Location matters when it comes to retail business success. Ask any retail or B2C business owner of any kind. The bottom line is that, if you run a business that requires you to meet your customers face-to-face to showcase merchandise, make service calls, or process transactions, the where of your business is at least as important as the what or how.
It is unfortunate, then, that so many companies underestimate some of the most important site selection factors or to gut feeling.
MindEcology’s site selection services take the guesswork out of where to situate your new restaurant, store, or office by carefully analyzing the location characteristics that lead to success and then finding locations that exhibit those characteristics. The ideal location profile is never the same for any two companies. In fact, even two companies operating within the same industry niche still likely have very ideal location profiles.
The Anatomy of “Where” in Retail Success
The link between choice of location and business success is clear. In our experience, there are three* primary factors that influence desirability of any given candidate location:
- 1. Quality of facility, including design, workmanship, age and upkeep characteristics
- 2. Accessibility, including proximity to major thoroughfares and ease of ingress and egress
- 3. Who lives and works nearby
* location success for some types of businesses can also hinge upon a fourth factor: its relative proximity to large or “big box” stores. For example, choosing to locate one’s business in a shopping center that also contains one or more major chain stores can attract large amounts of foot traffic to the center, which helps out other businesses in the area.
In our experience, most companies going through a site selection decision-making process make the mistake of focusing solely on factors #1 (quality of facility) and #2 (accessibility) while largely ignoring factor #3 (“who” lives and works nearby). This is unfortunate, since demographic and psychographic factors vary greatly by geographical area.
MindEcology can develop a prioritized list of prime locations for your business based upon the all-important “who” factor, which is the makeup of the people who live and work there.
How We Do It: The MindEcology Site Selection Process
Our site selection process essentially involves three phrases. For companies with a history of existing stores in operation, we take the following steps:
- 1. We analyze your existing locations, finding patterns that link the demographic, psychographic, and geographic characteristics of your customers with historical store success.
- 2. We combine the most predictive characteristics of your existing locations using standard statistical techniques and/or artificial neural network modeling techniques that allow us to create an actionable model of your ideal locations.
- 3. We analyze your new trade area, breaking it down into meaningful geographical units. This can be done at multiple possible levels of granularity, including the major metro area, city, zip code, block group, or individual address level.
- 4. Finally, we assign each geographical unit in your trade area a desirability score based upon its likelihood to be affiliated with a successful new store, restaurant or office. Each location is scored, ranked and prioritized to make the information extremely easy for anyone on your team to digest and understand.
For new companies without any existing locations, we our process is very similar to our standard process, except that we substitute steps #1 and #2 for a target market analysis. We start the target market analysis by analyzing your business model and producing a set of demographics, psychographic and geographic factors that are likely to be associated with a business like yours. We then complete the remainder of the process as outlined in #3 and #4 above.
At MindEcology, we firmly believe that site selection recommendations are only valuable when the information presented can be understood and acted upon without requiring a Ph.D. in information science or geography. We pride ourselves in presenting our results to your team in clear, actionable terms.
Specifically, our site selection analysis for your business will results in three primary deliverables:
- 1. A presentation that outlines our methodology and findings.
- 2. A ranked and prioritized list of all geographical units (i.e.., major metro areas, cities, zip codes, block groups or addresses) under consideration.
- 3. Heat maps at the zip code or block group level for your trade area which are color-coded based upon location desirability.
Once you have received the results our analysis, you can work with your internal real estate team or a commercial real estate broker to make your final selection choice(s) based upon quality of facility and accessibility factors.
The steps that we take in the site selection process in many ways mirror that of our best customer profiling process. The main difference is that, instead of analyzing historical customers, we are analyzing the demographic or other attributes of the historical (i.e., existing) locations. Our goal is to find correlations between these various attributes and the success of these existing stores.
For companies that have fewer than 100 existing locations, our site selection process involves the application of traditional statistical techniques in order to find meaningful patterns.
For companies that have more than 100 existing locations, we often choose to apply machine learning techniques in order to find predictive patterns in the data.
Thinking of conducting a site selection analysis for your new store, restaurant or office? Contact MindEcology today to learn more about the benefits of engaging us for our site selection services.