first need to find out if your business is allowed to be there. Check your local zoning laws by taking a trip to city hall, or by contacting your local zoning office. A strong commercial property management company or commercial realtor will have the tools and resources to help you work out any logistical kinks.
2. How busy is the area? Does this area see much foot traffic?
Once you are sure that you can open a retail space in the area you have been eyeing, spend some time observing the surrounding businesses and blocks to see exactly what kind of foot traffic you can expect for your business. If the area feels somewhat empty and infrequently visited by people on foot or otherwise, it might not be the best location for your retail space. In fact, since the covid-19 pandemic has gradually subsided, foot traffic in the United States has been increased by 20% during the first quarter of 2022, compared to that of 2021.
3. Will your business fit in here?
The next step is to ask yourself if your business fits in with any surrounding businesses, or in the surrounding area generally. For example, if your company sells children’s clothing, opening a storefront on a block full of bars and restaurants might not be a good idea. Alternatively, setting up shop in a plaza that has many other businesses likely to attract children and families (pet stores, craft stores, or home goods stores) would be a much wiser move. This ties in with the next question, which is:
4. Does your target audience frequent this area already?
Knowing your target audience is essential to so many aspects of running a successful business. From branding and marketing, to products themselves, you should always have your buyers in mind. That being said, why would you open a retail space in a location that is unlikely to attract your target audience? For example, hip, city-dwelling millennials are not likely to travel far into suburbia for one store in a shopping plaza. Before you choose your location, make a conscious effort to imagine where your target audience lives and what their day-to-day moves look like.
5. Are there competitors nearby?
It is also very possible that your business might fit in too well. For example, if you are not the first of its kind to settle down in a given location. A little competition can be fine, but if there are several storefronts selling the same product or service as you within walking distance of the spot you have your eyes on, you should consider looking elsewhere.
However, there is a way to succeed even with many competitors nearby. By making sure there is something about your spot that the others are not offering, you can stand out in the crowd, and the competition might actually help you. If the stores are similar enough to yours to be considered competition in the first place, this means they are drawing on the same consumer base as you, thereby giving you access to the customers they have already brought to the site. All you have to do is become the new favorite.
6. What are the long-term cost projections for this area?
Of course, you should be aware of rent costs and lease agreements if you are renting your retail space. But for owners and renters alike, knowing the long-term outlook on the area you are considering is very important. If the cost of living in the area is expected to go up, you may witness the comings and goings of various businesses, people, and even communities. Not only will you have to consider whether you will be able to keep up with rising rent costs or property taxes, but also imagine what those things will do to the landscape in general. How will this area change? If things look much different in 5 years, would this still be a good place for your business?