Real estate site selection can be a complex web of evaluating store attributes within a potential store trade area. The process utilizes both a science and an art to the overall selection process combining a number of factors that weigh on the viability of the location. Complicating the process is that each location has its own special attributes, which makes site selection more directional in nature as opposed to a cookie-cutter process. That being said, here are some key attributes that should be considered in the overall evaluation:
Traffic Counts – While these are clearly site specific (think of the difference between a rural site and an urban site), analyzing the traffic counts will help offer a predictability of volume. The key is to understand what the potential traffic patterns are for the site before one can look solely at traffic counts. If a road carries a number of cars, but that road does not feed well into the site, the traffic counts may be misinterpreted. Understand the natural flow into the site before assessing the traffic counts. One way to gain some perspective on how traffic counts mirror volumes is to compare existing site volumes with their traffic counts. Many operators jump right into new site selection without looking back at existing sites and creating a model based on their geographic areas. This may give you a more reliable predictive model for your future sites.
Population Counts – Population count is the next logical indicator for your location. Not only do you want to look at the population count as it stands today – and is it enough to support a site – but also how has it been trending. Positive growth indicates a viable marketplace while negative trends may raise a red flag. In addition, gaining a better understanding of the ethnicity and socio-economic trends in the trade area will offer a better snapshot into the merchandising mix that should be presented at the site.
Seasonality & Geographic Nuances – Determining whether the site is seasonal or not should factor into your analysis. Operators shouldn’t necessarily shy away from seasonal type stores but rather not be surprised by them after they open. Closely related to seasonality would be a trade area driver – i.e., a mall or theme park – that may positively or negatively impact your store’s performance. Monitoring these outside forces will tighten up your model. In addition, look for the non-seasonal enhancements or barriers to your site. A river that bisects your trade area, for instance, will effectively cut your traffic to the store no matter how close in proximity the homes are. Even certain companies can impact your site. A large manufacturing facility that releases a number of employees at the same time can cause bottlenecks in the traffic flow that will cause potential customers to avoid the area at these peak times.
Visibility – This may be more anecdotal than the other attributes but should still be a consideration. Judging whether the site is easily viewed from afar as opposed to a site that is hidden by overgrown trees should be a factor. Driving the site from all four directions allows for the owner to gain the perspective of potential customers as they approach the location. Other considerations would include that speed of the traffic as it approaches the potential site. If the traffic flow is traveling at too great a speed or drivers are distracted due to complicated traffic patterns, the opportunity to notice your location is diminished.
Competitors – Obviously, understanding the competition within the trading area is critical. I would approach this competitive evaluation in a three-fold fashion: a) gasoline, b) convenience store, and c) quick-service restaurants. Look at the competitive landscape in degrees of competition – meaning, some competition has greater negative impact than other competition. Ranking your competition based on this impact for all three categories will paint a more holistic overview. Keep in mind, that some competitors may impact only the gasoline while others may have a greater impact on convenience product sales. With the c-store industry creeping further and further into foodservice, mapping the quick service restaurants in the trade area will give you a better indication of the viability of your foodservice operation.
Location – Location, location, location. There are many factors that come into play when picking the best location. Is it a premier corner? What day part side of the street is the site? Is there easy ingress and egress into the location? Are there divided highways in front of the location that make access more difficult? Is this an inside lot location and not even a corner? What is the length of the property frontage? There is a myriad of considerations for the actual site location that need to be evaluated in the context of the other attributes.
Let’s face it; there are a number of variables that come into play. While one cannot be certain that accurately depicting all of these attributes into a real estate site evaluation model can guarantee success, it will at least put you in a better risk aversion position. That is the science of it.
I have been around the block long enough to know that some stores simply defy their science and just work. The art of site selection is far harder to quantify than the science. While those stores are the anomaly, evaluating new locations by putting their attributes through the litmus test above, helps minimize the downside risk of opening an underperforming location.