Why Some Retail Chains Expand Successfully While Others Fail to Pick the Right Locations

Key takeaways

• Some chains mistake lots of traffic for lots of potential customers
• Ask if property development or road construction is being planned in the area
• High-end stores shouldn’t open next to budget retailers and vice versa
• If you plan on hiring, consider how prospective employees will access the store

Lots Of Traffic Doesn’t Mean Lots Of Customers

When choosing a retail store location, many managers assume traffic will lead to interest and a lot of customers, which isn’t always the case. Stores benefit from being in close proximity to shoppers only if they are the type of shoppers they are looking for. Small retailers often take advantage of the traffic from larger franchises.

You should consider parking for deliveries and customers as well as public transport in the area. As a rule of thumb, retail stores should have 5-8 parking spaces for each 1,000 square feet of retail area. The store should be visible to customers because you’ll be paying less for advertising.

Mapping software gives retail stores an edge over the competition by integrating customer behavior, competitor information, store data, demographic data, and other datasets. Integrated data visualization maximizes the value extracted from incongruent data assets.

Retail chains shouldn’t forget their online presence. More than half (55%) of consumers want to read about products online and check out what’s available at nearby physical locations.

Zoning And Planning Can Harm Your Advertising Efforts

Marketers spent almost $1.1 trillion on advertising globally in 2024, up by 7.3% or $75 billion from 2023. According to Statista, ad spending has increased by over 50% worldwide since 2019.

Advertising is a prominent item on franchises’ budgets. This fact notwithstanding, many managers fail to look into the local regulations of zoning, signage, and planning before signing a lease for a new store. You can get in touch with the local council office for information about local regulations. Some districts place restrictions on the imagery and size used in advertising signs. Inquire into any future planning and development around the retail store.

Failing To Research The Competition

There are more than 3,000 unique franchises in the US alone, and 300 companies launch franchising operations every year. Before you decide on a retail location, find out as much as possible about competing businesses in the area and who your neighbors will be. These factors can help or hurt your business prospects. For instance, a luxury furniture store won’t do well located next to a slashed price or discount retailer. It would fare better beside a luxury fashion brand or a beauty salon. These types of outlets attract the same target group of shoppers without directly competing with the furniture store.

Recruitment Shouldn’t Be An Afterthought

More than 8.5 million people currently work for a franchise, but that doesn’t mean they’ll flock to your establishment, especially if your new area has poor access to public transport or if you chose a bad neighborhood because of the lower rent.

If you plan on hiring employees for your retail business, make sure you are in an area where they will be attracted to work and live. High-quality staff is essential to any business’s prospects, so it’s important to plan your new site in an easily accessible area.

FAQ

What Do Successful Retail Chains Have In Common?

Successful retailers understand the ways and reasons their target group shops and deliver on those expectations. Once they have obtained this understanding, they can establish the technology that fulfills those needs, such as mobile capabilities and mapping tools.

What Are The Most Common Expansion Mistakes?

Expanding too soon and choosing the wrong location. If the first stores are doing well, investors start putting pressure on the chain to open new branches. One store’s success doesn’t say much about the success of stores in other areas with different target customers. Rent is the main reason stores choose the wrong location. The lower the rent, the lower the footfall, and footfall is essential for new businesses.