One type of service I offer is commonly called “Site Selection”. It’s where I use tools that analyze which location, or locations are best for a client’s place of business. This is all based on a multitude of factors including demographics, household incomes, lifestyle profiles and traffic counts — just to name a few – of the subject area. The subject area can be a 3 mile radius, a particular city or county or it can even be determined by a 10 minute drive time map.
Now if you’re asking exactly how this can benefit you and your business, let me run through a very brief scenario with you that I did for one of my clients. My client owned a handful of cell phone stores throughout the San Francisco Bay Area, and they were being encouraged to expand into new markets. My clients were already very familiar with their local Bay Area market, but venturing out meant taking some risks — something most business owners want to minimize. My clients new target market was either Sacramento or Los Angeles. What I asked of them was to give me the locations of their two best stores and their worst store. The two best locations were located in Southland Mall in Hayward and Hilltop mall in Richmond. Their worst location was at Stoneridge in Pleasanton.
As I browse through the local demographic and income reports, I notice quite a few things are different that just pop out at me. Among the few things that stand out is the amount of households, showing that they sell more in more dense areas. I also see that the income levels are sharply different — almost by double in per capita and in median household income. Digging a little deeper I also notice the amount of renters vs. owner occupants. I also see the ethnicity differences in our two best locations vs. our sub standard one.
Given all this information, I can present this to my clients and see what their feedback is. However, from a third person point of view, it seems that my clients key target market is going to be in a dense area, with median household income levels around $60k/year with a high diversity index. Again, given the fact that I don’t want to go extremely into detail and bore you guys, let’s look at just the Sacramento market for now…
It seems like we know which malls we can likely count out for now, and which malls we can focus on. Next let’s look at the diversity index. Remember 62 wasn’t our target market. Both good locations were nearly 90, so let’s look at 75+. Again we can see that there are some overlaps in some of the areas, whereas again some of the malls have been pretty much counted out.
Again, for the sake of saving time, let’s presume that we’ve pretty much narrowed down what mall areas we will be looking at. We know this by at least taking our past example of what seemingly works and what doesn’t, and applying it to a whole new market. At this point we could take a look at a few locations at a time (for the sake of sanity) and see if there’s any competition
If it looks like there not very much competition in a mall or extremely close to it, this is when a tour is necessary. When it all boils down to it, you have to be able to get on the ground and see what’s happening. If a mall has multiple competitors of the same brand, we move on to the next one. The point is we already know which malls my client is likely to target, and his risk is now minimized. He knows his customers better than anyone — now at least he has an idea of where other potential and similar customers are in different areas. Again, if there’s little or no competition in a mall, my client can now feel comfortable about his risk and use my services to help him negotiate a lease with mall management. If while on the ground we realize there’s little to no competition, but the available spaces are lousy and tucked away under escalators outside of foot traffic, my client simply moves on unless there’s an option for a better spot in the mall.
Again, what it all boils down to is selecting the site with the best probability for success. You have to know who your target market is. If you’re expanding a chain of karate dojos and your lessons aren’t cheap, you’re likely going to look both high income areas and a large amount of youth in local population. There are other tips and tricks — such as it’s usually more beneficial for a dentist, orthodontist and other similar medical practitioners to work in close spaces or medical plaza. Remember, you have to know your target market and do your research in order to minimize risk and expand your business wisely…now that’s good to know. 🙂
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