COMMERCIAL SITE SELECTION TIPS |
Site Evaluation: Basics: The factors driving the success of retail businesses or the quality of their locations are for the most part objective and can be measured or studied using scientific tools in order to make intelligent estimate of future potential. Site evaluation is less an art than a science.
Site Evaluation: Basics: The behaviors of your customers determine the effects of location. Their efforts to locate your business, choose you over competition, connect visits to your location with other activities, come from home or work, their demographic qualities - these and other customer factors define the logic of retail, and how that retail logic then effects your particular location.
Site Evaluation: Basics: Location, location, location is not as simple a formula as it seems. In many markets today, predicting sales is not the same as evaluating site quality. While site quality contributes to sales, there exist many factors contributing to a sales prediction.
Site Evaluation: Basics: Evaluating site quality and evaluating risk are separate problems. Factors creating high risk are only partially related to the factors determining site quality. A site of average quality can be a very high risk due to a few factors like visibility, strategic position, or too much competition.
Site Evaluation: Basics: Since site evaluation often includes several interested parties, and since each party has a somewhat different reason for liking or disliking a site and therefore uses different rules for site evaluation, objective knowledge about the features that determine the success of a site is imperative for your effective evaluation strategy.
Site Evaluation: Basics: Unlikely to change several years down the road, the features determining site quality endure. A good location will always prevail over a poor location, but good location does not guarantee good sales or quick success. If your new location has to be immediately successful, your most important evaluations may have only a little to do with site quality and more to do with marketing and image.
Site Evaluation: Basics: Money spent on customer research, market selection, and/or site evaluation before building or leasing is smart money. A one-time expense for an intelligent site evaluation process is small compared to the monies required to open even a small store. Waiting until things fall apart to spend money on site evaluation will cost a great deal more, and the consequences for the integrity of your business can be devastating. Spend early to increase your earnings later.
Site Evaluation: Basics: Short-term sales vary from market to market, and site to site. Short-term sales are often mistakenly the only measure in site evaluation. Many factors contribute to site quality, and many factors determine sales in any location. Short-term sales are rarely a trustworthy indicator of site quality. Develop an objective systematic process of site evaluation, including solid knowledge of your customers and a strategic plan for market development, and the bumps you encounter will be minor compared to any approach based on short-term sales.
Site Evaluation: Definitions: A process, not a result, site evaluation is the objective assessment of the quality or suitability of real estate for a specific business concept. It is the measurement of the relative quality of a piece of real estate compared to other like-pieces of real estate and uses all the objective and subjective information available.
Site Evaluation: Definitions: Sales forecasting or sales prediction is the process of predicting the expected sales volume for a particular location. This is not site evaluation. Site evaluation is a process to measure the quality of the location which takes into account demographics, site features like visibility and access, and competition (current and future). While sales volume depends on site quality plus other factors such as market presence, marketing, operations, customer perception and timing, site evaluation is only a part of a sales forecasting system.
Site Evaluation: Shrinkage: Confusing site evaluation and sales forecasting will create problems. It is very difficult to separate the part of sales explained by site quality from the parts depending on other factors. This results in a prediction model suffering from shrinkage; predictions for new sites not included in the sample used to build the model will not be as accurate. To avoid shrinkage build a sales forecasting system based on true understanding of all factors determining site quality - avoid models based on simple statistical "goodness of fit" measures.
Site Evaluation: 1st of 3 Components: A solid site evaluation uses three major components: clear objectives, good sources of information and a systematic approach. Clear objectives include: finding the best available real estate in the market, comparing potential locations, explaining the source(s) of problems for an existing store, reducing risk in a new location, using a scientific site evaluation process.
Site Evaluation: 2nd of 3 Components: A solid site evaluation uses three major components: clear objectives, good sources of information and a systematic approach. Good sources of information include: demographics, specific site features like visibility and access, strategic plans, customer information, marketing/advertising support.
Site Evaluation: 3rd of 3 Components: A solid site evaluation uses three major components: clear objectives, good sources of information and a systematic approach. A systematic approach may include: surveying customers to identify who they are and there buying behavior, ordering a demographic report to see where your customers reside, driving the neighborhood(s) studying business and retail activity, counting traffic, rating competition, evaluating current and potential visibility and access, identifying barriers or other special features, creating an exhaustive report.
Site Evaluation: Perspective of Observer: Your process for evaluating a site, though subjective, may already be quite sophisticated and valid, or very naïve. You may know intuitively that to be successful a store needs good visibility, easy access, a street with adequate traffic. Your own experiences also provide additional facts. Or you may be a small business owner about to open your fist location: Your site evaluation process may not be intuitively as sound or as based on personal knowledge as you'd like. Regardless, you will benefit from educating yourself in order to make objective, accurate judgments about potential real estate.
Site Evaluation: Perspective of Observer: Often a site is labeled good or bad not because of its immediate features but because of the perspective of the evaluator. An agent may be driven by pressure associated with closing the deal inside a small opening of opportunity. A developer may focus on long-term needs to get key tenants in the space. And a storeowner may most concern herself with the bottom line during the first few years of business.
Site Evaluation: Perspective of Observer: Site evaluation requires a mix of relative and absolute facts. Some of the factors influencing site evaluation are: market knowledge, physical characteristics of trade area, demographics, customer knowledge, site features, competition.
Site Evaluation: Perspective of Observer: Site evaluation requires a mix of relative and absolute facts. While perfect or poor visibility is often defined relative to other retail business in the area, the number of competitors is an absolute measure even though the relative value of these measures may change. The most important relative judgment in a site evaluation is site quality - site quality provides a direct comparison between a potential location and others throughout the market.
Site Evaluation: Perspective of Observer: Site quality is a composite score computed by combing the scores of individual site features and demographics into an overall quality score. After collecting a variety of information on a site, that information is combined in such a way as to get an overall rating. While all of us most often use this process for evaluating real estate, it is most often subjective and/or intuitive and never specifies what site features are considered or what value is placed on each feature.
Site Evaluation: Convenience Business: One of the most important determinants of the relative value of particular site features is whether it is to be convenience- or business-oriented. Convenience business depends primarily on the nearby customer base that drops-in. Because convenience business is likely to have competition throughout the market it is unlikely a customer would drive out of the way to visit one location over another.
Site Evaluation: Destination Business: One of the most important determinants of the relative value of particular site features is whether it is to be convenience- or business-oriented. Destination business depends primarily on attracting customers through their uniqueness: visits to destination businesses are often planned ahead of time and may involve driving some distance.
Site Evaluation No-nos: How to Build a Bad Location: Insist on a trophy location near your residence, despite poor site features or negative demographics. Ignore the import of crucial drive-by features like visibility and access. Locate at the edge of a retail center, next to vacant land or high-crime areas. Be the last concept to enter a market already saturated with competition. Locate near a mall or retail center that closes earlier than your businesses normal operating hours.
Site Evaluation No-nos: How to Build a Bad Location: Select a hard-to-get-to corner in a strip center or on a side street with little traffic in a busy trade area and compound this error of judgment by thinking the traffic on the primary road belongs to you. Select a weak strategic position in a highly competitive market. Select a location that can be easily out positioned by a major competitor. Ignore the demographics that suggest the residents in the site neighborhoods are not your customers. Be delighted but do not find out why there are no competitors anywhere near the site you are considering.
Site Evaluation: Location Narrowing: Site evaluation is typically concerned with a site's immediate vicinity, but site evaluation also considers larger geographic contexts. The decision to be in a particular city or market usually comes before any specific site decision. What cities or markets within a nation are most suitable for your business? Your need to be in a certain market and the timing of investment may have as much to do with site decisions as the site quality. Often the decision is made by default since most business owners begin by opening one ore a few stores in the market where they already exist.
Site Evaluation: Location Narrowing: Site evaluation is typically concerned with a site's immediate vicinity, but site evaluation also considers larger geographic contexts. A market is defined as the metropolitan statistical area (MSA) being considered. MSA is the most commonly used market description perhaps because it includes a core city or town and all the surrounding towns affecting the core. In what part of the city do you want to locate? Where are your customers living, working, and visiting? Where is the competition? Will this site be one of many in the market or the only one you run? A need to be in a particular section of a market will most likely impact the kinds of sites available to you and your needs. As will the factor of how much you are willing to compromise on site quality.
Site Evaluation: Location Narrowing: Site evaluation is typically concerned with a site's immediate vicinity, but site evaluation also considers larger geographic contexts. Trade area usually refers to the geographic area containing the bulk of your customers. Some site features like the impact of competition or strategic position and demographic features like population or the availability and amount of certain customers serve as actual descriptions of the trade area - these often depend on how you define your trade area boundaries.
Site Evaluation: Location Narrowing: Trade area usually refers to the geographic area containing the bulk of your customers. If your business is to be destination-oriented and is to be the only location, your trade area may include most of the market. Traditional trade area boundaries may not be helpful in this situation. But if your business is convenience-oriented and is to have numerous locations, defining accurate trade area boundaries may be the most critical decision you make.
Site Evaluation: Location Narrowing: It is common to find a site first, then define the trade area of that site. But it is just as common to choose an appropriate trade area containing an adequate customer base, then select a specific site within that trade area. Regarding the success of these methods; six of one, half-a-dozen of the other.
Site Evaluation: Location Narrowing: Site perspective is a decision about a single piece of real estate and includes an evaluation of many site-specific features like visibility, access, type of location, parking. Any site evaluation worth-its-salt includes a trade area evaluation. Market factors and trade area factors can interact with site quality issues in effecting location choices; the context provided by market factors may have more to do with final site selection than site quality.
Site Evaluation: Customer Knowledge: Site evaluation includes the key component of customer knowledge. Customer knowledge includes who they are as well as how they behave. Who your customers are can be discovered in a solid demographic study of items such as age, income, education, household size. How your customers behave: where they live and work, what other activities they combine with a visit to your business, what time of day they visit, and the frequency of use.
