10.1    Why the Location
Plays a Role

We begin by looking at the reasons
why location plays a role, because in order to have a successful store, you need to take a number of things into consideration and the location is one important factor.

However, if you think that it is just about finding a spot that looks nice, then that would show an immaturity when it comes to certain business decisions.

Location is about so many things, from people being able to find you, to the passing trade that is going past your door on a daily basis.

Large companies are willing to pay huge sums of money to have a store in a particular location and you have to ask yourself
this question, why would they do that if location
was not that important?

The answer is obvious; these companies understand that there are certain areas where they just have to be seen, as their market almost expects
it from them. The only problem with this is that they then have to weigh up different
options and study their market to see if it is worth their while spending the money to open up a new store. After all, just because a small group of people would love certain products,
it is not going to be enough for a company to feel that this is the perfect
location for them.

However, this is not limited to large companies with turnover in the hundreds of millions.
Think about sections
of cities where there is a more bohemian and arty feel to it all. Think about the kinds of shops and stores that will often be in that area. Why do you feel that they have all been drawn together into this group? It is simply because they know that this is the perfect location
for their bohemian
type products as the correct market is gathering in that location.
It would be pointless for them to be set up in a different
part of the city some distance away from where all of the key market players
are based, as they would struggle to draw people away from this key area for just one single store.

Location plays a role because you have to adhere to the idea that you need to largely go to your market rather than hoping that the market comes to you. Yes, there are some companies
where that is not such a problem,
but generally speaking,
location plays a role for these following
factors.

There are adequate potential
staff members that can work there

While this may not be that important
for a number of retail outlets, you do want to make sure that there are enough people in the locality that have the skills and experience that you are searching for to work in your outlet. You do not want to have people travelling over vast areas if you can help it.However, you must also remember
that different locations
will tend to lead to you having to pay varying sums of money to staff just because of the higher cost of living. Being aware of this in advance should ultimately
play a role in deciding on your location.

The cost

The cost is everything and you need to find that balance between a location that is good for you and also one that is going to be affordable. Clearly,
if you are in the middle of town, it is going to be more expensive
per square foot, but even moving just to one of the main roads in the heart of the town can still get you the passing traffic you are seeking,
but at a fraction of the cost. This is more than just weighing up the pros and cons or trying to save a buck here and there. You will find that there is a real balancing act between getting
the perfect location
and getting the absolute maximum
out of your budget.

Are there enough customers?

We will go into this point regarding
customers in more detail later, but for now it is sufficient
to say that you need to get to grips with the number of potential customers
that you can expect to get at this particular
location. Even though this is not going to be directly related to your location, it should form part of your market research and included in that is the location
of your store.

FACT

London's Oxford Street is the longest high street in Europe and offers 67 flagship
stores

Source: globalblue.com

10.2    How to Identify the Correct Location

We look at how you identify
the correct location for your store and even
though we mentioned some general points above, it is best to look at a more
specific example that you can then apply to your own situation.

Now, if we say that you have decided to run a clothing store, then there are certain things to take into consideration with the location.
However, you can easily take any of these options and apply them to your own market if you wish to do so

Know your market

This may sound as if it has nothing to do with your location,
but actually being aware of who your market is going to be will make a huge difference in the location
that you end up selecting. It is essential
that you know who you will be selling to before you can actually select the location because the two go hand in hand.

So, who are you going to be targeting?

Think about it before moving to the next step.

Know the demographics of the location

If you believe
that you have found an adequate location,
then you have to examine
the demographics before
you are able to finally decide if this is the place for you. This is where your market research
comes to the fore because
you have to know if the population
exists in a large enough percentage combined
with your target market to make it worth your while taking that location.

For example

If you are selling clothes to the teenage market, then a town that is known as basically
being a retirement village would not be the best location.

Know how busy the area is

So if you are convinced
that there are enough people living in the area to make it worth your while, then you have to start to work out if the location of the store is going to be busy enough to cover your costs. This can be done by merely observing the area to see if it is in a part of town that gets a lot of people going past or if it is stuck at the end where nobody goes. This is important because spur of the moment customers simply walking past the store are still key to the success of a business.

Know how people will get there

Another key point to take into consideration with the location
is understanding how people will get there in the first place.
Is it easy for them? Is there adequate parking?
How about public
transport? If your location is more out of the way, then you are going to be cutting out a percentage of potential customers and that is not something
that you want to  be 
doing.  Understanding  the 
methods  of getting to your location can provide you with a better sense of how well you should perform based entirely
on the ease with which people can walk through your door. If it involves them going far away from their home, then you better have something good to offer them as a result.

Think about
your overall visibility

It is also important that you think about your actual visibility when it comes to the location. Are you easy to find or are you hidden down a side street that only locals may know about? The best and most successful stores are those that can be clearly seen and identified even just in passing. If you are hidden then it is hardly the best location,
so look at other stores in the area and see if they stand out because
if they do not, then the chances
are that your store will not do well either.

In other words, there is more to selecting the location of a store than just thinking that it looks like a nice place and that it should serve you well. Instead,
you have to think more carefully about your market and whether or not there is an adequate
number of people there to make it all worth your while.

10.3    The Difference It Will Make to Your Store

We will now jump forward in
time and assume that you have found a location
for your store, we begin to look at the difference it will make to either the
success or failure of your business.

As you may imagine, being in the correct location so that people can easily find you is going to be a major advantage
to your store. Furthermore, the figures from the passing trade can be taken into consideration as a percentage
of sales will always occur from these customers. The best part is that this applies no matter the type of store that you own.

Even though the percentage increase on
your revenue will be linked to the location and the products that you sell, it is impossible for us to discuss the exact improvement that you can expect from being in the right place at the right time.

To really stress the difference it makes we only
have to look at how the wrong location can lead to all kinds of problems
for a company.

Overall, this is merely applying logic to a location
and the issues that can hamper your ability to draw in as many customers as possible. Remember,
you need to make sure that you offer each customer an experience and that will begin with your location
and their first impressions when they reach your store.

Setting up a store takes money and even though you can budget for the creation
of the store, it is reasonable to assume that you will expect a return on your cash, or at least see changes, quite quickly after you open your doors. The problem here is that if you choose the wrong location, then you can ultimately have a major impact on your cash flow. Considering how many companies
struggle when it comes to their cash flow, it makes no sense to make things more difficult.

The point about cash is always going to be the key when we are talking about the location, and there are also going to be ongoing costs that can really rack up a pretty impressive
bill.

When setting up your store, it is reasonable to assume that you budgeted for a certain number of staff and then sought to employ them. However, if you have not conducted
your due diligence
with your market and how visible you will be, then there is a good chance that you may very well hire more staff than you need.

At that point it then leaves you with a rather troubling
problem. You either let some people go in order to save the store from bleeding
money, or you admit a mistake with the location.
Now, most managers
are hardly going to choose the latter option. They will seek to reduce their expenses as much as possible
without admitting that they were wrong in the first place.

10.4    Dealing with the Costs

Finally, we are going to talk about something that is extremely
important when dealing with finding the correct location, the costs.

We mentioned earlier
on how being in the middle of town will be more expensive when it comes to paying rent and that it is a good idea to look around the heart of town for a good location that is less expensive. However,
there is still more to it than just looking to see how much money it will cost you on a monthly basis.

It is important
that you balance up the costs with the projected
sales that you can expect from this particular location
and we do accept that it can be quite a fine line between the two.

However, that is where understanding your market and where your market is located will prove to be useful.

While it is impossible to accurately predict
every single  expense 
or  cost  ahead 
of  time, understanding the approximate value and expense
of everything before you settle on your location is something that you must do.