Opening a new location is a significant investment. Before you start viewing properties or narrowing down a shortlist, it pays to understand what a good location actually looks like for your business.
A busy location isn’t necessarily the right one, a large population doesn’t guarantee demand and being close to competitors can be either an advantage or a risk. The strongest location decisions come from looking at several factors together and understanding how well a potential site matches your customers and your business.
At Newgrove, we’ve specialised in Location Intelligence for more than 25 years. Here are seven factors worth considering when you’re deciding where to grow next.
1. Study the population
Are the people living and working around a potential location the type of people who are likely to buy from you?
Population size is an obvious place to start, but the number of people in an area only tells you so much. Understanding where people live, work and travel from, and comparing this with what you already know about your customers, can provide a much better indication of potential demand.
If you have existing locations, your own customer data can be particularly valuable. Looking at where your customers come from and how far they travel can help you understand the characteristics of successful catchments and use those insights when considering new areas.
2. Review the local demographics
Once you’ve looked at the overall population, the next step is to understand who those people are.
Demographic data can reveal differences in age, employment, household composition, income and affluence, housing and other characteristics. Consumer data can add further context around lifestyles, interests and behaviours.
The important thing is not to look for a universally attractive demographic profile, but one that fits your particular proposition. A location that works extremely well for one retailer, restaurant or service business may be completely wrong for another.
Comparing demographic and consumer characteristics across different areas can help you identify which locations contain a stronger concentration of the audiences you want to reach.
3. Look at proximity to other businesses
What’s around a potential site can have a significant effect on how attractive it is.
A busy high street, retail park or commercial centre may already attract large numbers of people, but it’s worth understanding what is generating those visits and whether the surrounding businesses attract customers relevant to you.
Looking at nearby businesses can also reveal how an area is developing. A growing cluster of restaurants, retailers or leisure businesses might indicate increasing demand, while changes in the local business mix could be worth investigating before making a long-term commitment.
Rather than judging a property in isolation, consider the wider commercial environment in which your business would operate.
4. Find your competition
Knowing where your competitors are located can help you understand both the level of existing demand and how well that demand is already being served.
A high concentration of competitors isn’t automatically a reason to avoid an area. In some sectors, businesses benefit from clustering because customers are accustomed to visiting a particular destination to compare options. In others, an established competitor may already be capturing a significant proportion of the available market.
Mapping competitors around potential locations allows you to compare different areas, identify possible gaps and understand how close competitors would be to your proposed site.
The important question isn’t simply “Are there competitors nearby?” but “What does their presence tell us about this location?”
5. Look for complementary businesses
Competitors aren’t the only businesses worth mapping. Complementary businesses can also provide useful clues about the potential of an area.
A café may benefit from nearby offices or shops, a fitness business from other health and wellbeing services, or a furniture retailer from being close to businesses selling other products for the home.
These businesses can help generate relevant footfall and create destinations where customers have several reasons to visit.
Understanding the wider mix of businesses and amenities can therefore help you identify locations where your proposition fits naturally into the existing environment.
6. Check the transport links
Accessibility matters to customers, employees and suppliers, so look beyond the property itself and consider how easily people can actually reach it.
Road access, parking, rail and bus connections can all influence the potential catchment of a location. Drive-time and travel-time analysis can help you understand how many potential customers are within realistic reach rather than relying simply on distance.
Movement and footfall data can add another useful dimension by showing how people actually move through an area. A site may appear well connected on a map but still receive relatively little relevant footfall, while another location might benefit from movement generated by a nearby station, shopping area or other destination.
Understanding both accessibility and actual movement gives you a clearer picture of how a location works in practice.
7. Has it got the X factor?
Sometimes a location has something less obvious that draws people to the area.
It could be a river or waterfront, a historic building, a tourist attraction, a particularly popular park or even a large and convenient car park. It might be something that doesn’t immediately appear on your site-selection checklist but still has a significant influence on why people visit and how they use the area.
Finding these local demand drivers is important because raw footfall figures don’t necessarily explain what is creating that activity.
If you understand why people are coming to an area, you can make a better judgement about whether that activity is likely to benefit your business and whether it is likely to continue.
Bring the seven factors together
There is no single measure that tells you whether a location is right for your business. A site might have excellent transport links but the wrong customer profile. Another might have strong demographics but intense competition. A third may look less obvious initially but sit within a catchment containing a high concentration of your ideal customers.
That’s why Location Intelligence is most useful when different datasets are considered together.
Periscope® brings location, demographic, customer, competitor and movement data into one place, allowing businesses to compare potential locations, investigate different factors and build a stronger evidence base for site-selection decisions.
The aim isn’t to find a mythical “perfect location”. It’s to understand which location offers the strongest fit for your customers, proposition and growth plans.
See how Periscope® can help you compare locations and make more informed decisions about where to grow.
