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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13 Site Selection Tips for Retailers: Choose the Best Location Every Time

Effective site selection can mean the difference between millions in profits and millions in losses. Every lease in your real estate portfolio represents a long-term investment in a trade area. There’s also an opportunity cost: you can’t pursue every site at once, so you have to prioritize them based on which locations appear to be the most lucrative opportunities.

Unfortunately, most organizations can only be somewhat confident in their projections. The success or failure of a single site can depend on hundreds of factors relating to the trade area, the site itself, competitors, and your customers. Even with most site selection software, the margin of error can be uncomfortably high, because the software can’t account for all of the variables that impact performance.

This is especially problematic when you’re comparing the opportunities available to you. Site selection requires more than analyzing locations in isolation—you have to weigh each opportunity and prioritize them accordingly.

You need site models you can trust. To build them, you’ll need to evaluate and compare a wide range of inputs, and use software that can incorporate them. At Tango, we’ve developed the world’s most advanced site selection software. Our machine learning and AI can incorporate far more variables in our site models, giving you what you need to make decisions with confidence.

Here are 13 site selection tips to help you build better models and make better real estate decisions.

1. Map your trade area

When it comes to site selection, spreadsheets don’t cut it. Geographic analysis is a fundamental component of site selection. It allows you to visually explore the surrounding trade area and key data points, so you can see the difference between various opportunities.

With Tango Transactions, you can overlay a map of your trade area with filters to display information about the people, places, and activities surrounding your site.

2. Establish your unique criteria

There are plenty of general principles you can use to guide your site selection process. But some criteria will only emerge when you examine your real estate portfolio and analyze your current sites.

You may find, for example, that your business performs better when a site is adjacent to a complementary business. Or maybe there are specific kinds of activities that your target demographic enjoys, and being closer to those unrelated places makes it easier to attract your best customers. Or perhaps you have a reputation for long drive-thru lines, and you see more steady business when your drive-thru entrance is visible from the highest-traffic street.

Site selection should involve a combination of general guidelines and your organization’s unique needs and insights. You’re not just trying to find the types of locations that have historically worked best for other businesses—you’re trying to find more sites like the ones that are working best for you right now.

Tango Transactions makes it easy to build models with your custom site selection criteria, so you can score and evaluate locations based on what your business needs.

3. Analyze existing traffic patterns

Put your business in the wrong part of town, and you force customers to work against the grain to reach you. A popular business can certainly influence traffic flow and change some of the natural patterns in a trade area. But a store is far more likely to succeed if consumers don’t have to change their current behavior to regularly encounter it. You want to plant your business where the action is, so people see you on their way to and from work, when they’re heading to the gym, or when they’re looking for places to eat.

You can learn a lot from looking at roads, but the best way to analyze traffic patterns is by combining geographic information systems (GIS) with mobile data, which you can do in Tango Transactions. This way, you can see precisely where a trade area is busiest, how the traffic flows, and even what it looks like at different times of day.

Exploring traffic patterns by time of day will help you see what the trade area looks like when people are heading to work, going to lunch, picking up kids from school, and heading home for the day. This way, you can consider if your site will be in the right place at the right time, when your target demographic is in the best mindset to visit your business.

4. Identify points of interest

In every community, there are key places people gather. They might be popular businesses. Public facilities like libraries or hospitals. Parks. Laser tag arenas. Race tracks. Zoos. This could even include  tourist attractions, or business districts where there are thousands of consumers. Different locations and activities appeal to different demographics, and some of these places may be more popular at specific times or on particular days.

Part of site selection is identifying these “points of interest” and evaluating your site based on how close it is to these landmarks. Obviously, this works especially well if you look at these points in relation to traffic flows. Traffic flows show you the comings and goings of the trade area, while points of interest represent some of the most dominant destinations. Put yourself near the places people already go, and suddenly it’s a lot more convenient and appealing to add your store to their planned activities.

In Tango Transactions, you can add local points of interest to see how a potential site fits in among the trade area’s most popular destinations.

5. Combine customer data with local demographic data

Your customer data plays a crucial role in site selection. But it’s most valuable when you can combine it with demographic data from the area surrounding a potential site. The more you can narrow down the qualities your most valuable customers share and assess how much business has come from various demographics historically, the more accurately you can estimate the total opportunity in the trade area.

Overlaid on a map of the region surrounding your site, this data can also help you see where your target demographics are most heavily concentrated. For example, if your best customers are active senior citizens, it would be helpful to know that your site is near an apartment complex or neighborhood with a large senior population, or that in this particular trade area, they tend to congregate around certain coffee shops and stores.

Your loyalty data reveals which demographics are most valuable to you, and local demographic data helps you see which sites have the greatest potential to reach them.

6. Assess each site’s accessibility

When people think about visiting your business, you don’t want their first thought to be how hard it is to get there. Poor accessibility creates friction, and if there’s too much of it, visiting your business starts to feel like more trouble than it’s worth.

If people can only turn into your parking lot from a single, difficult-to-access lane, being in a high traffic area becomes a lot less advantageous. Or maybe people have to cross a bridge to reach your side of town. Or use an alley. Perhaps they have to fight across another store’s parking lot to reach you.

Accessibility isn’t just about the design of the cross streets and parking entrances, either. What if your site is in the heart of a busy shopping mall, where people can only get to you by entering through another store or a main entrance? Being in a popular area with plenty of foot traffic is nice, but it becomes an obstacle when your store is someone’s only destination.