Site Evaluation: Customer Knowledge: Most site evaluations suffer from only looking at customer demographics. Failure to also look at customer behavior will impact the success or failure of your business. How often will they use your business? How far do they travel? Where do they come from? Where are they going? Why do they come? What else do they do on the way? How close to home? How close to work? What is the nature of their use of your competition?
Site Evaluation: Customer Knowledge: Customer sources are the meat and potatoes of site evaluation. Customer source is one of the most important components of customer behavior. What sources (where) customers come from, how many come from each source, the total number of customers from all sources - the answers will make site decisions much easier. Considering the features of visibility or access, which impact most or all customer sources, is a different consideration than counting the number of people working in nearby offices, which is done when focusing on a particular customer source.
Site Evaluation: Customer Knowledge: There are many major customer sources to be considered in any site evaluation. Residents are customers living in the trade area and visit your business directly from home, return home after visiting your business, or combine their visit to other activity associated with home.
Site Evaluation: Customer Knowledge: There are many major customer sources to be considered in any site evaluation. Employees are customers employed in the trade area who combine a visit to your business with work. This customer comes from work to visit you, returns to work after visiting, or combines a visit to your business with other activity related to work.
Site Evaluation: Customer Knowledge: There are many major customer sources to be considered in any site evaluation. Shoppers are customers shopping in the area who then visit your business and continue shopping in the trade area.
Site Evaluation: Customer Knowledge: There are many major customer sources to be considered in any site evaluation. Entertainment seekers are customers in the trade area for movies, parks, etc. This customer includes residents as well as tourists, fitness enthusiasts, out-of-trade-area (out of town) friends and family of residents.
Site Evaluation: Customer Knowledge: There are many major customer sources to be considered in any site evaluation. Travelers are customers in transit through the trade area and visit your business because they see your sign and your business is convenience-oriented, or they are staying in the trade area and visit your business because it is destination-oriented.
Site Evaluation: Customer Knowledge: There are many major customer sources to be considered in any site evaluation. Commuters are unique customers going to and from work who may travel past your business daily, even twice or more daily, but who do not live in the trade area.
Site Evaluation: Customer Knowledge: There are many major customer sources to be considered in any site evaluation. Special populations are a strong customer source not fully highlighted in a normal demographic study. Your business may benefit from the presence of a school, military base, or seasonal residents. In addition, there are many specialized customer sources resulting from special combinations of customer behavior. A solid site evaluation will provide this information.
Site Evaluation: Customer Knowledge: A diversity of customer sources offer higher sales potential and less risk than a strong but limited source. While it is possible to have strong sales based on only a couple customer sources, it is usually a higher risk than a diversified customer source.
Site Evaluation: Customer Knowledge: A visit to a retail business is usually combined by the customer with one or more other businesses, either retail or convenience-oriented. Linked errands is a hallmark of our time-oriented and mobile society.
Site Evaluation: Customer Knowledge: Convenience-oriented business is more and more located within destination-oriented business: the bank or coffee kiosk inside the grocery store, the restaurant inside the airport. Convenience-oriented businesses often link together: the quick-serve restaurant and gas station, the video and convenience store. And new concepts are often attached to established businesses: internet service with cafes, jungle gyms with fast food.
Site Evaluation: Customer Knowledge: When evaluating a particular site you will want to evaluate current and potential links that will most likely increase the overall visits to your business. When businesses cooperate in a way that serves the multiple needs of the customer, a larger visit ratio is attained than without that cooperation. A solid site evaluation will also take into account what businesses all the customer sources visit, especially those customers coming from home, work or shopping.
Site Evaluation: Customer Knowledge: Look for sites where your customers have numerous reasons to be in the immediate vicinity, or in the larger trade area. Linked clusters of businesses that serve your customers provide this activity.
Site Evaluation: Customer Knowledge: Most of your customers spend the bulk of their money depending on the time of day. Dining. Shopping. Gas. Etcetera. The more convenience-oriented your business, the more your business needs to be near daytime convenience-oriented populations. Destination-oriented business will often generate their own draw and can therefore do without being located near day part populations, though that business is at risk of being out-positioned.
Site Evaluation: Customer Knowledge: While some businesses get by depending on one part of the day's revenues, it would be a dire mistake to apply this across the board. Only highly successful locations can excuse the loss of revenues from any normal day part. This thinking is often referred to as "the law of compensation" and its blind followers often find their business struggling. Low volume in one day part is not always compensated by strong volume in another day part.
Site Evaluation: Customer Knowledge: Just because a particular business does well based on a particular day part does not mean it will do as well based on the same day part in another location. If you are considering opening an additional location of the same business, do a full site evaluation process. This will make you money in the long run. It goes without saying; opening a business that fails costs money. Great deals of it.
Site Evaluation: Customer Knowledge: Frequent customers, whether numerous times a week or a couple times a year, are a key consideration in site selection. But infrequent customers are usually more vital to the success of a business. A site with a high amount of frequent customers and a low amount of infrequent customers is at risk of changes in the marketplace. New competition, out-positioning by a competitor, cannibalism by one of your other locations: these and other changes in the marketplace can lower sales volume.
Site Evaluation: Customer Knowledge: Frequent customers, whether numerous times a week or a couple times a year, are a key consideration in site selection. But infrequent customers are usually more vital to the success of a business. A constant frequent customer base can be wiped out by large manufacturing plant closures, military or school closures, and other major changes. Infrequent customers are not as fragile; increased competition can even increase the trade area's attraction, thus increasing your business' volume.
Site Evaluation: Customer Knowledge: Your infrequent customer base is more vital to sales volume than your frequent customer base. A site evaluation can predict whether there will be a large enough infrequent customer base. A business will rarely be unsuccessful with a solid infrequent customer base, even if that business has a low frequent customer base. The best locations are often a convenience stop for your frequent customers and an easy destination for your infrequent customers.
Site Evaluation: Customer Knowledge: With the exception of a few small town and extremely competitive city sites, the amount of customer sources and the supply of actual customers is not a risk factor. The problem to consider in site evaluation is not so much the supply of customers, but the demand; the amount of actual customers for your particular business.
Site Evaluation: Customer Knowledge: The amount of actual customers for your particular business is a result of the complex, changing relationships between customer sources, image and competition. Image itself is a composite of all the features influencing customer perception to visit your business: your location's surroundings, your business' visibility and access, and the market presence or customer familiarity with your product.
Site Evaluation: Customer Knowledge: The amount of actual customers for your particular business is a result of the complex, changing relationships between customer sources, image and competition. Competition, both direct and indirect, is a composite of all businesses a customer considers when making a purchasing decision. All competitors will influence your site's success by adding visits to your business, or dividing the visits among all competitors. This composite interaction provides a quantitative measure of the demand for your product.
Site Evaluation: Customer Knowledge: A high number of total customers can allow for a high amount of competition, while a low amount of total customers requires lower competition. A strong image can increase the demand for your product over your competition. Customers prefer businesses which are conveniently located in the trade area, easily seen from the street, accessible, established, etc.
Site Evaluation: Customer Knowledge: A successful site has a strong supply of customers relative to the amount of competition and possesses an image attracting those customers by the quality of location and market presence.
Site Evaluation: Customer Sources: The strongest customer source for restaurant and retail business is residents living in the surrounding neighborhoods. Their impact can be between 20 and 80%. 40-60% of this kind of business depends on customers living in the surrounding neighborhoods.
Site Evaluation: Customer Sources: Site evaluation begins with understanding the quantity and quality of the residential customers who surround your location. It will be unusual for you to choose a location that has poor support from residents in the trade area even if other customer sources are excellent.
Site Evaluation: Customer Sources: The retail trade zone can be as small as a single strip center or cluster of businesses in which the site is located or as large as several square miles when the area includes several malls and a large collection of shops and restaurants. Regardless, the retail trade zone represents the area a customer would visit to find your business. It is usually the draw of the retail trade zone that attracts your non-destination customers to shop and dine in the area around your site.
Site Evaluation: Customer Sources: The first demographic zone to consider is the area within one or two miles of the site which is the boundary defined as the convenience zone; the area in which it is very easy and practical to use your business because of its proximity. This 1- to 2-mile boundary is somewhat arbitrary; it might be less in a densely populated city and greater in a small town setting. The convenience zone tends to be smaller for a convenience-oriented business and larger for a destination-oriented business.
Site Evaluation: Customer Sources: Regardless of the typical demographic features of your customers within the convenience zone, a much broader selection of demographic profiles will be attracted to your business simply because you are there.
Site Evaluation: Customer Sources: A larger population in the convenience zone is generally better, especially for convenience-oriented businesses. It is less true for destination-oriented business because sales depends more on people traveling from outside the convenience zone. For some destination-oriented businesses, people will often resist entering a congested area. Large residential numbers can also hurt your business when accompanied by low amount of retail activity.
Site Evaluation: Customer Sources: Apartments and condominiums are generally a benefit in the convenience zone as these provide high density and populations often driven by the need for outside services and convenience. These dwellers tend to be younger or older than traditional neighborhood profiles.
Site Evaluation: Customer Sources: In the convenience zone do not expect to find typical demographics. Look for a broad collection of consumers possessing disposable income and easy access to your business. Nearly all consumers in the convenience zone who use your products will be your customers.
Site Evaluation: Customer Sources: It is ideal to have a few pockets of frequent customers with in the convenience zone; distance and/or convenience does matter to frequent customers and an additional 100-200 customers can significantly impact sales.
Site Evaluation: Customer Sources: Convenience-driven sources of customers, including shopping, entertainment, hotels and other businesses, are beneficial when concentrated in the convenience zone. But it is possible to have too much activity; you can lose the balance between residential customers and business/shopping support.
