Our first annual Sustainability Report, detailing 2023 performance, is now available. View Here

Our 2023 Sustainability Report is now available. View Here

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Site Selection Criteria: 10 Crucial Factors for Choosing Prime Locations

Site selection is a complex process with high stakes. Overlook the wrong factor, and you could make a long-term commitment to operate at a loss. On the surface, a site might look like the ideal place to launch a new location. But when you combine all the datasets and insights you need to critically analyze and compare sites, you might find that the sales forecasts simply don’t pan out.

Using the right site selection criteria will help you avoid costly mistakes and choose the best real estate opportunities for your business. Here are 10 crucial factors for site selection.

1. Local demographic data

It doesn’t matter how prominent or desirable a site is if the people you’re trying to reach don’t live, work, or spend their time nearby. Every community is different. And that’s why a critical component of site selection is examining who is actually in the trade area and how closely they align with your best customers. This is one of the strongest indicators of the actual opportunity in a trade area. With site selection software like Tango Transactions, you can overlay demographic data over a map of your target trade area, so you can see the population breakdown of the area you’d service.

2. Traffic patterns

People are far more likely to see, think about, and visit your store if they see it on their commute to and from work or on their way to other activities. Traffic flows within a trade area show you where the demand is and when it peaks, which helps you pinpoint the best opportunities to tap into that demand. Tango displays traffic flows and lets you filter by time or day to identify patterns.

3. Points of interest

In every trade area, there are specific places people tend to gather. Some of them are businesses, and others aren’t. Some are popular with the locals, and others may get attention from throughout the county, or even across the country. Local parks, event centers, casinos, gyms, schools, shopping malls, and libraries could all represent points of interest you’ll want to consider in your site selection process.

4. Competitors

The more competitors in the trade area, the smaller the true opportunity is for your location. You’re all trying to attract the same people with the same product categories. Of course, the number of competitors isn’t what’s really important here. You need to know how much of the market share these competitors are taking. A small, unknown competitor shouldn’t stop you from capitalizing on an excellent site, but established competitors with nationally-recognized brands and thriving customer bases will significantly impact the success or failure of your site.

You may want to use geofencing to see how much foot traffic their store receives, or analyze and evaluate their site using your own criteria.

5. Store cannibalization

Store cannibalization is easy to overlook as you compare sites. But if you’re trying to identify the best opportunities, you have to look for the sites that generate the most incremental sales. A sales forecast that doesn’t account for store cannibalization isn’t giving you an honest picture. Any time you have multiple locations serving the same area, the new location will leech some sales that would’ve otherwise gone to the old one. And your site models need to include estimates for that.

6. Visibility

If people can only see your facility from specific parts of the street or when they’re already in a larger building (like a mall), it’s going to be extremely difficult to maximize the opportunity the trade area presents. Even in a high-traffic area near relevant points of interest, a site with poor visibility will miss a lot of exposure. It’s near the demand, but will have a hard time tapping into it. Be sure to include criteria for evaluating a site’s visibility.

7. Facility type

There are likely a variety of building types that could meet your needs. Some are more valuable than others. As you analyze potential sites, you’ll want to distinguish between, for example, a standalone store and one that’s an endcap of a strip mall, or a facility that has a drive-thru and one that doesn’t. The most valuable facility type will vary business to business.

8. Employees

Everyone knows some employees are more efficient and effective than others. But businesses often neglect to consider this as they compare sites that otherwise appear similar on paper. This is especially problematic if an excellent staff is one of the key reasons a site is currently performing well. As you look to recreate your successful sites, include criteria for evaluating how employees contribute.

9. Your own unique criteria

Whether you have a handful of locations or thousands, you’ve undoubtedly discovered some unique qualities the most successful ones have in common. Maybe they’re all in trade areas with a skatepark. Or within a mile of a high school. Or they share a building with a particular complementary business. Whatever your criteria, make sure you use site selection software that can incorporate custom specifications into your site models.

10. Omnichannel retail

Brick-and-mortar stores aren’t just points of sale and order fulfillment centers anymore. In nearly every path to purchase, your stores still play some role in putting your products in your customers’ hands. They can be an inventory source and fulfillment center for online and phone-based orders. If you’re doing local delivery and fulfillment options like drive-up service or buy online pick-up in store (BOPIS), it’s worth thinking about how close your site is to where your customers actually live—where you’ll be delivering orders, or where people will have to go to utilize your alternative fulfillment options.

Build site models you can trust

You have plenty of options when it comes to site selection software. But the problem is most of them can’t build site models that are comprehensive enough for you to consistently rely on. The margin of error is high enough that you’re always taking greater risks than you’d like. Tango Transactions lets you incorporate enough inputs to build stunningly accurate models with reliable sales forecasts.

Want to see what Tango Transactions can do for your business?

Schedule a demo today.


Paul Thompson

Tango 2023 Sustainability Report

We have released our first Sustainability Report for 2023, marking an important step in our sustainability journey. In the report, we announce our goal of becoming carbon neutral by 2030, setting us apart as a pioneer in the larger ecosystem of real estate technology providers.