At SiteSeer, we talk every day with retailers, franchise organizations, and other multi-site businesses that want to select sites that give them the best potential for profitability and success.
But here’s the stark truth: most companies have room for improvement when it comes to site selection, and hindsight is 20/20. It’s very easy to think back and wish that you knew certain things about a site when you chose it.
While you should be wary of any site selection software company or consultant that promises a methodology or tool that sounds a lot like a crystal ball, there are certain things you can do to choose better sites in the future and minimize costly mistakes.
Here are a few best practices in site selection based on our years of experience guiding retailers and service providers:
#1 Know your customer.
If you’re adding new locations, you must get to know your customers beforehand. Whether you collect data through a customer loyalty program, memberships, surveys, or purchase third-party consumer and demographic data, it’s absolutely essential to narrow your focus to locations that fit the profile of your target consumer. Your customers’ needs, wants, and behaviors should be top of mind with site selection!
When you know more about your customers, you’ll be better able to identify new sites that fit the way your customers live, travel, and shop.
You might identify a site that’s located in a “hot” area with high traffic, excellent visibility, and good access, but is totally wrong for the consumer segment you serve. Bottom line: don’t ignore the data, and keep your customers’ at the forefront of every location decision.
#2 Focus your resources.
Once you have collected data and insights about your customer, you should narrow down your potential sites by completing a success profile that allows you to compare several potential sites.
Compare locations based on your customer demographics, lifestyle segmentation, spending patterns, competition, etc. You should consider customer type and traffic patterns to identify clusters of high incidence–or in other words, specific areas that match your site criteria.
When you see this information on a map, it will become easy to quickly identify potentially good neighborhoods for your site.
#3 Get the help of a commercial real estate broker that works with retail chains.
A good CRE broker can provide you with market knowledge and help you screen an area for a site in your target area. That’s a much better approach than browsing available retail space in your area. Their local knowledge is valuable, and even better is a broker that also uses a data-driven toolset (like SiteSeer’s Void Analysis tool) to supplement their expertise.
Lean on a broker to answer questions such as:
- Are there retail demand gaps in this retail trade area?
- What sites are a good match for your business based on your criteria?
- What does the future look like in terms of competition and change of resident demographics and lifestyle?
#4 Don’t rely on technology alone.
The human element should definitely be a part of your site search.
Yes, data will help your business make better site decisions, but the best site selection process blends artificial intelligence and your own expertise. Once you have narrowed down your list to a few possible sites, ask yourself the important questions:
- Do I have any current locations that are like this one?
- If so, what have my positive/negative experiences been with those sites?
- What concerns me about each of the sites on my final list?
Don’t forget to augment your data and machine learning models with what your own research tells you.
Does your broker knows facts about a new shopping center that aren’t yet available to your models? If you are considering a new area, make sure to investigate any city planning on the horizon. Are the demographics changing in an area on your short list (i.e. new young families are moving into a neighborhood that used to be retirees)?
AI and machine learning models should augment the site selection process, but they should not overtake it.
Important Advice for Retailers: Establish a Solid Site Selection Process
One final best practice in retail site selection: have a process! In addition to getting to know your customer, make sure you define your trade area methodically, study your competition thoroughly, and choose your site criteria well too.
If you are over-reliant “gut feel analytics” to make site decisions, you’re very likely overlooking good options and putting too much stock into those that lack solid data to support them. A site selection process also helps you focus on the right metrics and criteria and use your time efficiently.
Site selection is a balance of art and science and experience and judgment.
If your retail site selection strategy and process could use some fine-tuning, explore SiteSeer. Want to learn more? Schedule a demo today!
