To be the best then learn from the experts. EuroAsia Research Experts will conduct a free consultation on assortment merchandising and product placements on November 23, 2015.
If you’re a part of a merchandising team or if you’re from the retail industry then take this opportunity to learn from the experts.
For schedule and inquiries contact us at info@euroasiaresearchexperts.com.
There are many factors that contribute to the success of a new store, but one of the most critical elements is your location. You may have done everything perfectly, but in the wrong site, your business could easily fail.
As with all other aspects of business, you need thorough research and careful planning when it comes to the ideal location. This begins with a crucial step: understanding the requirements of your business format. Different formats have different needs. For example, convenience stores need to be in urban areas with heavy foot traffic, while a grocery store can be located in residential areas that have ample parking space.
Once you have identified the needs of your business format, you can assess locations based on these criteria:
In any business, one of the first things you do is you identify your target market. What are their income brackets? What brands do they buy? What are their buying habits? When you determine these, you can also figure out the areas they frequent. You can look at these areas for your store location, because your target market is already there.
You have to make it easy for your target customer to visit your business. If your business format requires a lot of foot traffic, you can choose locations along main roads or busy streets, or near public transportation routes. Do you expect your target customers to drive to your store? You may need ample parking space and a large driveway. The flow of traffic is also an important consideration, especially since roads that are one-way today may become two-way in a few years, or the flow of vehicular traffic may change. Which side of the road would be better? Are there upcoming commercial or residential developments that might affect your business?
Study not only the current business landscape, but also the future of that area. Many thriving business and commercial districts started out as idle or undeveloped locations five or ten years earlier. In addition to researching upcoming developments, you can assess current and potential competitors in the area to see how you can compete with them.
Often you have to look at multiple locations because you have to open more than one store. But it’s not practical to open one store in one place, and then open a second store on the other side of the country. If the locations are too geographically distant, you will have problems with logistics. You may want to consider opening multiple stores in a single city, business district or region, for example. This will help build your brand recognition, paving the way for expansion to other areas in the future.
There are many risks to consider when setting up a new business or opening a new store. Some of these risks you can plan for, such as prospective sites in flood-prone areas or earthquake zones. Other risks are difficult to predict, such as changes in traffic management schemes or a large shopping mall suddenly opening. Think of possible situations that might have a big impact on your business, and draft contingency plans for them.
One of the most important things to remember when choosing a new location is your budget. There are many costs involved in opening a new store, and it may be tempting to spend a lot on what you think is the ideal location. If you find an optimum space that is over your budget, think carefully if it is worth the expense. The additional cost of this location could be detrimental to other aspects of your business. Did you find a low-cost location? Cheaper is not always better.
These are a lot of factors to consider when choosing a new location. How do you decide? You can assign a weight to each criterion, determining which factors are most important for your business format. Then you can create a score card for the different locations you are considering, and see which one is the most ideal. When you find your ideal location, you are already contributing to the success of your business.
About the Author:
Eric Poiret
Strategic Planning Director – EuroAsia Research Experts
Eric has a solid experience of more than 25 years in the management of retail chains in the Gulf Region, Asia and France. Before becoming the Chairman of ERE, he was Managing Director for Metro Gaisano, Chief Operating Officer for ASWAAQ, a Dubai Government-owned company, and Chief Executive Officer for MAF Carrefour KSA. Eric Poiret’s expertise lies in strategic planning and operations management.
The Philippines for the past years has been a flourishing and thriving market for retail operations. International, national, and local players each have established their presence in key cities and are continuously expanding like wildfire to rural centers, even to before unexpected locations. In the past, most malls were only located in the cities, but recent developments have seen the rise of malls in every municipality and town. Expansion strategies of big mall owners to target more market segments have reached the provinces through smaller channel formats like supermarkets and groceries. The proliferation of convenience stores from business districts have reached the residential areas and are now present in every street corner. These developments were brought about by Filipino consumerism and the increase in their purchasing power.
