Saturday, March 26, 2011

Is Location Important to a Retail Store?

Do Monkeys Swing From Trees?  Of Course Location is important to a Retail Store!

My very first retail job was working for my father.  You notice I said for and not with.  But, that's a blog for another time.  We sold Ladies shoes in indoor flee markets around New York City.  We had one in Brooklyn, New Jersey and Eastern Long Island.  

Each location completely different.  In Each market we had a different location inside such a corner booth or near the front door.  Each Market did a different volume of business.  Each Store paid a different amounts of Rent.  People would pay different amounts in completely different areas.   Some shoes sold better in different areas while some didn't sell at all.

My Fathers reasoning if your making money in three locations then the more locations you have, the better.  He reasoned flee markets are small time stores and he could do better in an actual retail store.  So he went all in and opened a store.

Here's where he failed!

He did no research.  He picked a location on a busy street. It had a Department Store across the street. 
A hardware store on the corner and the following stores between.  An Insurance agency, Real estate, Pizza place and a pharmacist. 

There was single car parking along the street and parking lots that no one knew about in the back of the store.  The Department Store had its own parking lot in the back with a rear entrance to the store.  So any traffic the store did, never made it to the street.  The traffic went by so fast and the store was so close to the street , no one ever saw our sign.

The Rent wasn't too bad just a little higher than the flee markets.  The biggest advantage to the store was we now had an actual office and storage space besides our home garage.  Cost involved in opening a store front vs another flee market booth really high!  Designing and furnishing the store alone can bankrupt you.  My father was so excited to have his own store he didn't care what kind of toys and gadgets he bought for it.  Equipment  we used to by used we were buying new. 

We did sales in a week what the slowest of the three flee markets did in one day.  So location is very important.  Planning ahead is also very important.   

Location ! Location! Location!

Location is very important but all things are relative to the magic word, Profit.  All things are relative to how much money you make there.   I've seen supermarkets close down in busy high scale areas because the rent ,competition and payroll costs were too high.  I  also have seen in that same supermarket chain a low volume store in a poor rural area make more profit than half the chain.  All things are relative.  If your rent is low and the payroll is low and your sales are ok you can make a profit.  If your the only store in town then you have a great location.  If your one of 4 stores you might not. 

Do some research and  planning first.  Don't just open a store for the sake of having a store.  Plan, Plan, Plan!

Only Fools Jump in with out looking first!

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