We all see businesses from drugstores and restaurants to retailers big and small opening year after year on the streets of Lafayette, and for the most part welcome them with open arms because of the new product selections offered or the added convenience of the new location. But if you’re like most people you often sit back and think: why Lafayette, and more specifically, why that location on this street?
I hear it all the time: “I can’t believe they would open at that intersection” or “really, another drugstore on that corner” and “why would that store go there instead of here?” Site selection is definitely a science, especially for the big national retailers who have large research budgets to make sure they maximize each new store; but it really is an art as well, with the gut feeling of an informed local broker invaluable to the process.
I thoroughly enjoy the site selection process of commercial brokerage and take pleasure in providing my assessment of the locations that were selected. The progression required to choose a site is comprehensive, but I’ll touch on a few of the more basic principles that should stimulate some thought as you drive around town, and the rest of the country for that matter.
One of the first determinations that must be made before a retailer chooses a location is whether the customer sees it as a destination or a convenience, as that can very easily eliminate or narrow down a particular site in the process. The destination-type retailer may not need to purchase the most expensive corner site in the city to attract enough business to be profitable; sometimes a cheaper, mid-block site off of a main street works just as well. For instance, a theater or bowling alley would definitely be considered destination-type retailers. It’s not like you drive down Johnston Street, notice the Lafayette Lanes sign, and think, “Let me stop in for a quick bowl.” On the contrary, drugstores and sandwich shops are what’s known as convenience retailers. For the most part, their product, services, and price point are the same, so the ease of getting in and out of them is a key factor in the busy consumer’s decision about where to shop.
One of the next most important factors considered is traffic flow. For the most part, the brick-and-mortar retailers on our streets rely on consumers driving their cars, trucks, and soccer-mom vans to their stores; therefore, traffic counts (average numbers of vehicles that pass a certain point of a particular street each day) are a key component in site selection. If one street in a desired trade area carries 45,000 vehicles per day and another only carries 30,000, it is easy to understand which might be looked at more closely first. In addition to the actual count, traffic direction must also be considered. As an example, most coffee shops (and even McDonald’s for that matter since it now does a large percentage of its sales in the morning) are located on the “going to work” side of the road, so a consumer can take a right-in, then a right-out and continue on to work or school in the morning wasting as little time as possible. On the contrary, most drug and grocery stores look for “going home” sides of the road since consumers rarely buy milk, groceries, and other convenience items before work.
Another factor to consider would be a shopping center’s tenant mix — how the different retailers within a center relate to each other. It makes sense that a dry cleaners, barber, sandwich shop, and package mailing center would all be next to a grocery store, so the consumer can park a single time to take care of a variety of needs. Even the combination of women’s dress shops, a bath store, and nail salon being in the same center would be likely. It’s doubtful Home Depot would locate in-line with a bridal shop and ladies shoe store; in the same retail corridor, sure, but not next door to one another in the same shopping center. The main reason is that they create very little synergy, as the customer of one store isn’t like the customer of the other. This synergy is the exact reason Longhorn Steakhouse is building right in front of Academy Sports. Think the men who park their pick-up trucks and shop there like meat and potatoes?
Whether the store does more business during the day or night can also definitely dictate location. A store that does significant business after work might not be excited about the Pinhook corridor or Oil Center since that is mainly populated during the day, and there are not that many rooftops close by. It’s also important to know who the retailer caters to. The demographic makeup of a particular part of town is also a huge factor in the search, as many retailers try to stick to a niche consumer group and therefore want to locate where they are living/working. And retailers’ competitors weigh heavily on store placement, as it’s really one super-sized chess match with each trying to out position the other guy.
There is a lot more to it, but the intricacies of site selection can be highly complex (and I certainly don’t want to give away any of my trade secrets!). Hopefully, the next time you drive by a new retail box under construction you have a better understanding of why they chose the site they did.
Ryan Pécot is a commercial broker with Stirling Properties. Since 2001 he has worked out of the firm’s Lafayette and New Orleans offices.
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Here's your daily look at late-breaking national and international news, upcoming events and the stories that will be talked about Thursday, December 12, 2013:
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Hashtag, retweet, like, share and do whatever else it takes to get in good today with the jolly man in red.