International and national players have taken advantage of this progress and competed head-to-head on market share and profitability, leaving some local players dumbfounded on how to cope with the ever-changing landscape of competition due to the bigger investors and the ever-growing consumer needs. Yes, there may be an apparent difference in terms of investments and capabilities between big and small players, but that doesn’t sound all correct to be able to achieve success and compete fairly. The obvious disparity in the standing and going points of the retail players, oftentimes overshadow the core aspects of operating a business. This is where not only the local players are caught into but even the bigger players.
Market varies from one place to another, even in similarities there are differences and uniqueness. This aspect can be better understood by doing Market Research. Knowing and understanding the market is essential to planning and implementing strategies. What will work and what will not, what is necessary and what is not. Market research will help find out the right location for a business, the population to target, its demographics and economic base, and other necessary information. For instance, since the Philippines is an archipelago, topography and market composition differs from one place to another. The research will help retailers determine what format to implement based on the data gathered. Thus, market research will enable custom-fitting to a specific market.
Market research will tell retailers where to go. Location is crucial to a business’ success, that’s why most big players are looking for the best location rather than going for the cheapest one. Though not a priority, the cost of getting the desired spot is a consideration for retail operations. The space where to establish a business will somehow dictate its effectiveness.
Accurate strategic planning allows retailers to understand and select the best options for development in line with their ambition and financial capabilities. Understanding their strengths and weaknesses will enable them to act appropriately. A business fails mainly for two reasons: (1) Lack of planning and strategizing for development; and (2) Under-evaluating the costs of developing the business. Business owners all want to develop quickly but aren’t well-prepared with their business plans and commercial concepts. If market research tells where to go, good planning tells what to do and how to do it.
Organized retailers, mainly international and national players, have understood this from their myriad of experiences. They plan better and keep the trend while adjusting their commercial concept. Recent developments will show for instance, how some national players diversify and expand their retail operations. From the big malls, they have further saturated the market and extended their brand through smaller and complementary formats like supermarkets, neighborhood stores, and convenience stores. These aren’t out-of the-blue decisions, but rather part of their master plans, with some adjustments along the way as changes and development occur.
Adhering and being consistent with the plan is also essential. The lack of understanding of it will lead to random, inappropriate actions. Mid-term expectations are preferable to short term anticipations in order to avoid discouragement. Local retailers and outsiders, however, show hesitation and uncertainty during the development phase or the execution of the plan. Even on the first sign of difficulty, some immediately reconsider their plans. Remember, if you planned well, trust the plan and go with it. Make the necessary adjustments as you see fit. But again, don’t veer away from the plan. If the return of investment is slow, you can adjust the commercial concept and economic model, instead of stopping.
Organization and resources are rarely appropriate to face challenges in developing the company. Retailers see the necessity to upgrade the model but are hesitant to engage in necessary investments. They should make sure that their standards will support their ambitious development plan. Commercial excellence in merchandising and operations are required to achieve the expected level of performance.
Moreso, the alignment of plans with the entire retail organization is a pre-requisite to embrace changes that promise the company’s growth. Everybody in the group should be aware of the plan, be connected, and aligned. They should push for the achievement of the plan. This step will prevent internal resistance that might cause delays and gaps with the company’s qualitative and quantitative targets.
The discipline in monitoring the development of the strategic plan is an important factor to its success. Retailers usually focus quickly on the economic performance without ensuring that all conditions and pre-requisites have been set, thus resulting to wrong assumptions. It is important for retailers to have a management that concentrates on company goals, tackles unique scenarios, and provides a clear road map.
In a progressive and competitive retail environment, only those that are structured, well prepared, and equipped with the right tools will remain steadfast.
About the Author:
Eric Poiret
Strategic Planning Director – EuroAsia Research Experts
Eric has a solid experience of more than 25 years in the management of retail chains in the Gulf Region, Asia and France. Before becoming the Chairman of ERE, he was Managing Director for Metro Gaisano, Chief Operating Officer for ASWAAQ, a Dubai Government-owned company, and Chief Executive Officer for MAF Carrefour KSA. Eric Poiret’s expertise lies in strategic planning and operations management.
