Opening a new retail store is exciting. But before you choose the decor and invite your first customers, you need to answer a critical question: Where will your store be located?
A retail location is a place where a business sells goods in person. From traditional freestanding brick-and-mortar stores to mall space, the best retail location is in a high-traffic area where your target customers are known to shop.
With retail space costing an average of $21.95 per square foot, where you set up shop is important. Pick the wrong retail location and you could be stuck in a long lease with low foot traffic and overhead costs that eat away at your profits.
This guide discusses how to choose a retail location, with bonus tips on how to maximize the space and improve your retail operation.
The more people you have visiting your store, the higher your chances are of generating revenue.
Your physical store location plays a large role in this. Areas known to have high footfall could allow you to ease off on local marketing and heavy retail signage. An attractive window display has the potential to pull in passersby who weren’t otherwise thinking of visiting.
One of the more notable retail shifts in recent years has been toward localism—preferring and buying from nearby brands that support the local community.
Some retail locations have a greater sense of community than others. For example, independent stores in downtown areas have more local engagement than big-box retailers in busy malls.
Treat your physical location as a hub for supporting the local community. From partnerships with other retailers to participating in community events, choosing a retail location near where the action happens puts your store in a better position to contribute.
A retail location isn’t just a space to meet new customers. Use the stockroom inside your new location as a storage and fulfillment hub.
Your retail location impacts how fast inventory comes in and out. It’s harder for suppliers to deliver stock to some areas, like busy malls with shared unloading bays and tiny storage shelves.
On the other hand, fulfillment strategies like buy online, pick up in-store (BOPIS) don’t work if your store isn’t located in an area already part of your customer’s habits.
Before scouting locations, establish what you can afford and what you actually need. Start by looking at the occupancy cost ratio (OCR). It measures the sustainability of your rent and related expenses against your revenue.
Then, determine your sales per square foot. This tells you how efficiently you’re using your space. A high number means you’re getting a lot of value out of every square foot you pay for. It helps you decide if you need a bigger, smaller, or differently shaped store.
Right now, there aren’t a lot of empty retail locations, so use your business projections to negotiate with landlords and demonstrate your viability. You could also look into popups and shared retail spaces, which give you more flexibility while you establish your business.
Your retail location should be situated where your customers live, work, and shop. Use data to find them. Define your trade area, or where your shoppers come from.
You can plot where your ideal customers live on a map, and then define your trade area by either drawing circles (like a three-mile radius) or by drive times. Once you have your trade area, look up facts like total population, median income (can they afford your products?), and how many people work there during the day.
Use data from mobile phones to see how many people walk or drive by a certain block. This data, offered by services like Placer.ai, shows you the busiest times of day and which neighboring stores are drawing crowds.
You might read that store traffic is up nationally, but what matters is the specific street you’re looking at. Go there and see for yourself:
The other businesses around you will affect your store. A small neighborhood strip mall creates a different vibe than a giant center with big box stores. Understand the type of shopping center or area you’re considering and whether its typical shopper fits your target shopper.
Pay attention to the other tenants. Are they businesses that will help you, like a popular cafe next to your boutique? Or are they direct competitors? In today’s market with few empty storefronts, your neighbors might not change for a long time, so choose wisely.
A zoning law determines what kinds of businesses can operate in a given area. To avoid legal issues and fines, retailers should check with the local planning agency to make sure their type of business is allowed.
How to assess:
After you confirm the zoning is okay for your business, you’ll still need other permits to operate, like a sales tax license and maybe a health permit. Make a checklist of everything you need.
When you find a retail location you like, it’s time to look closer at the building and the contract. Here are the different elements to consider:
If you’re still not 100% sure about your location, a short-term test can be a smart move. Try out different retail locations before committing to a particular space with temporary options, such as:
Glossier took this approach with their retail location strategy. After opening a popup store in London, CEO Emily Weiss said, “In London, we’ll be following our most successful temporary store of all time with our first-ever permanent international flagship.”
