“Location, location, location.” We’ve all heard this adage with regard to selecting a prime retail location. If your lease is up at your current location, evaluate how well your business is doing and if a move might improve your trade. If you’re about to open a new store, selecting a good location is a fundamental building block for success. Consider carefully the pros and cons of having a store located in a mall, lifestyle or power strip center, traditional strip center or free standing site.
Malls attract many customers, offer many types of stores, have a comfortable environment to shop and have consistent store hours. Some of the disadvantages are: occupancy costs are high; mall owners control business operations such as display advertising; competition is intense.
It’s true that malls attract customers and generate traffic. But by the same token, independents, especially in the larger malls, must compete with the big box chains and their national brand name advertising budgets. Store owners often tell me they like this competition, that the big box stores drive consumers into the malls where they have a chance of beating them on price. They can also differentiate themselves by the type of merchandise they carry. For example, few chain stores carry estate jewelry. Offering customers unusual and unique merchandise is an essential ingredient for success in a mall. Having the capacity to do custom design work and create one-of-a-kind pieces is also a way to differentiate yourself from the chain store competition.
A good mall can offer the independent store owner a continuous flow of potential customers. But this comes at a price. Mall rents are significantly higher than strip centers or other locations. Plus, it’s not just the cost of the rent but the cost of keeping the store open during mall hours. Malls are generally open seven days a week 10 to 10. If a store owner wants any time off, that means hiring at least one additional sales staff or manager. Compare this with the typical independent in a strip center open Tuesday through Saturday 10 to 6 and closed Sunday and Monday.
Finally, malls are getting older and anchor tenants are decreasing due to retail consolidation. Fashion and jewelry stores are experiencing limited growth in malls compared with other locations.
These luxury shopping centers are usually located in affluent neighborhoods - demographics that fit closely with those of a jewelry merchandise buyer. They generally have open air configurations that offer restaurants and other entertainment. Lifestyle centers cater to national specialty stores such as Pottery Barn and lack major department store anchors.
Lifestyle centers range in size between 150,00 to 500,000 sq. feet - much smaller than even the average mall size and tiny compared with a mall like the one in King of Prussia in Philadelphia with over 2.5 million sq. feet. The size is smaller and so is the traffic volume. Shoppers tend to be more purpose driven - they have specific stores and shopping tasks in mind versus the mall shopper who will browse and be more impulsive.
Lifestyle center shoppers come from higher income households - with these demographics it’s not surprising that independent jewelry stores find they are a good fit for this sort of location. The problem is that these sorts of retail locations are generally found in large metropolitan areas that can sustain this sort of niche market. If you live in a smaller city or rural community chances are there is not a lifestyle center located there.
Power Strip Centers
Power strips have an open air configuration but are primarily a collection of big-box retail stores with such anchors as Target, Marshall’s, Costco, Lowes etc. They have lower occupancy costs than malls; many are located near traditional enclosed malls.
One disadvantage is that many power strips have the stigma of being a discount center for price oriented shoppers. Like the lifestyle centers, power strips are generally located in large trading areas. They may have restrictions regarding signage and they generate less traffic than that found in malls.
Traditional strip centers
Stores in strip centers are arranged in a row, with a sidewalk in front; they are typically developed as a unit and have large parking lots in front. They face major traffic arterials and tend to be self-contained with few pedestrian connections to surrounding neighborhoods.
Strip centers usually range in size from 5,000 square feet to over 100,000 square feet. The smaller variety is more common and often located at the intersection of major streets in residential areas; it caters to a small residential area. This type of strip mall is found in nearly every city or town in the U.S. Rents are affordable and this sort of location lends itself to smaller, more close-knit communities where an independent jeweler can build a good reputation and customer loyalty through personal customer service.
Having your own building will separate you from the competition. The design of your building and retail space can add to your own brand identity. If you own the building there are no signage or advertising restrictions and you can design your building with plenty of parking and easy access. Locating the building at a busy intersection or prime trading area will increase the land cost but because you may not be near other retailers (no foot traffic) picking the right spot for your store is imperative.
Choosing the best location for your store comes down to the size of the trade area; occupancy cost; pedestrian and vehicle traffic at each location; operational restrictions by property managers and the convenience of the prospective location for your customer.
Bob Epstein is CEO of Silverman Consultants, LLC. Offering a legacy in sales strategies for jewelers since 1945, Silverman Consultants provides guidance to store owners seeking to turn around a business, sell off unwanted inventory, or liquidate an entire store. With offices located in Charleston, South Carolina; New York, New York; and Saskatoon, Canada; the company helps jewelry store owners and chains formulate strategies designed to maximize revenue in times of transition, whether due to retirement, store closing, or simply when needing a boost in sales. For more information, visit www.silvermanconsultants.com or call Bob direct at 800-347-1500.