So, you have a successful retail business and you want to grow, consequently, you are considering opening a new location. The old real estate adage “location, location, location” has merit, but, it goes much deeper than what you think. “Location, Location, Location” is about more than being in a high traffic area with good visibility. There are many other things to consider, and those things are your customers.
Before you step out of your comfort zone and open that additional location, you need to minimize your risk as much as possible by doing your homework. Here are some things that you should consider:
1. Who is your customer?
This question should go beyond simple demographics and should delve into psychographics; the study of a person’s personality, values, opinions, attitudes, interests, and lifestyle. Because this area of research focuses on interests, attitudes, and opinions. Demographically speaking two individuals may look identical, having the same age, income bracket, home ownership/rental status, educational background, etc.; those same individuals may have extremely different hobbies, spending habits, and family values. Demographics tells you who your buyer is, psychographics tells you why your customer spends their money.
2. Who is your competition?
Who is your biggest competitor?
What markets are they located in?
Who is their customer?
Knowing who your biggest competitor is very important. Locating in a similar market or even adjacent to your biggest competition can help drive traffic you’re your company. You also benefit from their marketing efforts as a result.
3. What does the area have to offer?
Once you have identified your prime location by truly knowing your customer, you can consider what the community you are going to locate in has to offer.
Many communities are motivated to develop certain corridors. Reaching out to the economic development office in the community you are interested in is an integral step in determining if there are financial incentives, fee waivers, or grants available to assist your expansion efforts. It is worth noting that the earlier these conversations start the better. Communities have to be good stewards of the taxpayers, and many financial incentives may require approval through their City Council and or the local School Board.
I know that these items seem simple, or even obvious; however, if you are a small company, with limited resources, sometimes this information can be difficult to uncover. Fortunately, there are consultants/businesses out there that specialize in helping companies discover this information, and I say to you, if you are taking the calculated risk of investing in building your business, you need to invest the time and resources in identifying this information.
A very wise person once told me that it is all about “Speed, Risk, and Money” (Carol Johnson). Knowing the demographics and psychographics of your customer, and engaging with the community where you decide to locate will increase your speed to market, reduce your risk, and take you from spending money to making money as quickly as possible.
Helpful related links:
- http://www.businessdictionary.com/definition/psychographics.html
- https://www.allbusiness.com/what-demographics-and-psychographics-mean-for-small-business-marketing-426-1.html
- https://www.allbusiness.com/the-difference-between-secondary-and-primary-market-research-1310-1.html
- http://www.localdirective.com/what-we-do/market-segmentation/
