Retailers and fast food people are the acknowledged masters of site selection. Given half a chance, they will tell you that the success of their businesses hinges on three factors. Ranked in terms of their importance, these are:
They are right, of course, but this is only half the story. What many people fail to realise is that the correct choice of location is important to any industry sector, not just convenience shopping. Of course, desired location characteristics differ dramatically between a fast food outlet and, say, a plumbing repair service, but location remains important nonetheless.
Retailers and restaurants
What makes retail stores and food outlets so challenging in terms of site selection is the fact that far from constituting one homogenous group, their needs differ widely depending on what sub-sector they occupy.
- Stores depending on impulse purchases (fast food and convenience food outlets, convenience stores, newspaper stalls) depend primarily on passing trade.
- Destination stores (furniture stores, large general discount stores, speciality stores like book sellers, upmarket fashion outlets, gourmet restaurants and certain service businesses) are generally less dependent on passing trade. Within reason, prospective customers, attracted by past experiences, advertising campaigns or word of mouth, will seek them out. Although these stores’ customers may be prepared to go out of their way to visit, convenient access and the demographics of the area remain important factors.
Site selection for some service businesses are virtually identical to those of retail stores that depend on passing trade, with dry cleaning depots and one-hour photo labs prime examples.
This contrasts sharply with the needs of businesses that offer a service which is primarily performed at their customers’ premises. In the ordinary course of events, customers will rarely visit such businesses. Sales are generated either by a mobile sales force or customers placing their orders over the telephone. Premises located in a high-rental retail precinct would not only be a waste of money, they could even become a drawback in terms of operational efficiencies.
Site specifications for such businesses include the availability of plenty of space to park service vehicles and store materials. Furthermore, the site should e located in a neighbourhood where the noise of the service teams comings and goings will be tolerated, Ease of access to the town’s main arterial road is another important requirement. As the telephone numbers of these businesses are their lifeline and ideally should never change, a long-term lease or ownership of the premises is an important consideration.
One could say with some justification that accountants, lawyers, consultants, medical practitioners and similar establishments fall into the bracket of destination shopping, except that they do not require retail premises. People will seek them out and visit their offices by appointment. Their premises can be hidden from view but must offer ease of access and adequate parking. They should also reflect the image the practice wishes to convey.
Manufacturers’ site specifications will include ease of access for heavy vehicles, loading bays, handling equipment and perhaps the availability of bulk utilities. For larger concerns, the proximity of public transport to get staff to and from work will be another consideration.
Aspects to consider when evaluating a site:
- Type of neighbourhood? (industrial / commercial, residential, mixed)
- What is the history of the area and what developments are planned for the future?
If there are significant projects in the pipeline then this could alter the character of the area. The building of a highway, for example, would divert through-traffic away from a currently bustling high street location and turn it into a ghost town over night. And the planned establishment of a shopping centre at the town’s periphery could act as a magnet for local shoppers. It is best to check these things out with the planning department of the local municipality, and also talk to estate agents and property developers who know the area well.
- How many households are established in the area, broken down into households within walking distance and involving a drive of 10 minutes or less?
- What income group(s) do residents fall into?
The actual site
- What is the traffic situation like?
If the site is located along a main thoroughfare but is difficult to access, passing traffic may do just that – pass it by.
- What are the parking facilities like?
- Are they adequate? If people have trouble finding parking, they will not come.
- Are they secure? If people are worried about the safety of their cars, they will be reluctant to come, and they certainly will not stay longer than is absolutely necessary.
- Are they affordable? If parking fees are too high, it will discourage visitors. (Some shopping centres make parking vouchers available to tenants, for distribution to qualifying customers.)
- Does the size of the site optimally meet operational requirements? Generally speaking, too small a site would hamper operations, whilst space in excess of actual requirements would push up operational costs.
- Do the characteristics of the site:
- Meet operational requirements or are major alterations required?
- Allow for easy application of the planned corporate identity?
- Is the total rental figure in keeping with going rates for comparable premises elsewhere? (If you pay significantly more rental than your immediate competitor, you will struggle to stay competitive.)
- Does the lease agreement appear to be fair?
- Do the owners of the premises have a good reputation for operational excellence / upkeep of the premises and their surroundings?
- What is the security like?
- Does the general neighbourhood have a good reputation in this regard?
- Are the premises itself reasonably secure (authorised access points easily controlled, windows secure, unauthorised access through the roof, especially outside normal business hours, unlikely to go unnoticed)?
- Is a reputable security company already active in the immediate environment? (“Piggy-backing” on existing arrangements is usually cheaper than making independent arrangements).
If the site is a shopping centre:
- Is the availability of parking assured in the long term? If the shopping centre is new, acres of parking may exist, but this could be earmarked for future development and this would reduce the available parking space at a time when demand for parking is likely to increase.
- What is accessibility like?
- In general terms: is the unit under investigation located along a main traffic route within the centre? (Some shopping centres appear to be bustling but have so-called “blind spots”, areas that do not attract traffic, and you should watch out for this.)
- How is accessibility as seen from the perspective of a mother pushing a pram, or an ailing individual forced to move about in a wheelchair?
- What are the official opening hours prescribed by the centre? It is important to find this out before signing a lease, for several reasons.
- If after-hour trading is important, you wouldn’t want to be the only one trading. You would also want to ensure that customers have easy access to the premises. Don’t accept assurances at surface value, walk the route yourself. Customers do not want to enter through a service entrance and make their way to your store through basement corridors, all the while running the risk of ending up in the boiler room by mistake.
- Should after-hour trading be unimportant, a different set of questions will arise, for example: Will I be obliged to keep the store open? This would create operational problems and extra costs, without attendant benefits.
- Who are the centre’s anchor tenants – do they appear to be satisfied with the amount of business they do and are they likely to stay after their leases expire?
- Does centre management have a good reputation for aggressively marketing the centre? Is there a tenant association or centre marketing association in place? If so, how active is it and how is it funded? Does every tenant have a say in its running?
Specific requirements – retail stores and similar
- What is the location of “people magnets” (bus/taxi ranks, railway stations, cinemas, commercial centres, office blocks, hospitals) in relation to the site?
- Does this attract people of the correct profile?
- Does the traffic count (number of people passing a location) meet or exceed desired levels? (If you are unsure what constitutes “desired levels”, do a count outside one or more of your future competitors’ locations.)
- What is the proximity of the nearest competitor?
- Does the competitor’s business appear to be doing well?
- Will it be possible to attract business away from the competitor?
- What is the visibility of the location like? If people cannot see the store, or at least its signage, they will not come.
Specific site characteristics – service business
- Is the operation of the business likely to fall foul of existing zoning restrictions? If so, how difficult will it be to have them amended/lifted?
- Are all required utilities available, for example 3-phase power, an industrial-strength water supply or lots of telephone lines? If not, how difficult and/or expensive is it likely to be to have the necessary services installed?
- Should business operations cause noise and/or pollution problems, how will the neighbours react? (It is especially important to address this question if the premises are located in a residential neighbourhood.)
- Is the site easily accessible to customers, suppliers and staff, including heavy vehicle access if needed?
- If premises are being sought for the operation of a professional firm, the general appearance of the building and the area surrounding it must be considered.