Location, Location, Location
Location can mean everything to a business. Businesses with inferior products or customer service can thrive purely based on having a great location. Stunning shops with brilliant products can fail horribly, again, purely based on location. Picking a location for your shop or restaurant is probably one of the first decisions you’ll make in retail but it might just be the most important one. Here are some of the factors you should account for:
Up & Coming vs. Established
Oxford Street in London or Buchanan Street in Glasgow are pretty much two of the best locations for retail anywhere in the world. However, the rent costs a fortune. Setting up a new retail concern, as a new brand or with a new product means it’s probably unwise to pick such a hallowed location for your business without some serious, serious investment. Breaking even on a location that can be as much as £500,000 – £1 million per annum in rent is ultra-ambitious, even for some of the most established retail brands (many of whom would be willing to make a loss on a flagship store).
It is therefore up to a new retailer to find a balance between rental prices, footfall and spending power. Trends towards gentrification in otherwise cheap areas can be spotted through local property data, investment news (both public and private) and in the social media feeds of influencers. Many artisanal retailers and restaurateurs look to pick areas that are popular among university students, for example.
Mapping applications like Google Maps and Waze can tell you how heavy traffic is in an area. A bus stop outside your shop may be a good indicator of commuter footfall but could also signal the presence of noisy schoolchildren, for example, which may or may not be offputting to your target demographic.
The economic characteristics of an area a good place to start. In Scotland, we have the Scottish Index of Multiple Deprivation that can tell you the economic profile of an area down to the postcode level. National property statistics can show you the direction of the house prices in an area, which is a strong indicator of spending power.
Ultimately, much of the data or the news you can gather online isn’t updated enough to give you a true feel for an area. If you live in a town or city and have time to explore it, chances are you’ll know which areas are up and coming than anyone else. If you’re looking to invest in an area from outside, then a scouting mission in person can be a good way to get a feel for an area.
Practicalities of a Retail Unit
Many new shops are opened where shops stood previously. Many restaurants, in particular, are opened where there were restaurants before. Unless you have a large, dedicated budget for kitting out your new retail unit then the practicalities of picking a unit that is like for like might outweigh any other part of your decision-making process. If you are opening a tea shop where another tea shop once stood then find out why it closed: was it mismanagement? Or was footfall in the area just too small?
At RMS, we’re big believers in omnichannel retailing. By having a strong presence online your business can benefit hugely. A well-reviewed restaurant with a strong online presence might not be able to serve warm food halfway across the world but might just get increased footfall from tourists. If you’re selling a new product, then you might as well look into selling it online too. Instead of focusing on one specific location, by tying your business into the many national delivery services, you’ll have the ability to diversify your revenue and mitigate the risk that is specific to your location. Building your brand nationally may also open doors to expansion.
Many “online native” companies like Casper mattresses or Warby Parker are opening physical retail stores because they understand the value and the extra dimension that retail brings – allowing customers to hold a product in their hands before buying it.
There are many considerations to make when it comes to e-commerce: do you sell directly or do you piggyback on a platform like Amazon or eBay? How active are you going to be on social media?
By starting a business, of any sort, in 2018 you have to be conscious of the online landscape, the opportunities it brings and also the competition it creates.
Location, online and offline is crucial to a business’s success. There are many methods you can take to identify the ideal spot for your business but sometimes local knowledge is the most important factor.
At RMS, we sell EPOS that can integrate with e-commerce systems and look good in your shiny new retail unit. We’ve been helping new businesses grow for over 15 years. If you have a new venture in mind, we’d love to talk.