Public transportation has a major effect on your accessibility as well. A site that’s right next to a bus stop or the subway is obviously a lot easier for people to access. If it’s difficult to reach your business, people are going to do it less often than they (or you) would like.

7. Evaluate visibility from high traffic areas

One of the biggest benefits of being in a high traffic area is that people see your business all the time. Your signage and buildings get more impressions, and consumers have constant reminders of the products or services you offer, and how convenient it is to use your business.

If they can’t see you, you lose all those impressions. And that makes it a lot harder to generate new demand. To someone who’s never used your business before, you may as well not exist. Even existing customers might turn to competitors they see more often.

Visibility isn’t just about exposing people to your business, either. A highly visible location also helps people find you when they’re looking for you. And that makes your business feel more accessible and less stressful to first-time customers. You don’t want someone to Google your business, get to the parking lot, and wonder, “Wait, so where is it?”

You might have a good location on paper, smack in the middle of a busy part of the trade area, but if it’s not visible from the cross streets, it’s a lot harder for you to tap into local demand. Make sure you include criteria for scoring a site’s visibility, so you can accurately compare and assess opportunities.

8. Research how the trade area is changing

A few years from now, the area surrounding your sites may look very different. Before you start a long-term lease or construct a new facility, you want to be confident that any expected changes are going to work in your favor. Maybe a large business just went under, and now thousands of people have to move to find new jobs. Or perhaps there are new apartment complexes going up near your site. Are they expensive? Designed for low-income families? Reserved for students?

As you compare sites, it’s crucial that you look at recent population and demographic trends, as well as news that could shape those trends in the near future. Are the nearby neighborhoods gentrifying? Any changes could have a serious impact on how you can expect a site to perform.

9. Find the trade areas your competitors missed

Throwing your business into the middle of a bunch of competitors usually isn’t a great idea. Sure, you’ll get some sales that would’ve otherwise gone to them. But they’ll leech some of yours, too. And the opportunity for each store gets smaller as the space gets more crowded. Put your competitors on a map, though, and analyze traffic patterns, demographic data, and points of interest, and you’ll find some opportunities they’ve overlooked.

Maybe there are particular times of day that are more valuable to your industry, and that’s when the trade area around your site is more active than a competitor’s location. Or perhaps a site is closer to a large pocket of your most valuable demographics. When you follow the traffic patterns, you might discover that people are driving absurdly far to reach a competitor, simply because there’s no closer alternative.

At one point, your competitors presumably researched the trade area and selected their site after assessing the options. But how much time has passed since then? If they’ve been there for years, that’s given them time to solidify their foothold and increase awareness … but the trade area has likely changed, since then, too. And that means you have opportunities that weren’t available to your competitor when they first moved in.

10. Estimate potential cannibalization

Cannibalization happens when two or more of your stores serve overlapping territories. To some degree, they compete with each other for the same pool of customers, and some of the sales that would’ve gone to one location go to the other. As you compare potential sites, it’s important to evaluate how much of the projected sales would actually represent new business. If a sizable chunk is just shifting from another one of your locations, that site is a smaller opportunity than it probably appears.

Estimating cannibalization will help you see the total impact of a new site on your business, so you can assess opportunities more accurately and create more reliable site models.

Remember: If your parent company owns other stores in the same territory, you’ll want to consider potential sister store cannibalization, too. You don’t want your apparent success to come at the expense of your parent company’s overall profits.

11. Consider the omnichannel impact

Increasingly, brick-and-mortar stores are far more than just a point of purchase. Each store is also an inventory source and order fulfillment center, even when the sale originates at another point of purchase.

If customers order online or over the phone, your brick-and-mortar stores can still play a critical role in putting products in their hands. Customers may head to the nearest store to pick up their order. Or you may have a local delivery service.

As you look at a site, it’s important to consider the implications for your omnichannel retail strategy. When you look at where people live in relation to your site, is it an ideal inventory source for existing online customers? Can you adequately facilitate deliveries from this location to the surrounding area?

You can even use online sales data to analyze how many ecommerce customers are nearby a potential site. Finding pockets of digital customers in a trade area can be a good indicator that there’s an untapped opportunity there, especially if competitors haven’t moved in yet. Placing a store near these customers may lead them to buy from you more often.

12. Look at parking capacity

Without adequate parking, it’s hard for a location to reach capacity and maintain a steady stream of customers. This is obviously highly related to a site’s accessibility, but it’s worth looking at as a capacity issue as well.

If your site shares a parking lot with another business, you’ll want to consider the likelihood that their customers, clients, or employees will exceed their parking capacity. During their peak hours, will there be overflow that creeps into your designated spots? Do you even have designated spots?

One way to evaluate this potential issue is to create a geofence around your business neighbors. This lets you track how many customers enter and exit their facility throughout the day, so you can estimate the number of parking spots they may need to occupy.

Whether your max occupancy requires just a handful of spots or hundreds, it’s vital that your site has enough nearby options to keep up with demand.

13. Build comprehensive site models

Site selection isn’t a process where you want to trust your gut. You need accurate models with reliable projections. And that only happens when you have all the data. Every input your model doesn’t account for is a blind spot—one with the potential to cost you millions of dollars.

Tango Transactions allows you to incorporate every variable that matters to your business in your site models, increasing your confidence and decreasing your margin of error. With artificial intelligence and machine learning, Tango Transactions can reliably predict each site’s performance.

Want to see what best-in-class site analysis could do for your business?

Schedule a demo of Tango Transactions today.


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.