Site Evaluation: Customer Sources: Your position in the convenience zone is crucial. If it is difficult or inconvenient for customers to access your business the location is most likely not a good one. Having major streets in the convenience zone that are not congested and linked easily to your location makes for a better one.
Site Evaluation: Customer Sources: If yours is a convenience-oriented business then density and position within the convenience zone are primary concerns. If a destination-oriented business then access through a good street system and surrounding business activity providing natural links causing the entire convenience zone to be a draw are vital to the success of your business.
Site Evaluation: Customer Sources: Within the convenience zone a higher percent of business will be drop-in business based on the spontaneous decision to stop. While your regulars already know where you are located, good visibility, signage and ease of access encourage drop-in business and are crucial to increase the amount of shoppers and travelers who only visit the convenience zone occasionally.
Site Evaluation: Customer Sources: In the residential zone customers come to your business from their home, although workers are a strong secondary customer source. The residential zone begins at the outside edge of the convenience zone and continues to the outer edge of your trade area. Customer density is less important here than in the convenience zone, while customer fit to your business is more important.
Site Evaluation: Customer Sources: Customer density determines the size of the residential zone while customer fit determines the potential of the residential zone to provide demand for your business. In dense areas the residential zone will usually shrink because of competition and increased drive times. In less dense areas the residential zone will expand because of reduced traffic and less competition.
Site Evaluation: Customer Sources: As the customers living in the residential zone are the primary customer source, the importance of non-residential customer sources is reduced. Shopper fall off dramatically once leaving the convenience zone. Workers will still have an impact, but most will be coming from the convenience zone.
Site Evaluation: Customer Sources: In the residential zone visibility and local accessibility will be less important to the customers in the residential zone because they already know where you are, and even if a convenience-oriented business, you are still a destination for them. Good signage, though, can always help build market awareness.
Site Evaluation: Customer Sources: While customers in the residential zone already know where you are, if a convenience-oriented business you may no longer be convenient to them - your position relative to competition will determine if you can attract customers within the residential zone.
Site Evaluation: Customer Sources: In the residential zone it is ideal to have a large number of infrequent customers and several pockets of frequent customers. When evaluating the demographics, look for both groups.
Site Evaluation: Customer Sources: Demographic reports are at their best in describing the residential zone because it is usually possible to measure which customer segments are likely to come from their homes to your business. Customer segments represent specific demographics defined by details like age, income, household size, occupation, education, and/or purchasing habits. Specific research on customer segments is highly beneficial in targeting frequent customers. Infrequent customers are often better described with more general statistics because of their broad base.
Site Evaluation: Customer Sources: The shift from the convenience zone to the residential zone offend reduces the importance of apartments and increases the importance of home- or condo-owners. As you move farther away from the retail clusters containing most businesses you encounter apartments first, because they are built around retail clusters, and then owner-occupieds.
Site Evaluation: Customer Sources: In the residential zone the customer fit to your business is more important than customer density. A strong fit provides a good source of frequent and infrequent customers regardless of other factors. When evaluating demographic reports, focus on a good fit with the surrounding residents.
Site Evaluation: Customer Sources: The destination zone describes the area outside the trade area that provides additional customers for your business. This includes true destination-oriented customers willing to drive long distances, retail trade zone customers attracted by the restaurant/retail draw of the area, or commuters traveling to and from work.
Site Evaluation: Customer Sources: In regards to the destination zone transients traveling through the market are considered to be convenience-oriented customers who don't actually come from any of the other zones, but stop near your site based on convenience factors.
Site Evaluation: Customer Sources: If your business is a strong destination because it is unique and scarce, the destination zone will be an important source of infrequent customers. The destination zone may be up to a 30-mile radius. As your business becomes less unique and more convenience-oriented, the destination zone will shrink until it vanishes.
Site Evaluation: Customer Sources: Any destination zone that is a simple extension of the trade area defines a real area regardless of size, and can be evaluated using demographics. Virtual areas are not measurable. Virtual areas are used in describing the origins of customers in transit through the trade area, such as along interstates; these customers are treated as convenience-oriented who stop because they enter the convenience zone and are attracted by signage or other site features.
Site Evaluation: Customer Sources: Destination-oriented customers feed into a retail area through a limited set of major roads, and traffic flow on these roads and the location of good residential pockets along them will determine customer potential from each direction in the market. Depending on customers from the destination zone is always risky because sooner or later several competitors will out-position your location. This may not matter is your business is strong and unique and if the surrounding retail area is a powerful draw.
Site Evaluation: Customer Sources: For customers coming from the destination zone, visibility, access, and strategic position within the retail trade zone are crucial. Many will be finding you for the first time and depend on signage. Even true destination-oriented customers may not be as familiar with the area as nearby customers and will depend on signage and access. Still others who already are aware of your business may drop-in based on signage.
Site Evaluation: Customer Sources: As destination zone customers are coming from all or a large section of the market, maps showing neighborhoods likely to contain your customers are very useful because you can connect key neighborhoods with the street network that feeds your location.
Site Evaluation: Customer Sources: The impact of the destination zone depends on the uniqueness and appeal of your business as a true destination plus good access into the retail trade zone through supportive street & highway networks. Give special attention to the drawing power of the retail trade zone and healthy links with nearby businesses to boost your potential for drop-in customers from the destination zone.
Site Evaluation: Demographic Reports: A traditional demographic report contains information about the people who live in the three rings or geographic zones you select. A daytime population report contains information about the people who work in the three geographic zones. These two will give you most of the demographic information needed for a solid site evaluation.
Site Evaluation: Demographic Reports: A traditional demographic report contains information about the people who live in the three rings or geographic zones you select. A daytime population report contains information about the people who work in the three geographic zones. These two will give you most of the demographic information needed for a solid site evaluation.
Site Evaluation: Demographic Reports: While a traditional demographic report and a daytime population report will give you most of the demographic information needed for a solid site evaluation, it is important to remember that numbers shown are relative. Values of particular statistics are dependent on context. Also, census data, a source for much of the statistics, is often collected based on census zones that change over time.
Site Evaluation: Demographic Reports: The standard three-ring demographic report helps you focus on the details of the immediate area around the site, as well as the surrounding areas. You can specify the points of origin and the mileage ranges for the rings to better focus the data and avoid redundancy. To get the most out of this report you should plan for the three rings to correspond to the three impact zones; convenience, residential, and destination.
Site Evaluation: Demographic Reports: The inner ring of a standard three-ring demographic report represents your convenience zone and has a 2-mile radius for a destination-oriented business and a one-mile ring radius for convenience-oriented business. The inner ring describes the population density in the immediate area and evaluates the site's potential to attract customers coming from shopping or work.
Site Evaluation: Demographic Reports: The middle ring of a standard three-ring demographic report represents your residential zone and ranges from 1-2 miles for a convenience-oriented business and 2-5 miles for a destination-oriented business. This ring describes the number and types of residents who will come from home to visit your business and some of the workers who will be your customers. Usually the middle ring contains the majority of your residents and some workers.
Site Evaluation: Demographic Reports: The outer ring of a standard three-ring demographic report represents your destination zone and has a range of 3-30 miles dependent on the type of business and the population density. The outer ring describes the total population of potential customers and usually contains many infrequent customers. You are a destination for all customers in the outer ring.
Site Evaluation: Customer Sources: The daytime population, people who work or shop in the area of your business, is a primary customer source. This group of customers fills the streets, shops, restaurants and office near your site during the day and then returns home in the evening. The importance of the daytime population can range from nearly 100% for urban locations to less than 20% for a residential area.
Site Evaluation: Customer Sources: Demographic measures of daytime populations may not be as accurate as residential demographics because the former are often based on a limited set of business of financial data for a particular market. Even so, daytime population estimates are an important source of information for site evaluation as the daytime population can then be divided into several different customer sources: employees, shoppers, entertainment seekers.
Site Evaluation: Customer Sources: For some businesses, especially restaurants, employees in the area are the largest customer source. Employees will shop coming to & from work, during lunch break, and for take-out or delivery businesses, all day long. Convenience and speed are two critical issues for employees. Unlike residential customers, who may or may not be driven by convenience, employees are almost always driven by proximity.
Site Evaluation: Customer Sources: The effective trade area for employees may be smaller than the residential trade area are. Pay the most attention to the employees in the convenience zone and then give some consideration to employees in the residential zone, especially if a destination-oriented business.
Site Evaluation: Customer Sources: Demographic services can help approximate the amount of employees in each job category for the daytime population. The distinction between blue- and white-collar jobs are important as well as the distinction between retail/service jobs and management/professional. In general, high-rise offices benefit most businesses, while factories provide employees who spend less, and spend less often, even at convenience-oriented businesses.
Site Evaluation: Customer Sources: Your task in site evaluation is to match the profiles of your customers coming from work with the employment profile of the area. Usually a large employer will be a negative factor because it will limit the attractiveness of the area as a draw for customers coming from other customer sources.
Site Evaluation: Customer Sources: Shoppers are normally driven by convenience factors, even more than employees, and will travel less than a mile to come to your location. A retail area that acts as a powerful draw is a destination attracting many shoppers while smaller areas will attract more local and convenience-oriented traffic.
Site Evaluation: Customer Sources: There is overlap between residents, employees and shoppers. As the retail area gets smaller the opportunity for transient customers declines and your business becomes more convenience-oriented, making shoppers and residents essentially the same population.
Site Evaluation: Customer Sources: Because large shopping malls are a strong destination their impact on a retail area will be somewhat different from that of many separate businesses or smaller centers. The gravity of a large mall prevents many shoppers from visiting other businesses in the area. Being positioned on a major street feeding the mall is beneficial, while being on the edge of the trade area around the mall with limited access and visibility is not.
