RETAIL
Site Selection Strategies
Looking for the right retail location? These experts offer some tried and true tips for making sure your decision is a good one
By Sara Shapiro

Sam Walton used a plane. Others take to the road--or use electronic mapping platforms and detailed demographics. Site selection can be high tech or low. But it can't be haphazard. You have to have a system to find the best site.

From his plane, Walton, who founded Wal-Mart, got a bird's eye view of the road systems and housing patterns around potential store sites. Those who drive obtain similar data on land. "It's a great way to immerse yourself in the community," observes consultant Alan Cleinman, founder of Cleinman Performance Partners in Oneonta, N.Y. "Many of my multi-location clients spend tons of time driving around the area to understand where the market is going."

An up-close and personal approach can show you how each region is growing. Is the downtown area being revitalized? Are new housing developments being built to the east? Are office parks popping up to the west? Which residential sections are most affluent? Which are losing their luster? Drive-through site selection might not be the most sophisticated method, but it has its advantages.

DATA, DATA, DATA

At the other end of the spectrum are high-tech solutions based on demographic information. How many people live in a particular area? How many work there? What is the average age? Are there more men or women in the area? Size of families? Income levels? Ethnic and language backgrounds? Length of residence? Popular hobbies and forms of recreation? Who rents? Who owns? A good deal of data can be obtained from the U.S. Census Bureau, but the ideal source is from your own database.

"Your own data is stronger than what's in the Census because you want the dynamics of your particular customers, not just who and where potential customers are," observes Steve Leeds, Ph.D., owner of  The Marketing Investigators (TMI) Associates in North Caldwell, N.J. "You should capture every bit of data you can to put in your database," he advises. "It can be used for multiple purposes."

Armed with demographics, you can use a Geographic Information System (GIS) to map out the area in a visual model. "With your own data, this analysis is particularly pertinent," notes Chris Steele, manager of Ernst & Young Kenneth Leventhal Real Estate Group in New York City. Through a mapping system, you can identify potential locations and analyze their feasibility. "You need to study the whole market to find gaps, voids, and opportunities, then analyze a particular site as the solution," explains Phil Armstrong, vice president of retail consulting firm Thompson Associates in Ann Arbor, Mich.

KNOW YOUR GOALS

If you're planning to move or to open an additional facility, you might want to find a place with similar demographics to your original site. In that case, you'll use a "look alike" or "analog" model. "In other words," explains Steele, "You want something analogous to what works for you now." By using your current patient demographics, you look for an area that would cater to a similar population.

That site might resemble your original location. Or it might not. It depends on the growth pattern in your community. "We had been in a downtown location for almost 40 years," notes Newulm, Minn. optometrist Stephen Akre, "but growth in the area was developing in the ends of town, so we chose one end of town and found a site on a main road between a McDonalds and a Perkins Restaurant. "Trading its sleepy Main Street USA location for a highway setting worked well for the practice. In addition to keeping their regular patients, Akre and his associate attracted a high number of new patients who had moved to this growing area.

With their high visibility and heavy traffic flow, highway locations are a viable option. So are malls, strip centers, office buildings, medical centers, and downtown areas. "One of the first decisions you have to make," advises Cleinman, "is what type of environment your target audience will enjoy the most."

In cases such as Akre's, his patient base was receptive to two very different environments, but that is not always the case.

It's also wise to decide where you will be comfortable working. "A mall might make perfect sense, for example, but you could be miserable there if it's not a good match for you," Cleinman adds.

CONSIDER THE VARIABLES

Every site has pluses and minuses, but there are certain factors that are critical.

• Accessibility. The location should be accessible and easy to find. Whether customers arrive on foot, by car, or by public transportation, make sure yours is an easy destination for them.
• Parking. The site should include adequate parking facilities.
• Signage. Signage should be prominent.
• Size. The size should be appropriate -- large enough to be comfortable for patients and your staff, but not so large that you're paying for unnecessary space.
• Market. The site should not conflict with any of your other locations. If your stores are too close together, you'll end up transferring existing customers between the markets.

Beyond the basics, there are additional considerations to weigh. For example:

• Incentives. See if your municipal, county, or state governments offer incentive programs or enterprise zone advantages.
• Taxes. Review the tax differences among municipalities.

SPOTTING THE TRENDS

Consolidation has created vacancies. This might be a good time to scout out those vacancies, according to Armstrong. For the most part, he adds, malls have become saturated, and many downtowns are being revitalized. Steele believes malls are still popular, though strip centers "are getting tired."

If a less traditional setting appeals to you, you might even want to consider supermarkets. "They offer a constant flow of customers," notes Ed Turkot, vice president of real estate for Foodarama Supermarkets in Freehold, N.J. "People come to a supermarket based on a need -- so they're often here. On the other hand, they come to a mall based on a want, so it's an occasional trip."

There are no cookie-cutter answers to site selection. Each situation is unique, and each real estate decision requires careful assessment. Whether you get behind the wheel to do your homework, hire a real estate consultant, or install mapping software in your computer, you have to look at the big picture in making your decision. "Don't look for the best real estate deal," cautions Armstrong. "Instead, make sure you go where the customers are." EB