Finding Retail Space: 10 Factors to Consider
- Customers
- Demographics
- Traffic
- Neighbors
- Competitors
- Zoning
- Your sanity
- Space
- Creating a budget
- Signing your lease
While you may see headlines about more big-box retailers shutting their doors, there are still opportunities in physical retail. Forty-four percent of consumers still prefer to shop in-store, according to the 2022 State of Consumer Behavior report. The customer experience is a top reason consumers visit brick-and-mortar stores, although engaging with the product and avoiding shipping costs are influencing factors as well.
The fact is, despite the popularity of online shopping, there remains a place for brick-and-mortar retail. If considering whether to sell in-person, remember: Your store’s location has a significant impact on whether or not you experience growth in a new storefront setting.
If uncertain where to start, here are 10 factors to consider to find the right space for your brick-and-mortar store.
1. Customers
When considering a space for your physical store, put yourself in the shoes of a customer who may have never heard of your company.
Ask yourself the following questions and answer them from a customer’s perspective:
- Do I already visit this area for similar goods or services?
- Would I pass this space in my day-to-day activities, or would I need to go out of my way to reach it?
- Am I more likely to visit a store if it’s easily accessible?
- How important is it to me to engage in person with the products this store sells?
The answers can help you assess the right location (taking into consideration retail marketing benefits such as curb appeal and accessibility) and approach to providing the best customer experience. Knowing the product you are selling, how a retail space can help you sell it, and ultimately, what the customer wants and needs is key to finding retail space.
Dustin Kroft, principal and lead designer for modern shelving company Kroft, took this in consideration when adding in-person selling so his customers could have an immersive experience. “People still have reservations about spending $800 on a shelving unit without seeing it first,” says Kroft. “This became a big motivation for also having a brick-and-mortar store for the brand.”
RECOMMENDED READING:You Just Find a Way: The Owners of Delancey Sports on Opening a Store Mid-Pandemic
2. Demographics
You can leverage analytics and reporting tools to identify the demographics surrounding your new retail space’s location. Doing so is important for your business, as collecting hard data provides insight into the ages, locations, shopping habits, gender, and living status (student, retired, single, or married, for example) of your customers or potential customers.
At this stage, also answer these questions about nearby businesses:
- What demographic do these businesses cater to?
- What types of products or services do they provide?
- Are they attracting customers that are part of your target market?
If the answers align with your business, leasing a space for your store in this area is likely a good fit.
Solutions from companies like Esri and Easy Analytic Software Inc.(EASI), and tools like Audience Insights, available through the Shopify store, can offer easy ways to find this type of information. Esri’s web and mobile app, ArcGIS Business Analyst, for example, provides location-driven market insights and affordable ways to evaluate a location’s nearby demographic.
Other resources include your local chamber of commerce, census bureau, and libraries.
3. Traffic
Understanding traffic patterns is critical to any retail business because it influences the location and long-term financial success of your store. Having steady foot traffic can increase sales and revenue, and continuously studying retail foot traffic data helps you determine the best place for your store when finding retail space.
“Opening a store is not a set-it-and-forget-it exercise. Customer behavior evolves, as do traffic patterns and market conditions,” explains Rebekah Kondrat, founder and CEO of Kondrat Retail. “The more a brand can pay attention and listen to feedback, the more likely it’ll be to make the adjustments needed to succeed.”
If this is your first brick-and-mortar store, consider not opening in a brand new development, since it will be more difficult to collect historical data on store traffic patterns. And consider the drivers of foot traffic in the area—being near an anchor store may help you attract external foot traffic, while being tucked away in a low-traffic area of a popular shopping area may limit your store’s visits. Public transit can also drive foot traffic.
Also, consider accessibility:
- Does the location provide adequate parking?
- Can customers and suppliers maneuver the parking lot with ease?
- Is the parking lot accessible from the road?
- Is the entrance to the store accessible?
The number of parking spaces you need for your business mostly varies depending on the state or province. It’s best to visit your city or county’s website to find specific information on parking requirements as it relates to your type of business and location.
4. Neighbors
Talking to neighborhood business owners helps provide even more data on foot traffic, sales, safety, and more.
Use these questions to interview your potential neighbors:
- Is this area safe?
- Is there a time of year you’ve seen a decrease or increase in sales?
- Do businesses frequently come and go in this area?
- Which nearby businesses seem to drive the most traffic?
- Does this area have much foot traffic?
- Is there anything you wish to change about the area?
Kroft took opening a retail store as a way to directly connect with the community: “I wanted to connect with our community directly, and establishing a physical space where we could showcase our products, host exhibitions and events, and support other local makers was a great way to bridge that gap.”
Additionally, communicating with neighboring businesses can unlock unforeseen opportunities. For example, you may team with a fellow retailer to set up a shop-in-shop.
5. Competitors
In finding retail space, consider where your competitors are located—being nearby may prove a benefit. That’s because you can tap into a strategy known as clustering. According to the Journal of Small Business Strategy, clusters of similar businesses operating in close proximity can add to a business’s knowledge base and encourage market competition.
