Deciding retail, restaurant locations
Where retail businesses and restaurants locate is, perhaps, the most important part of the decision-making process. However, the perfect location is determined by several factors. Investors consider traffic counts, roof tops, disposable incomes in the area, potential for future growth and proximity to other like businesses. Residents, in a growing area, should understand why these considerations are important.
Investors will conduct various assessments which are connected to their targeted customer base. For example, a shop which sells children’s clothing will want to locate in an area with a large population of kids. If the clothing is pricey; the store should be in an affluent location with a large population of kids! Women’s boutique clothing stores often have expensive merchandise. They should land in an area with residents who are able to pay higher prices. The investors will obtain local demographics that include income brackets, median age, and current and projected population. These factors are determiners for whether their businesses will be profitable. A store selling expensive products for a niche audience cannot be successful if located in a locale that does not have the demographics to make pricey purchases.
Locating a restaurant or retail business in an area that other businesses are located is also a component of retail/restaurant site selection. The other businesses can drive traffic. Stores will often locate near their biggest competitor. That competitor has already, most likely, spent a great deal of marketing dollars to attract customers. The traffic has already been established so less money can be spent on marketing efforts by the newer business. Haven’t we all commented on competing drug stores, gas stations and other merchandisers being across the parking lots from the competition?!
Access to stores and restaurants is important. Investors will measure the ease of ingress and egress as well as available parking both open and enclosed. If a downtown location is being considered, it must be easily accessed. Is it reachable by walking and does significant foot traffic exist? Can disabled customers easily navigate to and from and into the establishments? And is there adequate space and parking for suppliers and deliveries?
The use of big data has become increasingly important. Because of e-commerce and the recent pandemic, the world of retail has changed. Many big-box stores have permanently closed. Sadly, we witnessed the end to icons J.C. Penney, Sears, Macy’s and Toys R Us. The brick-and-mortar stores are disappearing. However, new technologies and processes are being utilized to make the shopping experience more convenient and tailored. The surviving bricks and mortar folks are using data and analytics to determine what their customers want, then responding to it by creating uniquely different shopping opportunities. Target marketing uses data to customize messaging via social media for promotions and sales campaigns for the consumer.
In addition to what is driving purchases, investors must have the support of the communities in which they locate. Are businesses being aided to locate in a community? Is infrastructure adequate? Are permitting and application processes easy to navigate? Are land prices and rents reasonable? Will profits be eaten-up by monthly operating costs, fees, and inspections? Does the local Chamber of Commerce and Business Alliances promote local businesses and provide relevant information to them? Are the businesses recognized for their contributions to the community’s tax base and the employment opportunities they create? Are the investors and owners valued?
It is common and easy for residents to ask for specific restaurants and specialty stores. We are an impatient society wanting everything at our fingertips. What growing communities must recognize is that without certain criteria, businesses – especially the unique, independently owned – cannot be profitable in a community which does not provide specific criteria conducive to profits. Businesses are very much averse to risk. Businesses must be as certain as possible that their investments will result in significant returns. Without the returns, there is no reason to establish a business. With the returns, additional employees can be hired, local organizations supported, and events sponsored, additional revenues generated for city/town services and an environment of prosperity established.
As we continue to plan for Prosper’s future, whether it be Downtown development, strategic planning for the Tollway or other commercial corridors, let us be mindful and learned about the determining factors for retail and restaurant investment; the trading area, population, and anticipated growth, purchasing power, competition, local support, land and rent costs and the ability to be profitable. We cannot simply say we want a Dee Lincoln’s, Nordstrom’s or III Forks and realistically expect them to locate in our community. With time and growth? Perhaps. Until then, we must continue to control our growth and create a business climate conducive to investment, profit, and sustainability.
Mary Ann Moon, CEcD, FM, HLM, is executive director of the Prosper Economic Development Corporation. Submit feedback to email@example.com. The views and opinions expressed here are the author’s own and do not necessarily reflect those of Texoma Marketing and Media Group.