Site Evaluation: Customer Sources: Evaluate the retail activity within one mile to estimate the potential of shoppers as a customer source. Consider it a benefit if the retail area has many shops or a mall that caters to your customers and not beneficial if this is not true. Position in the trade is vital since most of this activity is convenience-oriented, even for destination-oriented business.
Site Evaluation: Customer Sources: Entertainment seekers are those customers entering the trade area for entertainment and linking their visit to your business. Movies, arenas, theme parks, natural and community activities are some of these draws. Links with entertainment activities are either direct or indirect, and are supported by a more limited set of businesses than shopping customers. Position is very important in attracting entertainment seekers because the links with other businesses are usually driven by impulse and are convenience-oriented.
Site Evaluation: Customer Sources: Your business' sales activity is usually supported by many positive links and diminished by a few negative links. Look for locations supporting your customers' need to link several activities with a visit to your business. Avoid links that diminish sales through direct competition or a poor fit.
Site Evaluation: Customer Sources: Transients are customers who do not live the area, work in the area, and who do not shop or run errands in the area. Transients are passing through the trade area and elect to stop, making up only a small fraction of business for neighborhood locations but often providing significant business for freeway locations. Commuters, travelers and tourists can be thought of as transient customers.
Site Evaluation: Customer Sources: Commuters, passing your location on a regular basis to & from work, can provide a major source of business. Position, visibility and access are key in attracting commuters. A position on the going-home side of the street strategically located in regards to competition is usually best. Certain early-day businesses may consider the going-to-work side of the street. Most commuter business is drop-in, and thus visibility and access are essential considerations.
Site Evaluation: Customer Sources: Local retailers and real estate agents will usually be able to give accurate local knowledge on commuter traffic. Streets that serve as major arteries usually have considerable commuter traffic. The difference between traffic volume at 8am, noon and 5pm are good indicators: If these numbers are constant, there is little commuter traffic.
Site Evaluation: Customer Sources: For commuters to be a benefit to your business, it must be attractive to commuters, located on a major artery, provide good visibility and easy access, and be positioned well relative to competition or other retail activity in the area.
Site Evaluation: Customer Sources: Travelers are in transit through the market and for travelers to benefit your business look for intersections with enough retail activity to draw travelers, good links with other businesses, good visibility at least at the entrance to the retail area, and a strong strategic position relative to competition.
Site Evaluation: Customer Sources: To attract travelers your business must be located on a highway that has travelers, must provide a service needed by travelers, have visibility and access needed for travelers to see your location, and be in good position relative to competition.
Site Evaluation: Customer Sources: Since travelers are attracted to intersections with a collection of businesses, good strategic position is essential. Visibility from the highway is important, but may not be as important as visibility to the traveler once in the trade area. The sooner they see your location or signage upon entering the trade area the better your chances of attracting the traveler.
Site Evaluation: Customer Sources: Tourists are travelers who stop and spend time in the trade area. Hotels and motels are good indicators of tourist activity, and tourists tend to favor convenience-oriented businesses in selecting restaurants or shopping opportunities. Seasonal considerations may impact the tourist business. Local tourist impact on a specific site can be measured by hotel & motel activity within a mile, but there may be tradeoffs to consider with neighborhood residents.
Site Evaluation: Drop-in Features: Drop-in features measure the convenience and potential of the site for attracting customers who make unplanned visits. These visits can be spur-of-the-moment decisions based on immediate needs or because of seeing the sign or building.
Site Evaluation: Drop-in Features: Key drop-in features include visibility, prototype, access, parking and strategic position. Drop-in features are most important for convenience-oriented business but are also very important for destination-oriented, especially in new or highly competitive markets.
Site Evaluation: Drop-in Features: Good drop-in features can determine as much as %50 of the sales volume for some convenience concepts. For destination concepts, roughly %20 of the sales volume can be explained by drop-in features. If a site rates poor or fair on drop-in features, do not consider it unless you have strong reasons for overriding this consideration.
Site Evaluation: Drop-in Traffic: For the most part, drop-in features depend on the traffic arteries feeding the site. The major traffic ways that affect drop-in features are primary roads, secondary roads, and freeways.
Site Evaluation: Drop-in Traffic: For the most part, drop-in features depend on the traffic arteries feeding the site. The primary road is the street that the building façade, and usually in this case most of the signage, is designed to face. The primary road is rarely thought of as a freeway, but may be the access road along the freeway, the feeder road in a strip center, a normal busy street, or any other type of road that the building fronts. The primary road is defined by the orientation of the building, rather than the amount of traffic carried.
Site Evaluation: Drop-in Traffic: For the most part, drop-in features depend on the traffic arteries feeding the site. The secondary road, if applicable to the site, is the nearest cross street from which the site, building, &/or signage is visible. In many cases the secondary road is the primary tragic generator since the site may face a smaller primary road or the interior of a strip center.
Site Evaluation: Drop-in Traffic: As the dynamics of freeway traffic are so different from other roads, freeways are treated separately. If the site or store is visible from the freeway or has convenient access to freeway traffic because it is near an exit, then it is considered a freeway location. If the site faces the freeway the feeder road is treated as the primary road.
Site Evaluation: Visibility: Visibility describes how easy or difficult it is for potential customers to notice your business. Obviously, for new locations, you must make this judgment without the benefit of having the actual signage and building. Visibility is more question of discrimination than the distance from which one can first see the sign or building.
Site Evaluation: Visibility: Visibility is more question of discrimination than the distance from which one can first see the sign or building. To what degree is your store clearly discriminated from the surrounding stores to a person who has never been to your store and is only moderately familiar with your signs or building prototype? How likely is it that someone driving down the highway will be able to notice you in this location?
Site Evaluation: Visibility: The key to good visibility is being able to locate your store and discriminate it from the surroundings when you are not really looking for it. Destination users have either been to your store before or will persist in finding it even with poor visibility and therefore will not be strongly affected by site visibility. Drop-in customers and infrequent or new customers will all depend on the visibility of your store for their visits.
Site Evaluation: Visibility: Visibility is more question of discrimination than the distance from which one can first see the sign or building. Drop-in customers and infrequent or new customers will all depend on the visibility of your store for their visits. When rating visibility your rating should be based on the perspective of these latter groups, not your own, already used-to-it, perspective.
Site Evaluation: Prototype Visibility: A prototype is the standard building or signage configuration for your concept. A distinguishable prototype adds to visibility by providing consistent cues about your concept that support the signage. The best prototypes make strong use of style, distinctiveness, and consistency.
Site Evaluation: Prototype Visibility: The best prototypes make strong use of style, distinctiveness, and consistency. The style of the building and signage should fit the concept. Churches, schools, banks, some types of restaurants have a certain look that is communicated by signs and building. The better your concept's building or façade fits the expected prototype the more visible it will be.
Site Evaluation: Prototype Visibility: The best prototypes make strong use of style, distinctiveness, and consistency. The more distinctive the prototype the easier an observation of a small part of that prototype signals that the concept is present. How clearly does a small part of your building or sign communicate the whole? Strong prototypes are distinctive prototypes.
Site Evaluation: Prototype Visibility: The best prototypes make strong use of style, distinctiveness, and consistency. An image of a prototype is built through repetition. If your concept is large enough to have many locations that follow a similar design, people will learn what to expect when they see your business. A particular location will then become more visible to the extent to which the building and signage fit the typical look of your other stores.
Site Evaluation: Prototype Visibility: Site visibility will improve to the extent that the proposed building is a prototype that fits the type of business, has distinction, and is consistent with other examples of that specific concept. Strip center locations often lack the opportunity to communicate fully the differences in building style and identity that we have come to expect in freestanding locations.
Site Evaluation: Access: The ease or convenience of getting to your store is a measure of its accessibility. Access is most commonly defined in terms of the ease or difficulty of ingress, coming to the store or its parking area, and egress, leaving the store or its parking area, from the major traffic arteries.
Site Evaluation: Access: A variety of methods and attributes for measuring access are available, including traffic diagrams, traffic volumes, curb cuts, medians, quality of entrances from primary and secondary roads, etc. Use of simple subjective ratings of ease of accessibility from the primary road, secondary road, and freeway, and taking measurements of the time it takes, once the sign or building is noticed, to enter the parking lot, park, and walk to the entrance are great ways to measure access.
Site Evaluation: Drop-in Access: Convenience-driven access is often referred to as drop-in access. The easier and quicker it is to get to your business from the street system the better the drop-in access. If your business is convenience-oriented, drop-in access will have a significant impact on sales.
Site Evaluation: Drop-in Access: The easier and quicker it is to get to your business from the street system the better the drop-in access. Convenience stores, gas stations, quick-serve restaurants, and many other convenience concepts have made a science of defining and measuring drop-in access and constructing sites that rate high on drop-in access.
Site Evaluation: Drop-in Access: If your business is destination-oriented and has good visibility, poor accessibility will not matter a great deal. If they can find you, customers who want to shop at your store will put up with difficult access.
Site Evaluation: Drop-in Access: The significance of a good or poor access rating depends a great deal on several variables such as visibility, strategic position, competition, and market presence. Good access is critical in a competitive market where site visibility and position within the market are average or worse. If you are a strong destination and have only light competition and have excellent visibility, people will make sure they get to your store.
Site Evaluation: Resident Access: An important measure of accessibility relates directly to a concept's customer sources. Strategic access measure the convenience of the store's position in the market relative to key customer sources. Resident access is the measure of convenience for residents in the neighborhoods around the site to travel to the sire's retail trade zone. Are there good streets free from gridlock? Are there any major barriers between the pockets of good residential customers and the site?
