Leasing retail space seems like it should be easy. You just drive to shopping centers which are near your house and select one which is convenient for you. Then you call the leasing agent and ask them to send the lease. Then sign the lease, mail it to them and you are in business — right? Of course, this is just about the worst way to approach leasing retail space.
Leasing retail space begins by deciding upon the type of retail or service business. That decision is beyond the scope of this article. Once you have determined the type of retail business, your first step in leasing retail space is to research your competitors and the industry.
Map Your Stores and Competitor Stores
Start by preparing a map of space leased by your firm and your competitors firm within your metropolitan area. Either color code or use a number system to identify which leased spaces are occupied by each of your competitors. If you are contemplating a ubiquitous type of business such as a nail salon or convenience store, map properties within a sector of the city or metropolitan area.
Next review the map and analyze store locations for trends. Are well-established professional firms already in the business? How many stores should they have in the metropolitan area? What is the distance between stores? How would you describe the level of income, education and growth for the areas they have chosen?
Visit Competitor Stores
Next, visit the retail space in your metropolitan area occupied by your competitors. What types of retail had they chosen? In other words, are they in unanchored strip centers, shadowing anchor strip centers, anchor strip centers, anchored neighborhood centers, unanchored neighborhood centers, community centers, regional malls or freestanding retail locations? If they are in a shopping center, what type of space do they have? Is it an end cap, in-line space, or an elbow space? Are they on the first floor or the second-floor? Make notes on their signage, visibility, and ingress and egress from the center. Are they in a location with easy access convenient to public transportation?
Research Competitor Stores
Visit stores which seem to be more prosperous. Make notes regarding the amount of space, layout, signage, merchandise mix and pricing. Shop the store. Ask questions of the retail sales staff. In some cases, you may want to tell them you are considering opening a competing store in another part of town. Most people are friendly and want to help if it won’t hurt them. Ask is your store successful. Ask questions about their clientele. What types of people shop at the store? Who are their best customers? What do customers want? Is price most important or service more important? What merchandise moves best? Which distributors do they like best?
Visit Stores in Other Cities
Travel to retail spaces occupied by competitors in three to five other cities. Repeat the process of making notes regarding relevant items and speaking with the retail sales staff. Attempt to learn the best practices and new trends. Do your competitors in other cities employ an approach not used in your city? Is it successful? Most business success comes from incremental improvements. Few people make the breakthrough improvements such as inventing the telephone or the electric light bulb. However, by doing research regarding what is working best for your competitors in your city and in three or five other cities, you radically improve your chance of successfully serving customers and having a successful business.
What Makes a Location Successful?
The next step is to compile data to infer what makes a retail space location successful. For perhaps 5 to 10 (total) of the more prosperous stores within your metropolitan area and in other cities, compile data for the relevant radius regarding demographics and psychographics. Demographics includes information such as the number of households, population who lives in the area, population who works in the area, income level of people who live in the area, income level of people who work in the area and population growth trends.
Psychographics is a relatively new concept in terms of regular application by business. Psychographics considers the income, education and attitude of the residents. People are divided into six plus groups based upon a series of criteria. Many businesses set down that psychographics are more insightful in estimating the location of a business versus demographics. A successful location will need to meet certain demographic criteria. However, locations which meet these criteria can be evaluated more carefully using psychographics.