Jonathan Keyser is the founder of Keyser, one of the largest occupier services commercial real estate brokerage firms in the nation.
One of the most critical elements to the success of your retail business is the selection of sites. The placement of your commercial real estate locations can be the difference between patrons visiting your business or the competitor across the street. When it comes to your business success, you can’t afford to guess on locations, fly blind or make generally uninformed decisions.
Fortunately, technology has advanced so much that artificial intelligence (AI) and data analytics are now widely available and can be used in every commercial real estate transaction to help business leaders understand the invisible data that impacts their consumer visibility. With a deep dive into the data, here are the areas where your broker should be providing insights:
Demographics And Competitor Void Analysis
Without a broker armed with data and looking out for your best interests, some business owners will choose a retail space based on only two criteria: 1) “Is it within my budget?” and 2) “Is it close to my house?” This is a recipe for disaster because you’re essentially trying to force your business into a market without looking at the demographics of the area or market saturation.
For example, if you’re a trendy fitness concept for moms and you choose a vacant retail space without doing your research, you may be placing your business in an area that has several other fitness competitors, regardless of if they are in that shopping center or not. Even if those competitors are vastly different or are not purely for your target market, you still may be competing for their business based on a multitude of factors such as brand equity, established relationships or distance from consumers. Moreover, if you know a handful of moms in the area, but that’s not represented in the overall makeup of the area’s demographics, you may not have a clear picture of the area’s demographic makeup and, thus, may be limiting your customer base too much for that market to support.
Knowing the demographics of your market provides you an initial understanding of whether your business is viable for that area. A void analysis shows you areas where your type of business may be underrepresented.
The Customer Journey
Some of your customers will visit your business and go straight home. Others will make the most of their trip, squeeze in errands and stop at other stores before returning home. In the past, this has been hard to distinguish, but we’re now able to better understand the customer journey, where your brand falls in their daily routines and which stores your customer base frequents before and after visiting your store. Understanding this should give you ideas on cross-promotional opportunities that may be of interest to your customers, as well as the overall behaviors, interests and psychographics of your customer base.
From one corner of an intersection to the other, you might be surprised at how drastic of a difference there can be in vehicle traffic. There are a number of reasons why you may not be getting the traffic you expected, from a nearby freeway to other retailers in the area. Vehicle traffic is a direct correlation to how much visibility opportunity you get for your space, and by understanding this, you can gain a greater understanding of where you’ll get the most bang for your buck, especially if you’re limited to certain areas of signage.
As technology evolves, business leaders are now more educated on their commercial real estate decisions. It’s your broker’s job to give you all the data and information necessary to make a sound decision, but it’s your job to make sure you’re choosing a tenant-only representative that can arm you with the information and support you need through this process. As you go through the broker vetting process, make sure that AI and data availability are part of your hiring criteria.