Site Evaluation: Employee Access: An important measure of accessibility relates directly to a concept's customer sources. Strategic access measure the convenience of the store's position in the market relative to key customer sources. Employee access is the measure of the convenience of the immediate trade area to individuals coming from work. Good traffic corridors are essential because of the time constraints of this group.
Site Evaluation: Shopper Access: An important measure of accessibility relates directly to a concept's customer sources. Strategic access measure the convenience of the store's position in the market relative to key customer sources. Shopper access is the measure of the convenience of the site to nearby malls, entertainment centers or other concentrations of shoppers, diners, or fun-seekers within a mile.
Site Evaluation: Transient Access: An important measure of accessibility relates directly to a concept's customer sources. Strategic access measure the convenience of the store's position in the market relative to key customer sources. Transient access is the measure of the convenience of the site to highways used by travelers, hotels and motels, and other sources of transients.
Site Evaluation: Strategic Access: Strategic access is actually a feature of the trade area and its relationship to the retail zone near the site rather than a specific site feature. Strategic access is a reality check on the likelihood of each customer source to actually become shoppers or diners in your business.
Site Evaluation: Strategic Access: While a demographics analysis can often locate potential customer sources within one or two miles, it is essential to evaluate the convenience of access that each customer source has to the area containing your business. Your rating of accessibility and its importance to your concept depends on many factors. In your final site evaluation, you should include separate ratings for drop-in access and strategic access.
Site Evaluation: Traffic Counts: While traffic is a measure of the volume on the primary and secondary roads and freeways feeding the site, traffic is a highly overrated site feature relative to its predictive value in site evaluation. While you need adequate traffic volume on the major roads, the problem is that counting cars says little about the potential of those cars to stop at your business.
Site Evaluation: Traffic Counts: Many of the measures included in a site evaluation will to some degree also measure traffic; competition, retail activity, entertainment activity, restaurant activity, malls or other major generators, evening activity, offices, daytime or residential population, and so forth. As each activity is a traffic generator, and more active areas obviously have more traffic, traffic and traffic counts are usually not included as a separate site feature.
Site Evaluation: Strategic Position: Strategic position measures how well or poorly a site is situated in the immediate retail are relative to other businesses. A good strategic position means much more than high visibility or convenient access. Good position succeeds by making your store more convenient to customers coming into the retail area, while your competition, because of their weaker position, becomes less convenient.
Site Evaluation: Strategic Position: Position matters a great deal because it drives customer decisions to use one business over another. A poor position within a retail area reduces your convenience-oriented business because many customers will never drive past your store.
Site Evaluation: Strategic Position: In a competitive market get the best position possible relative to your competition. High competition, low image and poor position can be a disaster. Good strategic position generates convenience-oriented business because even if your store wasn't the primary purpose of the trip, it can quickly become a secondary stop by virtue of its good position.
Site Evaluation: Strategic Position: Having the best strategic position means that potential customers coming from all major customer sources pass your location soon after they enter the retail area. Selecting a location between the customer source and your competition is a good strategic position. A poor location is one in which your customers reach your competition first or can get to them more conveniently.
Site Evaluation: Strategic Position: Because strategic position is so important, it's worth fighting for in a market. If the site has the potential to be strategically positioned over time as the area grows, pay the extra money for it, if necessary. Look for locations that are difficult for competition to out-position.
Site Evaluation: Strategic Position: Because strategic position is so important, consider sites with poor position only when the population density, normal traffic patterns, or your pull as a destination will guarantee a good supply of customers. Consider them, but choose a poorly positioned site only with great care.
Site Evaluation: Strategic Position: Keeping your priorities in order, select first the best strategic position available, then be sure you have excellent visibility on the primary traffic artery. Finally, go for the best ingress and egress possible.
Site Evaluation: Physical Environment: The physical environment is a description of the physical and contextual features of the area around the site. Physical environment is concerned with factors such as the type of neighborhood, the age or stage of development, the amount of vacant land, and the existence of parks or other factors that enhance or diminish the area's quality.
Site Evaluation: Physical Environment: Physical environment makes an important contribution to the image of your business because certain features will encourage or draw people into the area while other attributes will have a negative influence.
Site Evaluation: Neighborhood Type: Neighborhood descriptions range from affluent and established to middle-class homes and condominiums to apartments and retail to factories and low-income housing. They also range from old to new, developing to established, static to dynamic, ethnically diverse to mono-ethnic, safe to crime-ridden, and so forth. Neighborhood creates a context for your site enhancing, decreasing, or having no affect on your business' image.
Site Evaluation: Neighborhood Type: The type of neighborhood you locate in must at least pass a common sense test relative to the type of business being considered. Demographics tell part of the story, but a quick evaluation of whether the physical character of the neighborhood will hurt, help, or have no impact on your business is just as important. Look for obvious red flags; otherwise expect at least a reasonable fit between your business and the surrounding neighborhood.
Site Evaluation: Surrounding Quality: High quality retail or residential surroundings are usually a positive draw for most types of businesses, independent of other factors. Perceptions of quality can be influenced by newness, contemporary design, expensive materials, landscape architecture, unique functionality, reputation, trees, parks or other natural features, and other factors.
Site Evaluation: Surrounding Quality: Low quality environments usually have reduced draw unless you possess a captive audience. Low-income housing, traditional factories, litter-strewn streets and properties, the absence of landscaping, the perception of crime, and vacant land all detract from quality.
Site Evaluation: Surrounding Quality: Low-income households and the absence of vehicles often create populations that have to support certain kinds of neighborhood businesses. Some of the highest-volume quick-serve restaurants and convenience stores exist in these surroundings.
Site Evaluation: Retail Balance: Balanced retail areas, ones offering a variety of shops, dining and services, often do better than areas with a limited like-group of retail outlets.
Site Evaluation: Retail Balance: One of the best strategic positions for restaurants is on the edge of a busy retail area positioned so as to pick off neighborhood or business traffic first. This is because there is a natural resistance to dealing with the extra traffic or congestion when one's only purpose is to dine.
Site Evaluation: Gridlock: Destination concepts may suffer from too much traffic because it makes it difficult to enter the area. Convenience concepts may benefit because the generous supply of cars creates constant demand for convenience-oriented products and services.
Site Evaluation: Edge Locations: An edge location is one near the boundary of s strip center, mall pad, or retail zone with vacant land, low-income housing, or other unsupportive development on the other side of the boundary. Certain edge or boundary locations can be harmful to retail business, while others can be helpful.
Site Evaluation: Edge Locations: A good edge location is positioned on the main road that receives the majority of traffic entering the area. This type of location has an excellent strategic position because customers reach it before reaching the competition. Its position is dominant relative to the competition.
Site Evaluation: Edge Locations: A poor edge location is one near the edge of the retail area on a road with little traffic. Customers visiting the area would probably not find the location unless it is a destination. An even worse location is near the edge of the retail area adjacent to vacant land or low-income housing and no street system. This is a common type of location in many newer markets here in the southwest, where vacant land is gradually converted into shops and homes.
Site Evaluation: Edge Locations: Being on the edge not only means your business will be harder to find, but it also means no convenience-driven traffic will pass, greatly lowering the potential for drop-in customers and for building general awareness of your business. The perception of crime is greater with edge locations near vacant or unfamiliar territory.
Site Evaluation: Edge Locations: As demographics only tell part of the story, always drive the neighborhood to assess the following: whether the physical surroundings are likely to be helpful or hurtful; whether the nearby businesses create a meaningful cluster of retail activity that make sense for the neighborhood; how much of the neighborhood is undeveloped or vacant; and the potential of the site to represent a positive edge location.
Site Evaluation: The Market: Regardless of market perceptions or market presence, selecting the best locations in the market for your business is still the goal. However, the definitions of the best location changes considerably based on how you answer several crucial questions related to the market and your strategy for growth in that market.
Site Evaluation: The Market: The idea of market is pivotal for good site evaluation and selection. The crucial issues concern growth strategy, regional awareness, market penetration, market fit, and prototype. Each of these issues impacts the site decisions you make by changing the relative importance of the attributes you use in evaluating the site, or by changing the growth priorities within the market.
Site Evaluation: Growth Strategy: If building one or just a few locations in the market because of a strong destination concept, your business must be positioned strategically near major highways that link easily with the entire market. These don't have to be dominant positions. If you are a true destination, customers will eventually find you, but you must make it possible for a large portion of the market to conveniently get to your business.
Site Evaluation: Growth Strategy: If building-out the market in order to become a dominant concept, you must fight to get strategically positioned stores open first and then fill in trade area gaps as appropriate. Locations on major highways with strong visibility and strategic position serve the dual purposes of building market awareness and operating successful units. Don't get sidetracked by secondary locations.
Site Evaluation: Growth Strategy: If your goal is to simply find one or a few excellent locations as they become available without being concerned about market presence or dominating the competition, the site quality score becomes the most important issue.
Site Evaluation: Growth Strategy: A variety of growth strategies will work fairly well as long as you select high quality locations. In most competitive markets, excellent locations are in short supply. In these situations your growth strategy becomes even more important as the decisions are more complex and involve many locations in addition to the ideal choice.
Site Evaluation: Growth Strategy: A good growth strategy keeps you focused on your long-term goals so you won't be tempted to sacrifice your long-term plans when mistakes are made.
Site Evaluation: Regional Awareness: Regional awareness is a measure of how well your chain concept is known outside of your primary markets. Regional awareness is invaluable from a marketing perspective because it immediately makes you a new strong destination in contiguous cities. The customer's question of who you are has for the most part already been answered.
Site Evaluation: Regional Awareness: Regional awareness impacts site decisions because if people already know your business you will have immediate market presence: Secondary, less strategic positions can still do well.
Site Evaluation: Regional Awareness: If possessing regional presence, daily drive-by signage influence is less important. Word-of-mouth advertising and a well-publicized grand opening will let most customers know of your arrival. It is still crucial that you locate near highways giving many customers coming from home or work timely access.
