Choose The Right, Retail Real Estate Location! Family Expenditures – And How They Can Guarantee Success!
Location, Location, Location – we’ve all heard that catchphrase! Choosing a great location is of the utmost importance…the correct location is one of the most important factors in a successful retail business.
Family expenditures will greatly increase your chances of selecting the correct area and location for your business. Whether you are starting a new business or increasing the number of stores in your multi-unit retail business, the benefit of evaluating the immediate area through family expenditures is immeasurable.
Firstly, we need to establish an understanding of our product or services, then pick a couple categories which our product/service falls into. Any demographic profiling consultant firm can give you a list of the different categories of products or services which they track or have in their profiling databases.
Secondly, we need to establish a radius or catchment area, which we believe we can draw clients from. For a typical small to medium retailer the catchment/trade area , is typically approximately 3KM surrounding your potential or existing location. When we have finalized our product category or service category and our catchment or trade area we can move to the next stage.
Let’s assume our product is widgets, the category we fit into on the database with our local demographic profiling consulting firm, is general widgets. We have also concluded we can pull customers from up to 3Km’s away; therefore we will use a 1KM and a 3Km radius circle around our potential or existing location; as the parameters for our study. We then produce a map and a list of variables, showing our potential or existing location; firstly the map can show, traffic counts, traffic generators, daytime populations etc, which will help us evaluate the immediate trade area. As well secondly, we produce a list of variables which includes; family expenditures on general widgets. Along with the previous information which also needs to be examined, let’s go into a little more detail on the family expenditures.
The data will show us…how much money is spent within a 1KM radius and a 3Km radius on general widgets within a year period. The data will also show us how much money is spent per household on general widgets within a year period. Now we have some hard data on dollars spent and can begin to establish a sales prediction model. Let’s assume $10,000,000 is spent on widgets within a 1Km radius of our potential location within a 12 month period…we want as much of those dollars as possible for our new potential retail location. A good first step would now be to check out the competition in the immediate 1Km radius and compare their widgets to the widgets you intend to sell. Also the competitions- service, quality of widgets and the look and feel of their stores. Some of the elements we could look also evaluate are the competitions, price point, quality of widget, quality of packaging, merchandising, location, convenience, store hours, store build-out, return policy, delivery service…these are just a few tips, there are many different variables you can incorporate in your comparison.
The next step is to chart the results and compare your location or potential location to the competition. This study and comparison can become very lengthy and detailed or quite simple depending on your needs.Through the evaluation of our chart we can now make a determination of the percentage of sales we can expect from the $10,000,000 of sales of widgets in the 1KM radius. We can then, follow the same procedure for the 3KM radius, if needed. This greatly helps us determine our sales at our new potential location. Which can also help us determine how much rent we can pay, how much staff we can hire, how much stock to order etc. and be profitable. As well, if we are studying an existing location we can set targets for sales based on the numbers we concluded from our study. We can also see which aspects of our existing location are inferior to the competition and resolve those deficiencies, and hopefully surpass the competition on same.
Evaluating family expenditures will greatly enhance our chances of choosing the right real estate location for a retail business. As well, continuing to work with and evaluate family expenditures as they come available year by year, will also greatly enhance our chances of a healthy, successful and profitable ongoing business!!
Family expenditures can do so much more than you ever realized! Want to ensure your success and outsmart the competition? Choose to investigate the world of evaluating family expenditures and open yourself up to a whole new world of possibilities!