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Choosing the right commercial location, the criteria for choosing

Criterion 1: The business environment

The commercial environment is the environment in which your point of sale will evolve. It's where supply and demand meet. It thus brings together elements favorable to the development of your business., potential customers in particular, and unfavorable factors, such as competition. Analyzing these elements from the perspective of your business is therefore strategic in choosing your commercial location.

In this sense, here are the four points you should ask yourself before you start:

• Your target customers : Who is she? Where does she buy? What channels does it use (physical and digital)? What is their average basket?
• Your objective : Why do you want to open a store? Is it for the purpose of acquisition, loyalty or reputation?
• Your budget: What is your budget?
• Your competitors : Who are your competitors? What is their commercial location strategy?

You can then analyze the characteristics of the neighborhood, the street or even nearby activities. The objective is thus to identify the adequacy between your activity and the commercial environment.

Criterion 2: Demographics

The demographic study of the neighborhood is essential in choosing the location for its commercial premises. It allows you to confirm the presence of your target customers. Questions to ask yourself:

• Who frequents the neighborhood? Inhabitants, tourists, people passing through, workers, etc.
• What is their profile? Age, gender, socio-professional situation.
• What are their habits? Purchasing power, intentions, behavior.
• What are the attendance trends? Does attendance vary by day of the week, hour, or season?
• What is the general ambiance of the neighborhood? The spirit of the neighborhood must be consistent with the products offered by the brand.
• What shops are nearby? Having a competing brand near your location is not necessarily a negative point; on the contrary, it can drain the way. This is the case with large retailers, for example, which often attract many visitors. Also, the type of activity of nearby stores must be consistent with yours. For example, a cheese maker will benefit from setting up next to a wine merchant, an activity complementary to his own.

Take the example of Paris, a heterogeneous city in which each neighborhood has its target clientele.

As you will have understood, studying demographics is essential in choosing your commercial space. And INSEE could well become your best ally for this!

Criterion 3: Pedestrian flow

Outdoor traffic represents the number of pedestrians who pass in front of your point of sale, and therefore likely to enter. So, the greater the pedestrian flow, the higher the probability of finding potential customers.

This plays a central role in finding your commercial location. It also allows you to assess the profitability and viability of the location. To do this, you can use flow sensors. These make it possible to measure traffic at the point of sale. They are particularly useful beforehand, when choosing your commercial space, but also afterwards, to measure the performance of your store.

Flow sensors can be positioned outside to count the number of passers-by on the street and inside to count the number of entrances.

Motion sensors, thermal sensors, infrared detectors, optical sensors or even counting by wifi, they have many advantages:

• Evaluate the quality of the commercial location;
• Determine your conversion rate (ratio between sales and entries);
• Determine busy periods and off-peak periods to optimize periods of commercial and promotional activities;
• Evaluate the attractiveness of your window on barges and optimize the layout of the window;
• Optimize the opening hours of your store and the planning of your teams.

Inside the point of sale, the sensors make it possible to:

• Identify cold and hot areas
• Optimize the merchandising and the customer journey

The entire Nestore pop-up store network is equipped with various sensors. These vary according to the size of the spaces and the needs of our customers: Infrared, 4D cameras or even smartphone sensors. However, the objective remains the same: to identify the potential of your store and optimize your merchandising strategy.

Criterion 4: The price per square meter

The price per square meter varies depending on the city and the neighborhood. But also if you choose a commercial space in the city center or in shopping centers.

‍Defining your budget beforehand is therefore essential. and will partly dictate your choice. Let's take the example of Paris again, where rents per square meter vary depending on the district or even the street. So, for the same neighborhood for example, the price per square meter can double depending on whether you choose a main street or not.

So yes, the pedestrian flow may be exceptional there. But does this potential match the cost of your commercial space? Will the expected turnover make up for your rent?

We help you to see things even more clearly!

Criterion 5: the point of sale

The choice of your commercial location must also take into account the point of sale itself, in particular of:

• Ease of access : is it accessible by car, on foot or by public transport? Does this correspond to the means of travel used by your target customers?
• The visibility of the point of sale: lIs the room visible from afar? Is the storefront easily noticeable? Is the window large enough to be visible? To do window dressing? Are there elements that tend to hide the window or the sign (street furniture, trees, signs, vehicles, etc.).
• The exhibition: Does the room get natural light? Does it require the installation of numerous light points?
• Surface area and interior layout: Is the size of the premises sufficient and adapted to your business and your objectives? The sales area must be consistent with the area of your stock and allow the creation of a smooth and pleasant customer journey for your visitors.

Defining your catchment area: essential?

Also called the “zone of influence”, the catchment area Refers to the geographic perimeter Where do the majority of customers come from from a point of sale.

Clearly defining your catchment area is an effective way to validate your commercial location. In particular, it allows measuring the strength of local competition and to estimate the turnover of your point of sale.

Data collection, competition study, area segmentation and isochronous map, will be the main steps for the study of your catchment area.

Measuring the performance of your commercial location

The development of your business in a physical point of sale must be accompanied by the analysis of performance indicators. This will allow you to measure the relevance of your commercial location. This assessment must be carried out in the light of your activity and your objectives. It will then allow you to adapt your retail strategy and your next decision-making.

The attractiveness rate of its commercial location

The attractiveness (or conversion) rate represents the proportion of potential customers attracted to your point of sale. It testifies to the relevance of your commercial location but also to the effectiveness of the windows and promotions displayed.

Cost per potential customer (CCP)

The cost per potential customer (CCP) is the marginal cost you pay for each customer who walks by the window at your point of sale. This indicator makes it possible to compare the cost per m² of different locations in terms of foot traffic. Thus, you are not evaluating the place according to its gross cost but rather according to the potential of the establishment to attract customers.

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This indicator is particularly interesting in a retail expansion context, to find the best location for new points of sale.

Conclusion

Choosing the right commercial location involves an in-depth study prior to your goals and your target customers. But also, of the various components of its commercial environment.

During the operation, it is essential to assess the attractiveness of the point of sale and to measure its main performance indicators. This allows to identify the strengths of the chosen location but also all the actions put in place (commercial events, merchandising, window display, etc.).

The data collected and analyzed in this way then allows you to test and compare other implementation strategies, in new neighborhoods for example.

Convinced of the power of test & learn, at Nestore, we see ephemeral commerce as a real laboratory to explore new concepts at lower costs.

From finding a location, thanks to our knowledge of the field and the best locations, to measuring performance, we support brands on their strategic challenges in physical retail.