Site Evaluation: Regional Awareness: The more convenience-oriented the business, the more critical it is to have a strong image in the trade area. For destination-oriented businesses, a weak real estate image can be compensated for by strong regional awareness.
Site Evaluation: Market Penetration: Market penetration measures the degree to which your present store location(s) exhaust the potential supply of customers. In a market with limited penetration there will be many gaps or areas that might provide an adequate customer base for an additional location.
Site Evaluation: Market Penetration: A high degree of market penetration affects your site selection strategy in the following way: All sites within the market for your concept are now convenience locations regardless of whether you are a destination or a convenience business.
Site Evaluation: Market Penetration: If possessing a high degree of market penetration, trade area analysis and site evaluation should focus on local considerations rather than market issues. Strategic position, the quality of local retail draw, the number of potential customers, all of the factors in local site quality become the major considerations in evaluating the site.
Site Evaluation: Market Penetration: Strong market penetration usually means that a store will reach its full potential quickly, often in less than a year, and that this potential will be determined by local rather than market factors.
Site Evaluation: Market Fit: Market fit describes the appropriateness of the market for a particular concept. Often, low sales in new markets have little to do with site quality and much to do with common sense about market fit. When there is a clash between your concept and the values and tastes of the market, you'll either be ignored and if surviving only after several years of building market awareness, or you hit the novelty niche.
Site Evaluation: Market Fit: If your concept is very novel or doesn't naturally fit the market's culture there are several strategies for site selection. Locate in the retail, entertainment, or dining activity centers where you are likely to find the largest number of people willing to try something new.
Site Evaluation: Market Fit: If your concept is very novel or doesn't naturally fit the market's culture there are several strategies for site selection. If a demographic niche exists that supports your concept, locate conveniently to this group.
Site Evaluation: Market Fit: If your concept is very novel or doesn't naturally fit the market's culture there are several strategies for site selection. Go after the 18-29 year olds in the market. Although they are the most critical consumers, they are also the most willing to try new concepts.
Site Evaluation: Prototypes: A strong prototype offers an excellent way to build an identity in a market. Prototypes that are visually appealing and communicate the right message to your customers have a strong impact on sales. Confusing prototypes force potential customers to decide what message you are sending and result in lost sales.
Site Evaluation: Prototypes: Most retail concepts have a specific look associated with that business. Customers expect pharmacies, gas stations, upscale restaurants, banks, discount chains, and other concepts to have a certain appearance. When they don't, customers may not recognize the concept in time use it.
Site Evaluation: Prototypes: Prototype becomes an important part of site selection because the type of building you construct or lease and the signage you choose are very much a part of the real estate quality. The stronger the identity you create in support of your concept, the better the location.
Site Evaluation: Prototypes: In creating a strong prototype, get a designer or researcher to match perceptions of your signage, façade, or building with the purpose or nature of your business. Be sure not to send mixed signals.
Site Evaluation: Prototypes: After creating a strong prototype for your first location, stick with it as you grow. You want both uniqueness and a clear identity that fits what customers expect from your type of concept. Site quality depends in part on how closely you can conform to your prototype requirements. Keep this in mind during negotiations.
Site Evaluation: Competition: There are three stages of competition, and knowing how they relate to market dynamics as well as your own growth strategy is essential to getting a true picture of how competition will impact the site you are evaluating. 1) Competition either doesn't exist or is so limited it doesn't matter. 2) There is moderate competition, but appears to have a largely positive impact on sales. 3) Competition is excessive and same store sales are flat or decline.
Site Evaluation: Competition: The non-real estate factors driving image include market presence, marketing, mystique, perceived quality of the product, and timing. When you have a strong image, high competition may improve sales. A weak image may suffer greatly even from moderate competition.
Site Evaluation: Competition: In competitive markets the best locations today generally have moderate competition and high demand. Low competition may produce a bug success but usually has increased risk.
Site Evaluation: Direct Competition: Direct competition comes from businesses very much like your concept in that their theme, merchandise, food, or target customer is similar to yours. True direct competitors tend to divide the market, each getting some proportion of the demand within the trade area.
Site Evaluation: Direct Competition: Direct competitors are essentially competing for the same dollars within the trade area. The reason your business is selected over a direct competitor might include convenience, habit or preference, perceived quality, selection, service, and the V-factor. V-factor regards the tendency for customers to seek out variety, especially in dining habits.
Site Evaluation: Indirect Competition: Indirect competition comes from stores that sell your food, merchandise, or services as a small part of their overall business. A grocery store that has a limited selection of office supplies is an indirect competitor for an office supercenter. Wal-Mart is an indirect (as well as direct) competitor for most retail businesses in a small town.
Site Evaluation: Indirect Competition: Indirect competition comes from stores selling goods similar to your store, but with a different theme, price, quality level, or selection. The question of direct versus indirect competition is especially complex for merchandise because many retail stores, from discount to specialty, will carry some of the same merchandise.
Site Evaluation: Cannibalism: Adding to an already complex issue is the pressure from franchises to keep the impact on their existing stores as low as possible, strategic questions based on your expansion plans in the market, and the general myths associated with cannibalism itself and its overall impact on sales.
Site Evaluation: Cannibalism: Cannibalism is considered positive because it usually is an indication of market presence or even dominance rather that a poor development strategy. The exception would be the rare situations where you unknowingly wipe out an existing store by opening a new one with a much stronger strategic position.
Site Evaluation: Cannibalism: Cannibalism is a strategic issue because it is impossible to build out a market without cannibalizing operating stores. Lower sales are expected in existing stores, as you open new stores and make the gradual transition from a destination to a convenience business.
Site Evaluation: Cannibalism: In general, the effects of cannibalism diminish over time. Even if they do not, in some cases it may be strategically wise to maintain a minimum level of cannibalism to be sure that you are not leaving gaps in the market. From a market perspective, you goal may be to dominate the competition by saturating the market with your store.
Site Evaluation: Cannibalism: From a market perspective, your goal may be to dominate the competition by saturating the market with your store. In such a case your major concern is not individual store sales so much as the total dollar amount extracted from the market. The same considerations apply even if you are building only two stores in the market.
Site Evaluation: Cannibalism: For a healthy business, new customer sources driven more and more by convenience factors will replace destination customers lost through cannibalism.
Site Evaluation: Cannibalism: When considering the impact of cannibalism, be certain to frame the discussions in terms of profitability, not overall volume. This may change our mind.
Site Evaluation: Business Clusters: The business cluster defines the immediate trade area for your store. The cluster may be the other businesses in a strip center or an out-parcel near the center, a loosely aggregated group of businesses surrounding a mall, or another grouping of retail/restaurants contiguous or connected in some other way.
Site Evaluation: Competition Impact: Low to moderate competition helps draw customers into the area, but after a point additional competitors add little drawing power while reducing the number of customers per business. Note that non-competing businesses in the area also have a great deal to do with the drawing power of the area.
Site Evaluation: Competition Impact: The retail area has a local demand based on the people who live and work near your store. Is there sufficient local demand to support you and the competition? In a saturated market, any additional competition just reduces sales for all similar stores. In a healthy market, additional competition helps to meet the strong demand.
Site Evaluation: Competition Impact: The retail area has some potential to draw customers from outside the immediate trade area. If the local trade area is not adequate, does the retail area have sufficient drawing power to support the existing competition plus your concept? If you sum the trade area potential and the expected drawing power outside the trade area, do you have enough potential customers per competitor to be successful?
Site Evaluation: Competition Impact: If you divide the total demand by the total number of competitors would your share be adequate for a profitable store? What are the volumes like for other direct competitors in the area? If these are below average, the supply/demand curve is most likely on the declining side. Can you tolerate below average sales?
Site Evaluation: Competition Impact: In saturated markets with strong competition, consider your market presence. You have a safety net if you are an established concept in the market. New concepts should beware in very competitive locations.
Site Evaluation: Competition Impact: In saturated markets with strong competition, consider your strategic position. A strong strategic position is invaluable in highly competitive areas: It is always worth the extra investment after a year or so.
Site Evaluation: Competition Impact: In the final analysis your job is to make a judgment call on the impact of competition. Statistics on consumer dollars spent per person for your product is a helpful demographic index. Common sense and a little hard information about how well competitors are doing are also very useful. Finally, knowing where this site will be on the supply/demand curve and whether you can tolerate even more competition in the future is also important.
Site Evaluation: Competition Impact No competition can mean the best of times or the biggest of blunders. In any case it is almost certain to involve some risk. No competition can be a slight plus when your concept is familiar and established. No competition can be a negative when it is relatively untested, either because it is a new concept or you are entering new types of markets. Use caution when considering sites with no competition.
Site Evaluation: Competition Impact: No competition is a definite plus when the trade area has at least moderate demand for your product and your concept is successful in other similar markets. No competition is a risk when demand has not been tested or the market is unfamiliar.
Site Evaluation: Basics: The factors driving the success of retail businesses or the quality of their locations are for the most part objective and can be measured or studied using scientific tools in order to make intelligent estimate of future potential. Site evaluation is less an art than a science.
Site Evaluation: Basics: The behaviors of your customers determine the effects of location. Their efforts to locate your business, choose you over competition, connect visits to your location with other activities, come from home or work, their demographic qualities - these and other customer factors define the logic of retail, and how that retail logic then effects your particular location.
Site Evaluation: Basics: Location, location, location is not as simple a formula as it seems. In many markets today, predicting sales is not the same as evaluating site quality. While site quality contributes to sales, there exist many factors contributing to a sales prediction.
Site Evaluation: Basics: Evaluating site quality and evaluating risk are separate problems. Factors creating high risk are only partially related to the factors determining site quality. A site of average quality can be a very high risk due to a few factors like visibility, strategic position, or too much competition.
