E-commerce and mobile sales have come a long way, but traditional brick-and-mortar retail stores are still faring well. The success of these stores largely depends on two things: the product and location of the store. The truth is, no matter how great one’s products is, sales will be down if there are no customers trooping into the store.
Putting one’s business in the right location is a prime consideration not only for startups, but for established businesses looking for another retail outlet. Finding and choosing the best retail space for rent here or abroad entails the same considerations. The following are points of concern when renting a retail space abroad.
What is Your Budget?
There are two things that have to be defined before looking for a retail space to lease: budget for the rent and size of the store. Paying more than one can afford based on the store’s sales, and committing to the wrong-sized space are common mistakes tenants make when renting. Having a clear idea on the budget will certainly help narrow down options and avoid renting an unaffordable space.
The affordability of a commercial space is traditionally based on the rent-to-sales ratio. As a whole the average rent-to-sales ratio of small, sole proprietorship business is 2.98%, with 1.24% applied to retailers of building materials, while retailers of clothes and accessories allocating 8.93% of their total sales to rent.
Rent of retail spaces depends on the location of the property to be leased, its location among other retail stores in the same area, condition of the space to be rented, length of the lease, and its availability. Regarding availability, renting a shop in a new mall is cheaper than renting a space in an established mall.
Other costs to consider when renting are: property taxes; insurance; utilities and maintenance. It is important to note who will shoulder the expenses for maintaining the building and parking facilities. Who will pay for security services, repair and maintenance of air-conditioning units? If the location is far from the main commercial hub, how much additional marketing is required? All these items add up to the cost of the retail store rent.
It may be difficult to project sales on a new business to determine how much rent one can pay; but one can always research on similar retail businesses in the area to find out how much their lease costs. In some cases, the services of a local broker may prove very helpful.
How Much Space Do You Need?
The required space varies for each type of retail store. However, common areas for consideration in a traditional store include the main sales floor, dressing rooms (if needed), stockroom, offices and bathroom. Opting for a functional kiosk, cart, or booth requires a smaller, less detailed space. A basic formula in estimating the size of a sales floor is: Sales Volume divide it by Sales per Square Foot. Of course, this formula may not work for all types of retail store, so it is still best to determine what equipment, display cabinets, shelves, tables and more are to be incorporated on the sales floor. A too large sales floor may seem like an empty store, while a too small store may seem cluttered and chaotic. The local trend in store display is also a consideration.
Rent a Retail Space that is best for the Business
It is best to have at least 3 options for a retail store to compare and contrast them for the best fit. Narrowing the choices comes down to three points: location, cost and size. Once the budget and approximate size are determined, the location of the retail store comes next.
· Safety and Security: Choose a safe place to locate your business. Customers will veer away from a retail store if they do not feel safe. It is best to research on the safety and security of the area from local authorities.
· Traffic and Accessibility: Knowing one’s target market will help a business owner choose a location that will attract that demographic. A lot of foot traffic does not necessarily means a lot of customers. The ideal is to locate a store where there are plenty of potential customers, but only if those customers are the target market. It is best to locate the store near where potential customers live, work, and shop. A feasibility study might prove handy to answer to:
· The number of people who walk or drive past the location
· Modes of public transportation that serve the area
· Availability and accessibility of parking spaces
Note that a retail store located in the mall will require less advertisement than one that is situated in a lone building off the commercial area. It is best to locate a commercial area near major highways and public transport for visibility and accessibility.
· Local Zoning: Before finalizing the location, a smart business owner must understand all the local policies, rules, and procedures pertaining to the locality of the retail store. The local zoning commission should be approached to seek information on zoning regulations and restrictions that may affect the store’s operation. One should also ask the local planning committee about future plans that could change the area’s traffic e.g. new highway construction and change of route for local transportation.
· Competition and Compatible Businesses: Location one’s business near competition may seem unwise, but doing so sort of guarantees targeted customer traffic courtesy of the competition. This strategy is best for a new retail store that does not yet have an established customer base. Locating a retail space near compatible commercial establishments also guarantees targeted customer traffic.
Another consideration is the distance of the retail space from the home of the owner. Spending too much time traveling to and from work is a waste of energy and time.
Before signing the lease, a business owner should pay attention to the terms of the contract, its stipulations and restrictions.