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Retail store locations: The science behind the choice

Monday, 11 November 2013 | By Gerry Gerrard

The position of a retail store can make or break its success. For anyone considering embarking on a retail venture, or for existing retailers looking for a new site – where do you start in your search for the perfect space?

According to Colliers International, there is around 2.6 million square metres of retail space currently under construction or expected to be completed over the next five years. More retail space means more choice – but there’s no need to be confused by the options – there is a science behind selecting the position of a store that will give you the biggest chance of succeeding.


But what is that formula for success?


As Australia’s largest bakery franchise, which works both with, and on behalf of its franchisees to secure new sites, the Bakers Delight property team has years of experience in securing the best possible location to ensure its bakeries deliver the greatest potential for franchisees.


The methodology behind site selection is not just a matter of choosing between a local shopping strip or a shopping centre. Our stores do better in very specific circumstances and that knowledge is applied to ensure we’re located in the best possible position. Here are the three key areas to think about in crafting your own winning formula – from the macro through to the micro:


1. Macro-economics and demographics


The first question to ask is: what are the economic trends at play in the retail sector in general and what’s the broad economic profile of the area you’re considering?


It’s always worth staying across retail sector research – for example, the most recent Colliers International report states that across the retail categories, the highest individual sector returns were achieved by neighbourhood shopping centres (8.9%) for the year to March 2013. Statistics like these will be essential to your decision-making.


Then you need to consider the profile of the community. Is it already well-established or is there an opportunity for population growth due to housing developments in the area? Don’t just think about what’s there now, think about how this could change over the years and the opportunities and challenges that presents.


Now consider the demographic make-up of that community and does it match your likely customer base? Demographic profiles obviously include things like age, ethnicity and income, but it’s also worth thinking about demographics in terms of ‘life stages’ – as this is one of the biggest indicators of likely shopping habits.


Once you’ve established the bigger picture and know the broad economic and demographic profile of the area matches your strategy, look more closely at the position of the store within that community.


2. The middle macro mindset


Shopping centre or local shopping strip? This stage is all about the potential footfall from existing shoppers in the area – so it’s time to take a closer look at the surroundings. What other stores are close by, and most importantly, what mindset will shoppers be in when they’re in the area? Are the surrounding shops larger retail chains or smaller independents and what does that mean for your success?


Being surrounded by retailers that complement your products will increase your chances of footfall. For example, at Bakers Delight we know that being close to other ‘daily needs’ food retailers boosts our sales – shoppers will wander from the butcher, to the fishmonger to the bakery and the fruit and veg shop to stock up for the week. On the other hand, if the shopping centre or local shopping strip is more fashion focused, even if there are thousands of potential customers per day, they aren’t likely to be in the right mindset to buy our products and an accessories store, for example, would have much more success here.


3. The micro matters


Yes, the micro detail matters. Take a shopping centre, for example: the level the store is on, its proximity to an entrance, whether the centre’s architecture is linear or curved all have an impact on how many people pass by or walk in.


For example, in a curved shopping centre more people tend to walk on the inside not the outside of a curve. While shoppers themselves may not even realise they do this – there is a pattern to how they walk around and shop. A difference of 10 metres can make a huge difference. Have conversations with existing retailers in the area and learn from their experience. Try spending a few hours studying the shoppers in the area yourself and consider how things change at different times of day and on different days of the week.


In theory, there are no unlucky shopping centres – just retailers who haven’t done their research.


Gerry Gerrard is the general manager of Bakers Delight. An Australian owned company, Bakers Delight has 700 bakeries employing more than 15,000 people, serving two million regular customers a week throughout Australia, New Zealand, and Canada.