Site Evaluation: Basics: Since site evaluation often includes several interested parties, and since each party has a somewhat different reason for liking or disliking a site and therefore uses different rules for site evaluation, objective knowledge about the features that determine the success of a site is imperative for your effective evaluation strategy.
Site Evaluation: Basics: Unlikely to change several years down the road, the features determining site quality endure. A good location will always prevail over a poor location, but good location does not guarantee good sales or quick success. If your new location has to be immediately successful, your most important evaluations may have only a little to do with site quality and more to do with marketing and image.
Site Evaluation: Basics: Money spent on customer research, market selection, and/or site evaluation before building or leasing is smart money. A one-time expense for an intelligent site evaluation process is small compared to the monies required to open even a small store. Waiting until things fall apart to spend money on site evaluation will cost a great deal more, and the consequences for the integrity of your business can be devastating. Spend early to increase your earnings later.
Site Evaluation: Basics: Short-term sales vary from market to market, and site to site. Short-term sales are often mistakenly the only measure in site evaluation. Many factors contribute to site quality, and many factors determine sales in any location. Short-term sales are rarely a trustworthy indicator of site quality. Develop an objective systematic process of site evaluation, including solid knowledge of your customers and a strategic plan for market development, and the bumps you encounter will be minor compared to any approach based on short-term sales.
Site Evaluation: Definitions: A process, not a result, site evaluation is the objective assessment of the quality or suitability of real estate for a specific business concept. It is the measurement of the relative quality of a piece of real estate compared to other like-pieces of real estate and uses all the objective and subjective information available.
Site Evaluation: Definitions: Sales forecasting or sales prediction is the process of predicting the expected sales volume for a particular location. This is not site evaluation. Site evaluation is a process to measure the quality of the location which takes into account demographics, site features like visibility and access, and competition (current and future). While sales volume depends on site quality plus other factors such as market presence, marketing, operations, customer perception and timing, site evaluation is only a part of a sales forecasting system.
Site Evaluation: Shrinkage: Confusing site evaluation and sales forecasting will create problems. It is very difficult to separate the part of sales explained by site quality from the parts depending on other factors. This results in a prediction model suffering from shrinkage; predictions for new sites not included in the sample used to build the model will not be as accurate. To avoid shrinkage build a sales forecasting system based on true understanding of all factors determining site quality - avoid models based on simple statistical "goodness of fit" measures.
Site Evaluation: 1st of 3 Components: A solid site evaluation uses three major components: clear objectives, good sources of information and a systematic approach. Clear objectives include: finding the best available real estate in the market, comparing potential locations, explaining the source(s) of problems for an existing store, reducing risk in a new location, using a scientific site evaluation process.
Site Evaluation: 2nd of 3 Components: A solid site evaluation uses three major components: clear objectives, good sources of information and a systematic approach. Good sources of information include: demographics, specific site features like visibility and access, strategic plans, customer information, marketing/advertising support.
Site Evaluation: 3rd of 3 Components: A solid site evaluation uses three major components: clear objectives, good sources of information and a systematic approach. A systematic approach may include: surveying customers to identify who they are and there buying behavior, ordering a demographic report to see where your customers reside, driving the neighborhood(s) studying business and retail activity, counting traffic, rating competition, evaluating current and potential visibility and access, identifying barriers or other special features, creating an exhaustive report.
Site Evaluation: Perspective of Observer: Your process for evaluating a site, though subjective, may already be quite sophisticated and valid, or very naïve. You may know intuitively that to be successful a store needs good visibility, easy access, a street with adequate traffic. Your own experiences also provide additional facts. Or you may be a small business owner about to open your fist location: Your site evaluation process may not be intuitively as sound or as based on personal knowledge as you'd like. Regardless, you will benefit from educating yourself in order to make objective, accurate judgments about potential real estate.
Site Evaluation: Perspective of Observer: Often a site is labeled good or bad not because of its immediate features but because of the perspective of the evaluator. An agent may be driven by pressure associated with closing the deal inside a small opening of opportunity. A developer may focus on long-term needs to get key tenants in the space. And a storeowner may most concern herself with the bottom line during the first few years of business.
Site Evaluation: Perspective of Observer: Site evaluation requires a mix of relative and absolute facts. Some of the factors influencing site evaluation are: market knowledge, physical characteristics of trade area, demographics, customer knowledge, site features, competition.
Site Evaluation: Perspective of Observer: Site evaluation requires a mix of relative and absolute facts. While perfect or poor visibility is often defined relative to other retail business in the area, the number of competitors is an absolute measure even though the relative value of these measures may change. The most important relative judgment in a site evaluation is site quality - site quality provides a direct comparison between a potential location and others throughout the market.
Site Evaluation: Perspective of Observer: Site quality is a composite score computed by combing the scores of individual site features and demographics into an overall quality score. After collecting a variety of information on a site, that information is combined in such a way as to get an overall rating. While all of us most often use this process for evaluating real estate, it is most often subjective and/or intuitive and never specifies what site features are considered or what value is placed on each feature.
Site Evaluation: Convenience Business: One of the most important determinants of the relative value of particular site features is whether it is to be convenience- or business-oriented. Convenience business depends primarily on the nearby customer base that drops-in. Because convenience business is likely to have competition throughout the market it is unlikely a customer would drive out of the way to visit one location over another.
Site Evaluation: Destination Business: One of the most important determinants of the relative value of particular site features is whether it is to be convenience- or business-oriented. Destination business depends primarily on attracting customers through their uniqueness: visits to destination businesses are often planned ahead of time and may involve driving some distance.
Site Evaluation No-nos: How to Build a Bad Location: Insist on a trophy location near your residence, despite poor site features or negative demographics. Ignore the import of crucial drive-by features like visibility and access. Locate at the edge of a retail center, next to vacant land or high-crime areas. Be the last concept to enter a market already saturated with competition. Locate near a mall or retail center that closes earlier than your businesses normal operating hours.
Site Evaluation No-nos: How to Build a Bad Location: Select a hard-to-get-to corner in a strip center or on a side street with little traffic in a busy trade area and compound this error of judgment by thinking the traffic on the primary road belongs to you. Select a weak strategic position in a highly competitive market. Select a location that can be easily out positioned by a major competitor. Ignore the demographics that suggest the residents in the site neighborhoods are not your customers. Be delighted but do not find out why there are no competitors anywhere near the site you are considering.
Site Evaluation: Location Narrowing: Site evaluation is typically concerned with a site's immediate vicinity, but site evaluation also considers larger geographic contexts. The decision to be in a particular city or market usually comes before any specific site decision. What cities or markets within a nation are most suitable for your business? Your need to be in a certain market and the timing of investment may have as much to do with site decisions as the site quality. Often the decision is made by default since most business owners begin by opening one ore a few stores in the market where they already exist.
Site Evaluation: Location Narrowing: Site evaluation is typically concerned with a site's immediate vicinity, but site evaluation also considers larger geographic contexts. A market is defined as the metropolitan statistical area (MSA) being considered. MSA is the most commonly used market description perhaps because it includes a core city or town and all the surrounding towns affecting the core. In what part of the city do you want to locate? Where are your customers living, working, and visiting? Where is the competition? Will this site be one of many in the market or the only one you run? A need to be in a particular section of a market will most likely impact the kinds of sites available to you and your needs. As will the factor of how much you are willing to compromise on site quality.
Site Evaluation: Location Narrowing: Site evaluation is typically concerned with a site's immediate vicinity, but site evaluation also considers larger geographic contexts. Trade area usually refers to the geographic area containing the bulk of your customers. Some site features like the impact of competition or strategic position and demographic features like population or the availability and amount of certain customers serve as actual descriptions of the trade area - these often depend on how you define your trade area boundaries.
Site Evaluation: Location Narrowing: Trade area usually refers to the geographic area containing the bulk of your customers. If your business is to be destination-oriented and is to be the only location, your trade area may include most of the market. Traditional trade area boundaries may not be helpful in this situation. But if your business is convenience-oriented and is to have numerous locations, defining accurate trade area boundaries may be the most critical decision you make.
Site Evaluation: Location Narrowing: It is common to find a site first, then define the trade area of that site. But it is just as common to choose an appropriate trade area containing an adequate customer base, then select a specific site within that trade area. Regarding the success of these methods; six of one, half-a-dozen of the other.
Site Evaluation: Location Narrowing: Site perspective is a decision about a single piece of real estate and includes an evaluation of many site-specific features like visibility, access, type of location, parking. Any site evaluation worth-its-salt includes a trade area evaluation. Market factors and trade area factors can interact with site quality issues in effecting location choices; the context provided by market factors may have more to do with final site selection than site quality.
Site Evaluation: Customer Knowledge: Site evaluation includes the key component of customer knowledge. Customer knowledge includes who they are as well as how they behave. Who your customers are can be discovered in a solid demographic study of items such as age, income, education, household size. How your customers behave: where they live and work, what other activities they combine with a visit to your business, what time of day they visit, and the frequency of use.
Site Evaluation: Customer Knowledge: Most site evaluations suffer from only looking at customer demographics. Failure to also look at customer behavior will impact the success or failure of your business. How often will they use your business? How far do they travel? Where do they come from? Where are they going? Why do they come? What else do they do on the way? How close to home? How close to work? What is the nature of their use of your competition?
Site Evaluation: Customer Knowledge: Customer sources are the meat and potatoes of site evaluation. Customer source is one of the most important components of customer behavior. What sources (where) customers come from, how many come from each source, the total number of customers from all sources - the answers will make site decisions much easier. Considering the features of visibility or access, which impact most or all customer sources, is a different consideration than counting the number of people working in nearby offices, which is done when focusing on a particular customer source.
