You hear it all the time. Location, location, location. It’s one of the undisputed truisms of successful retailing. Many an entrepreneur believes a good location is the trump card to competition. Yet even though location as a word and concept often gets top billing, it is the site characteristics of a location that often really make or break a business.
Consultant Debbie Suassuna says it is important to understand the difference between “location” and “site,” and how they work together, in order to get the best, most objective perspective on where to locate a business. Suassuna said that when you’re familiar with an area, it’s easy to make assumptions about the virtues of a site or location that may or may not pan out. “Getting expert market research on a site and location is your best insurance that you are opening in the right place and the right size for your sales potential. It helps minimize risk,” she said.
So why are location and site analysis considered two different and equally important things when they sound like variations on the same theme?
Location is the geographic place in your town that aligns your business with the right population and demographic profile. Infrastructure and other businesses in the area are also part of what makes a location good or not. Are there any distinct barriers nearby (railroad tracks, tunnels, rivers) to reaching a potential location? Will your food co-op have retail synergy with other retailers in the area also attracting the kind of customer you serve? In the scheme of things, Suassuna believes the right retail synergy plays a larger role in a business’ success than most people realize.
A site analysis takes a look at the physical attributes of a specific location. Is the building big enough or adequate for your needs, how is the parking availability, is the space easy to get in and out of as a shopper? And most important, how visible is the site from the road? It’s this last point that Suassuna argues that people most familiar with an area can be especially blind to and could benefit from outside assistance.
“Some people assume that people already know about the food co-op, especially in small towns,” she said. “I’ve done a lot of consumer research that shows that visibility is often the number one driver to bringing in new customers.” Suassuna noted that a location off the main drag might seem like a better deal financially at first, “But can you afford to wait until people find you?” Getting consumers to change shopping patterns, especially if your site is not noticeable or convenient, can be challenging and expensive. She argues that you can accelerate the maturity of your co-op and get sales faster in a more visible location.
The site plus location equation doesn’t or can’t always come out perfect. The ideal location may be too expensive. Or the site characteristics are great, but the location’s terrible. Market, location, and site analysis offers third-party expertise to help you weigh available options and help validate to your lenders and stakeholders that you’ve done your research. As far as vetting a project’s potential, it’s invaluable.
“A professional market/location/site analysis conducted by a reputable market analyst is part of the due diligence of a large expansion,” said expansion planning and business development consultant Bill Gessner. “To raise capital, external and internal, it’s very important to have an independent assessment by a qualified analyst.”
George Huntington, general manager of Bloomingfoods Market & Deli in Bloomington, In., opened the co-op’s third location this past year on the Near West side of town. Originally, the site had been a restaurant that the co-op had leased and operated for a number of years. When the restaurant continued to struggle for profitability, the co-op’s leadership considered its options.
The prevailing opinion of the time was that Bloomingfoods should launch a hybrid restaurant and store in the space. However, after commissioning CDS for a market analysis, it was determined that an emphasis on groceries would probably better serve the area’s consumers. Huntington said decisions made after receiving the location and site analysis results have contributed to the grocery co-op’s current sales success. He knew instinctively the location was good, but the report also highlighted some site characteristics that he realized had to be fully considered before the project could proceed as a grocery store.
One of the report’s key questions was about the site’s parking being inadequate for the size of the grocery co-op. Rather than pass on a good location with some middling site characteristics, the co-op looked at ways to improve the latter. “We decided to get bold with our design,” said Huntington, by asking the city for angled parking in the two block radius around the store, thereby gaining more crucial parking that also serves as traffic calming measures. The co-op also built a huge canopy in front of the co-op to improve visibility and “stand out as a community gathering place,” and that encourages pedestrian and bike traffic as well.
Maximizing a co-op’s expansion potential is a bottom-line imperative for location and site research, but doing one regularly also offers other benefits to food co-op operations that should not be overlooked. Both Gessner and Suassuna argue that market analysis post-expansion can help managers better understand their operation’s current standing in the marketplace, and they can use the information as a tool for improving or strengthening marketing and customer service.
Huntington continues to commission regular market studies for Bloomingfoods for those reasons. “It allows us to do target mailings to customers, depending on our strong or weak areas. It also gives us info on how deep we’ve penetrated certain areas of our trade area.” He believes good management and staff should have a feel for what customers want, but a market study can help quantify hunches and focus efforts on what’s tangible and understood and about their market.
Additionally, Bloomingfoods’ success has brought them a continual stream of inquiries from local communities and developers seeking a grocery store. Having up-to-date market studies gives the co-op a tool for knowing which projects warrant serious consideration. Huntington believes market studies have also helped him understand the co-op’s place so that Bloomingfoods is poised to take its influence on the city and its communities to a new level. “We have an awareness of the vision of our city leaders and we plan to be aligned with that,” Huntington said.