Nestore's blog

Choosing the right business location: selection criteria

Criterion 1: The business environment

The business environment is the environment in which your point of sale will operate. It is where supply and demand meet. It thus brings together elements favorable to the development of your business , particularly potential customers, and unfavorable elements, such as competition. Analyzing these elements through the prism of your business is therefore strategic in choosing your business location.

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

• Your target customers : Who are they? Where do they shop? What channels do they use (physical and digital)? What is their average basket size?
• Your goal : Why do you want to open a store? Is it for acquisition, loyalty, or brand awareness?
• Your budget: What is your budget?
• Your competitors : Who are your competitors? What is their business location strategy?

You can then analyze the characteristics of the neighborhood, the street, and even nearby activities. The goal is to identify the fit between your business and the commercial environment.

Criterion 2: Demographics

A neighborhood demographic study is essential when choosing a location for your business premises. It allows you to confirm the presence of your target customers. Questions to ask yourself:

• Who frequents the neighborhood? Residents, 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, time of day, or season?
• What is the overall vibe of the neighborhood? The neighborhood's feel should be consistent with the brand's products.
• What stores are nearby? Having a competing brand near your location isn't necessarily a negative; on the contrary, it can actually reduce traffic. This is the case with large brands, for example, which often attract many visitors. Also, the type of business of nearby stores should be consistent with yours. For example, a cheesemaker would benefit from setting up shop next to a wine merchant, as it complements their own business.

Let's take the example of Paris, a diverse city in which each neighborhood has its target clientele.

As you can see, demographic research is essential when choosing your business premises. And the INSEE could well become your best ally in this regard!

Criterion 3: Pedestrian flow

Exterior traffic represents the number of pedestrians who pass by your store and are therefore likely to enter. Therefore, the greater the pedestrian flow, the greater the likelihood of finding potential customers.

This plays a central role in your search for a commercial location. It also allows you to assess the profitability and viability of the location. To do this, you can use flow sensors . These allow you to measure traffic at the point of sale. They are particularly useful upstream, when choosing your commercial premises, but also afterward, to measure the performance of your store.

Flow sensors can be positioned outdoors to count the number of passersby on the street and indoors to count the number of entrances.

Motion sensors, thermal sensors, infrared detectors, optical sensors or even Wi-Fi counting, they have many advantages:

• Evaluate the quality of the commercial location;
• Determine your conversion rate (ratio between sales and entries);
• Determine peak and off-peak periods to optimize sales and promotional periods;
• Evaluate the appeal of your window to customers and optimize the layout of the window;
• Optimize your store's opening hours and your team's schedules.

Inside the point of sale, the sensors allow:

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

The entire Nestore network of pop-up stores is equipped with various sensors. These vary depending on the size of the spaces and the needs of our customers: infrared, 4D cameras, and even smartphone sensors. The goal, however, remains the same: to identify the potential of your store and optimize your merchandising strategy.

Criterion 4: Price per square meter

The price per square meter varies depending on the city and neighborhood, as well as whether you choose commercial space in a city center or a shopping center.

Defining your budget upfront is therefore essential and will partly dictate your choice. Let's take Paris again as an example, where rents per square meter vary depending on the district or even the street. Thus, 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 traffic may be exceptional. But is this potential worth the cost of your commercial premises? Will the expected turnover compensate for your rent?

We'll help you see things 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:

• Ease of access : Is it accessible by car, on foot, or by public transport? Does this match the means of transport used by your target customers?
• Visibility of the point of sale: Is the premises visible from afar? Is the storefront easily noticed? Is the window wide enough to be visible? Is it suitable for window graphics? Are there any elements that tend to hide the window or the sign (street furniture, trees, signs, vehicles, etc.).
• Exposure: Does the space receive natural light? Does it require the installation of numerous light points?
• Surface area and interior layout: Is the size of the premises sufficient and appropriate for your business and objectives? The sales area must be consistent with your inventory size and allow for a smooth and pleasant customer journey for your visitors.

Defining your catchment area: essential?

Also called "zone of influence", the catchment area designates the geographical perimeter from which the majority of a point of sale's customers come .

Clearly defining your catchment area is an effective way to validate your business location. It allows you to measure the strength of local competition and estimate your point of sale's revenue.

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

Measure the performance of your commercial location

Developing your physical retail business must be accompanied by an analysis of performance indicators . This will allow you to measure the relevance of your retail location. This assessment must be carried out in light of your business and your objectives. It will then allow you to adapt your retail strategy and your future decision-making.

The attractiveness rate of its commercial location

The attraction (or conversion) rate represents the proportion of potential customers attracted to your point of sale. It reflects the relevance of your business location as well as the effectiveness of your window displays and promotions.

Cost per potential customer (CPC)

Cost per potential customer (CPC) is the marginal cost you pay for each customer who walks past your storefront. This metric allows you to compare the cost per square meter of different locations in terms of foot traffic. This means you're not evaluating a location based on its gross cost, but rather on its potential 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 business location requires an in-depth study of your objectives and your target customers , as well as the different components of your business environment.

During the operation, assessing the attractiveness of the point of sale and measuring its key performance indicators is essential. This allows you to identify the strengths of the chosen location as well as all the actions implemented (commercial promotions, merchandising, window displays, etc.).

The data collected and analyzed 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 pop-up stores as a real laboratory for exploring new concepts at lower costs.

From location research, thanks to our knowledge of the terrain and the best locations, to performance measurement, we support brands with their strategic challenges in physical retail.