Retail site selection is the process of choosing a location for your retail stores. While these decisions were previously based on intuition and experience, these decisions now rely heavily on rich analytics and robust data.
To help you choose the best site for your retail store, we have a retail site selection checklist outlining all of the things you need to consider when choosing a retail store location:
Generally speaking, we’ve tried to list them in the order you would want to do them, however, depending on your desired outcome, the process may look slightly different. Feel free to rearrange these items as they work best for you and your site selection process. Regardless, these serve as a great starting point for essential things to check for when performing a site selection.
There are a number of things you want to consider when choosing a new retail site, including your business performance, demographic data for your existing locations, and much more, but there are a few key nearly universal things to address when selecting a new retail site.
It’s always important to think of site selection as not only choosing new locations, but also deselecting underperforming and failing locations. While much of our strategies listed are about finding what is working, honing in on what it is that is driving this success, and then replicating it, understanding where your retail stores’ biggest shortcomings are can inform your site selection — and deselection — just as much.
What you need to do: Map and visualize current stores for your brand so you can see what you are dealing with.
Why you need to do this: This will help you identify areas where you don't have any stores, or where you have more stores than typically normal for your brand, giving you a baseline so you can dig into why that is and determine if those are good locations. Some stores may be located too close to each other and cannibalize business - which you can identify and then fix.
What you need to do: Map and visualize competitive and complementary businesses.
Why you need to do this: Doing this can show you where there are areas of opportunity or risk. Maybe your stores located closest to competitors are the most successful, or vice versa, so having an understanding of that will help your site selection. Similarly, understanding where complementary brands are (think a juice bar located near a yoga studio), could help you find locations where your target customers may already be.
What you need to do: Overlay demographic data with your store locations to see who lives closest to your stores. You can also use mobility data to see which census block groups (CBGs) your customers are coming from when they visit a particular POI.
Why you need to do this: Demographic data indicates the types of people (age, gender, income, race, education level, etc.) that are either near your store or visit your store/nearby. This information will help you determine lookalike markets and also better tailor your customer experience. This will help you market more effectively, as well as choose the type of store that is best suited for a specific location (drive thru vs traditional dine-in restaurant, etc.).
What you need to do: Add other relevant data to your analysis, like proximity to highways or public transportation, building types, and more.
Why you need to do this: This can help provide more context on why a store is successful or not. Enriching with more information provides analysts a way to differentiate store locations and really understand why one is better than another. Different brands may have different needs so the contextual data will vary. For example, a gardening store might want to overlay with residential property information so they know how many people near the store actually would need their products versus people who live in cities with no land.
What you need to do: Look at key metrics like revenue and foot traffic for each store location.
Why you need to do this: All of the previous steps lead up to this one. This will indicate which locations are most successful so you can derive why they are successful and find look alike locations. For example, if locations nearby universities are the most successful, you can target locations with similar demographics.
The characteristics of successful stores uncovered in the previous steps (how close they are to your other stores, competitors, complementary businesses, target customers, etc.) will help you define what characteristics you should look for in the next store location. You can also use this information to see which stores are not performing well and decide where to close - site selection works both ways.
What you need to do: Using the insights derived from store performance analysis, find potential new locations that have similar characteristics to what your most successful stores have. You can also use this to model new opportunities by testing a location in a new area, using that as a lookalike for your future locations.
Why you need to do this: With data backing up why a store is successful, you can then use data to identify stores matching that profile and are thus set up for success, since you know that strategy works. Demographics and foot traffic data for census block groups (CBGs) can also help you identify where your target customers live and interact with places like your business the most.
You can then use this to help model expansions to areas and demographics you haven’t tested. If your locations are all in suburban areas and are trying to set up in a rural area, you can test that location. Then use that location as a lookalike for other locations you may want to set up, and an indication of how you can do in the new area or with the new demographics.
What you need to do: Use existing location performance to determine the ideal retail space size and layout for the new location.
Why you need to do this: To find the best location for your business, you’ll need to compare the retail spaces available to you, including not just their location, but their layout and size. Use the previous performance of your existing locations, along with information about the potential site, to determine the best location size and layout.
Site selection is just one component of a successful retail strategy, but it’s essential for proper resource management and audience targeting. Make sure you address all of the things above before choosing a site for your new retail location — or before closing a location.