It may also help in attracting more customers, which, in return, can increase sales. This also helps ensure that you’re choosing a location that your demographic is already visiting and that suits their needs.
Data Axle Reference Solutions is one resource for small business owners looking for the ideal location, and it’s easy to use. Applications include mapping capabilities that help you identify your competitors, their company data, and additional consumer data in the area.
6. Zoning
Make sure you understand the rules, policies, and procedures related to your business and the potential location. This includes researching and ensuring you are in compliance with any zoning regulations. Zoning laws define what is and isn’t allowed in an area as it relates to a specific level of use.
Ask about the property’s zoning laws before signing a lease. You can access this information from the department of city planning (or equivalent office) for your respective area.
If you’re in love with the location but discover the zoning isn’t compatible with your business, you can apply for a change of zoning. To do this, visit your local zoning commission to ask for a rezoning petition. Be prepared with the following information:
- The location of the property
- The property’s existing zoning classification
- Your business’s zoning classification
The steps to apply, fees, and time commitment for rezoning vary by city.
Your local city hall is another resource to gain more knowledge on any regulations that may affect your business operations, parking requirements, signage, and more.
7. Your sanity
As a new owner (or renter) of a brick-and-mortar storefront, you face many new responsibilities—from overseeing store operations to managing retail inventory—in addition to your existing (or planned) online shop.
Another consideration is the commute time. A long commute can take a toll on your health and productivity, both of which can affect your success. Take steps to preserve your mental health and avoid burnout, as your well-being and work performance are interconnected.
Research shows that long commutes hinders productivity.
8. Space
When viewing a potential location for your store, space is a major consideration. You need to know how much square footage is needed for selling your products and setting up visual merchandising. Factor in the amount of space needed for an office area, break room, and storage—these design elements are a key part of your retail store layout.
If you choose a location with plans to grow, then adopt a growth strategy early on to help prepare for any potential business pain points that come with scaling a business. This can include having the right level of financing and staffing support.
“Staffing is always going to be one of the biggest challenges for any retailer,” says Mikey Moran, CEO of Private Label, retailer of sneakers, sports, and travel bags.
9. Creating a budget
Create a budget so you can track expenses and revenue and determine affordability when making cost decisions. For example, if there are any repairs or renovations needed for your chosen space, these upgrade or improvement costs would be included in your budget. The price tag of leasing your commercial space or equipment lease would be included as well. Additional cost considerations include lighting, hardware, fixtures, and even an outside canopy for hosting special outdoor events.
Remember, aim to overestimate your rent, utilities, and supply needs when creating a budget— that way, you have a savings cushion if there are unexpected expenses. Equally important is to implement a contingency plan that includes a financial safety net.
Finally, if seeking a cost-effective way to test the market before settling in permanently, consider a pop-up shop. The costs can vary, but can start as low as $2,000. A pop-up can be a good way to generate brand buzz and direct potential customers back to your ecommerce site for more information, including details about your soft opening and in-store products.
10. Signing your lease
Before signing a lease agreement, examine it thoroughly and consider tapping the expertise of a real estate or legal expert who can decipher any hard-to-understand language. Depending on your level of comfort, you may choose to negotiate the lease yourself.
Information to review in the lease includes:
- Rental rates
- Designation of maintenance and other responsibilities
- Lease terms such as security deposit, prepaid rent, and lease length
PRO TIP: If you’re opening a brick-and-mortar storefront for the first time, you may want to consider a shorter-term lease.
FURTHER READING: Need a little help understanding your lease? Read up on our guidelines to negotiating a retail business lease.
Moving forward with finding the right store space
Finding retail space for your business’s brick-and-mortar store includes taking inventory of everything from your ideal customers and business environment to the square footage of your physical location and the fine print on your lease. Above all else, remain devoted to making a calculated, well-researched decision to aid in your business’s long-term success and growth.
Read more
- 5 Successful Retail Businesses That Started Off as Side Hustles
- How To Work With a Developer to Build Your Retail Website
- Shop-in-Shop: How to Capture Existing Foot Traffic with a Pop-In Shop
- What to Sell: How to Find a Great Product-Market Fit for Your Brand
- You Just Find a Way: The Owners of Delancey Sports on Opening a Store Mid-Pandemic
- How This Gemstone Retailer Is Making Sales Magic With Healing Crystals
Finding retail space FAQ
What makes a good retail property?
There are several features that make a good retail property, including:
- Proximity to public transportation
- Clustered among similar businesses
- Steady foot traffic
- Visibility
- Accessible parking
How deep should a retail space be?
The depth of a retail space varies based on the products you are selling, the anticipated foot traffic, and projected sales. Ultimately, the depth will be determined by your retail store layout, but a recommended depth is 70 feet.
How do you maximize space in retail?
Maximize retail space by taking advantage of your vertical shelving, optimizing display space for bestselling products, and measuring your sales per foot to assess whether you are making the most out of your available retail space.