📌 GET STARTED: Shopify POS is the fastest way to accept in-person payments, sell at events, or open a popup shop. Download the Shopify POS app onto any smartphone or tablet and rent a mobile card reader to start selling wherever your customers are.
Now that we know the importance of choosing the right space, here are seven types of retail locations to consider when opening your next store.
Brick-and-mortar retail is the most traditional type of physical location. Also known as freestanding or anchor stores, it’s a type of building used by retailers to connect with customers in their own premises.
A shopping mall is a place where customers come specifically to shop. Usually spanning millions of square feet, they feature numerous stores—from big-box retailers to independent stores—all under one roof.
A shopping center is a busy building where people come solely to shop. Also known as a strip mall, it can have up to 20 physical stores—including restaurants—situated in a single area.
A business park is an area used as headquarters for businesses. On some, you’ll find industrial plants and warehouses. But these units can be great spots to expand your retail business.
Downtown is the main business and commercial area of a town or city. Many merge retail buildings with residential, such as retail units beneath high-rise apartments. Downtown shopping areas can host many types of retail outlets like convenience stores, specialty stores, and boutiques.
This is a road where there are a bunch of local stores in a village, town, or small city. It’s usually within the central business district and is a place for folks to shop, socialize, and eat and drink. It’s a popular choice for mom-and-pop shops that have been there for generations.
There’s a lot that goes into finding a retail location. If you’re still unsure about which is best for your business, consider setting up shop in a place you already have: your home.
Selecting a suitable retail location requires analyzing various layers of data. Here are some resources to review:
Choose a retail location within close proximity to your customer base and treat the store as a fulfillment center to offer blended shipping options, such as:
Let’s put this into practice and imagine you’re a coffee shop looking for your next retail location. Opening a store within a busy shopping center or mall space might sound like the perfect location, since you’re exposed to casual shoppers.
But opting for business park units could be a smarter strategy. Not only is rent likely to be cheaper, but customers commuting to work can pick up their morning coffee without too much disruption to their daily routine—especially if there’s space for a drive-thru lane.
💡 PRO TIP: Set up in-store pickup in Shopify to start offering in-store pickup as an option at checkout. Pay less on last-mile delivery, speed up fulfillment times on in-store orders, and drive more foot traffic to your stores.
Retail locations in busy areas often come with a heavy price tag. That doesn’t mean you need to rule them out altogether.
Reduce the size of your store—and therefore the square footage you’re paying for—with omnichannel retail strategies like showrooming and endless aisles. In both cases, a shopper visits your physical store and browses a small selection of products. But instead of immediately taking the item home with them, customers either:
💡 PRO TIP: Encourage store staff to send the carts they save to no-shows by email at the end of their shift. This is an accessible way to recover abandoned store sales and attribute more revenue to your store–even if the transaction happened online.
The process of expanding your retail business is a daunting one. Whether you choose downtown or a shopping center, use these tips to secure the best spot for your next store. Remember: The goal is to best position your store to capture potential customers in the local community.
A retail store location refers to the physical space where a business operates and sells products directly to customers. The ideal location is one that’s easily accessible to shoppers to maximize foot traffic and visibility. It could be a standalone store or a location within a shopping mall or center.
The location of your retail store determines how easy it is for customers to find your business. It can also impact the amount of foot traffic your store receives, its visibility in search results, and how easily it can be found.
The most important factor is the target audience and ensuring the location provides easy access for them. You need to be where your ideal customers live, work, or shop, taking into account the area’s demographics and visibility. A great spot makes it convenient for the right people to find and visit your store.
To analyze foot traffic, count the number of people passing by a potential site, either by observing in person or using data. The goal is to confirm that the people in the area are your target customers.
A shopping center is any group of retail stores, often configured as an outdoor strip mall or a lifestyle center where you walk outside between shops. A mall is a specific type of shopping center that is a large, enclosed building, often with one or more anchor stores like major department stores.