Site Evaluation: Customer Knowledge: There are many major customer sources to be considered in any site evaluation. Residents are customers living in the trade area and visit your business directly from home, return home after visiting your business, or combine their visit to other activity associated with home.
Site Evaluation: Customer Knowledge: There are many major customer sources to be considered in any site evaluation. Employees are customers employed in the trade area who combine a visit to your business with work. This customer comes from work to visit you, returns to work after visiting, or combines a visit to your business with other activity related to work.
Site Evaluation: Customer Knowledge: There are many major customer sources to be considered in any site evaluation. Shoppers are customers shopping in the area who then visit your business and continue shopping in the trade area.
Site Evaluation: Customer Knowledge: There are many major customer sources to be considered in any site evaluation. Entertainment seekers are customers in the trade area for movies, parks, etc. This customer includes residents as well as tourists, fitness enthusiasts, out-of-trade-area (out of town) friends and family of residents.
Site Evaluation: Customer Knowledge: There are many major customer sources to be considered in any site evaluation. Travelers are customers in transit through the trade area and visit your business because they see your sign and your business is convenience-oriented, or they are staying in the trade area and visit your business because it is destination-oriented.
Site Evaluation: Customer Knowledge: There are many major customer sources to be considered in any site evaluation. Commuters are unique customers going to and from work who may travel past your business daily, even twice or more daily, but who do not live in the trade area.
Site Evaluation: Customer Knowledge: There are many major customer sources to be considered in any site evaluation. Special populations are a strong customer source not fully highlighted in a normal demographic study. Your business may benefit from the presence of a school, military base, or seasonal residents. In addition, there are many specialized customer sources resulting from special combinations of customer behavior. A solid site evaluation will provide this information.
Site Evaluation: Customer Knowledge: A diversity of customer sources offer higher sales potential and less risk than a strong but limited source. While it is possible to have strong sales based on only a couple customer sources, it is usually a higher risk than a diversified customer source.
Site Evaluation: Customer Knowledge: A visit to a retail business is usually combined by the customer with one or more other businesses, either retail or convenience-oriented. Linked errands is a hallmark of our time-oriented and mobile society.
Site Evaluation: Customer Knowledge: Convenience-oriented business is more and more located within destination-oriented business: the bank or coffee kiosk inside the grocery store, the restaurant inside the airport. Convenience-oriented businesses often link together: the quick-serve restaurant and gas station, the video and convenience store. And new concepts are often attached to established businesses: internet service with cafes, jungle gyms with fast food.
Site Evaluation: Customer Knowledge: When evaluating a particular site you will want to evaluate current and potential links that will most likely increase the overall visits to your business. When businesses cooperate in a way that serves the multiple needs of the customer, a larger visit ratio is attained than without that cooperation. A solid site evaluation will also take into account what businesses all the customer sources visit, especially those customers coming from home, work or shopping.
Site Evaluation: Customer Knowledge: Look for sites where your customers have numerous reasons to be in the immediate vicinity, or in the larger trade area. Linked clusters of businesses that serve your customers provide this activity.
Site Evaluation: Customer Knowledge: Most of your customers spend the bulk of their money depending on the time of day. Dining. Shopping. Gas. Etcetera. The more convenience-oriented your business, the more your business needs to be near daytime convenience-oriented populations. Destination-oriented business will often generate their own draw and can therefore do without being located near day part populations, though that business is at risk of being out-positioned.
Site Evaluation: Customer Knowledge: While some businesses get by depending on one part of the day's revenues, it would be a dire mistake to apply this across the board. Only highly successful locations can excuse the loss of revenues from any normal day part. This thinking is often referred to as "the law of compensation" and its blind followers often find their business struggling. Low volume in one day part is not always compensated by strong volume in another day part.
Site Evaluation: Customer Knowledge: Just because a particular business does well based on a particular day part does not mean it will do as well based on the same day part in another location. If you are considering opening an additional location of the same business, do a full site evaluation process. This will make you money in the long run. It goes without saying; opening a business that fails costs money. Great deals of it.
Site Evaluation: Customer Knowledge: Frequent customers, whether numerous times a week or a couple times a year, are a key consideration in site selection. But infrequent customers are usually more vital to the success of a business. A site with a high amount of frequent customers and a low amount of infrequent customers is at risk of changes in the marketplace. New competition, out-positioning by a competitor, cannibalism by one of your other locations: these and other changes in the marketplace can lower sales volume.
Site Evaluation: Customer Knowledge: Frequent customers, whether numerous times a week or a couple times a year, are a key consideration in site selection. But infrequent customers are usually more vital to the success of a business. A constant frequent customer base can be wiped out by large manufacturing plant closures, military or school closures, and other major changes. Infrequent customers are not as fragile; increased competition can even increase the trade area's attraction, thus increasing your business' volume.
Site Evaluation: Customer Knowledge: Your infrequent customer base is more vital to sales volume than your frequent customer base. A site evaluation can predict whether there will be a large enough infrequent customer base. A business will rarely be unsuccessful with a solid infrequent customer base, even if that business has a low frequent customer base. The best locations are often a convenience stop for your frequent customers and an easy destination for your infrequent customers.
Site Evaluation: Customer Knowledge: With the exception of a few small town and extremely competitive city sites, the amount of customer sources and the supply of actual customers is not a risk factor. The problem to consider in site evaluation is not so much the supply of customers, but the demand; the amount of actual customers for your particular business.
Site Evaluation: Customer Knowledge: The amount of actual customers for your particular business is a result of the complex, changing relationships between customer sources, image and competition. Image itself is a composite of all the features influencing customer perception to visit your business: your location's surroundings, your business' visibility and access, and the market presence or customer familiarity with your product.
Site Evaluation: Customer Knowledge: The amount of actual customers for your particular business is a result of the complex, changing relationships between customer sources, image and competition. Competition, both direct and indirect, is a composite of all businesses a customer considers when making a purchasing decision. All competitors will influence your site's success by adding visits to your business, or dividing the visits among all competitors. This composite interaction provides a quantitative measure of the demand for your product.
Site Evaluation: Customer Knowledge: A high number of total customers can allow for a high amount of competition, while a low amount of total customers requires lower competition. A strong image can increase the demand for your product over your competition. Customers prefer businesses which are conveniently located in the trade area, easily seen from the street, accessible, established, etc.
Site Evaluation: Customer Knowledge: A successful site has a strong supply of customers relative to the amount of competition and possesses an image attracting those customers by the quality of location and market presence.
Site Evaluation: Customer Sources: The strongest customer source for restaurant and retail business is residents living in the surrounding neighborhoods. Their impact can be between 20 and 80%. 40-60% of this kind of business depends on customers living in the surrounding neighborhoods.
Site Evaluation: Customer Sources: Site evaluation begins with understanding the quantity and quality of the residential customers who surround your location. It will be unusual for you to choose a location that has poor support from residents in the trade area even if other customer sources are excellent.
Site Evaluation: Customer Sources: The retail trade zone can be as small as a single strip center or cluster of businesses in which the site is located or as large as several square miles when the area includes several malls and a large collection of shops and restaurants. Regardless, the retail trade zone represents the area a customer would visit to find your business. It is usually the draw of the retail trade zone that attracts your non-destination customers to shop and dine in the area around your site.
Site Evaluation: Customer Sources: The first demographic zone to consider is the area within one or two miles of the site which is the boundary defined as the convenience zone; the area in which it is very easy and practical to use your business because of its proximity. This 1- to 2-mile boundary is somewhat arbitrary; it might be less in a densely populated city and greater in a small town setting. The convenience zone tends to be smaller for a convenience-oriented business and larger for a destination-oriented business.
Site Evaluation: Customer Sources: Regardless of the typical demographic features of your customers within the convenience zone, a much broader selection of demographic profiles will be attracted to your business simply because you are there.
Site Evaluation: Customer Sources: A larger population in the convenience zone is generally better, especially for convenience-oriented businesses. It is less true for destination-oriented business because sales depends more on people traveling from outside the convenience zone. For some destination-oriented businesses, people will often resist entering a congested area. Large residential numbers can also hurt your business when accompanied by low amount of retail activity.
Site Evaluation: Customer Sources: Apartments and condominiums are generally a benefit in the convenience zone as these provide high density and populations often driven by the need for outside services and convenience. These dwellers tend to be younger or older than traditional neighborhood profiles.
Site Evaluation: Customer Sources: In the convenience zone do not expect to find typical demographics. Look for a broad collection of consumers possessing disposable income and easy access to your business. Nearly all consumers in the convenience zone who use your products will be your customers.
Site Evaluation: Customer Sources: It is ideal to have a few pockets of frequent customers with in the convenience zone; distance and/or convenience does matter to frequent customers and an additional 100-200 customers can significantly impact sales.
Site Evaluation: Customer Sources: Convenience-driven sources of customers, including shopping, entertainment, hotels and other businesses, are beneficial when concentrated in the convenience zone. But it is possible to have too much activity; you can lose the balance between residential customers and business/shopping support.
Site Evaluation: Customer Sources: Your position in the convenience zone is crucial. If it is difficult or inconvenient for customers to access your business the location is most likely not a good one. Having major streets in the convenience zone that are not congested and linked easily to your location makes for a better one.
Site Evaluation: Customer Sources: If yours is a convenience-oriented business then density and position within the convenience zone are primary concerns. If a destination-oriented business then access through a good street system and surrounding business activity providing natural links causing the entire convenience zone to be a draw are vital to the success of your business.
Site Evaluation: Customer Sources: Within the convenience zone a higher percent of business will be drop-in business based on the spontaneous decision to stop. While your regulars already know where you are located, good visibility, signage and ease of access encourage drop-in business and are crucial to increase the amount of shoppers and travelers who only visit the convenience zone occasionally.