Location is a key criteria to study within market research.
The HORECA sector (HOtels-REstaurants-Coffee shops) has paid a heavy tribute to the crisis. Official sources announced in April that 1945 companies in this sector had filed for bankruptcy in 2012 in Belgium, up 28% over the last 5 years. As we explained in a recent post on the survival rates of startups, this isn’t much of a surprise actually given that the HORECA sector has the lowest survival rate of all.
What this statistics should teach us however (along with the other stats published by the INSEE) is that small brick-and-mortar companies should pay attention to factors that speed up mortality. In particular our experience shows that localization of a store should be thoroughly investigated.
Why is localization so important for a store
Unless you have a worldwide renown store, your localization will determine your audience and eventually the number of customers in your store. There is a reason why some locations are outrageously expensive (think of the Champs-Elysees or the 5th Avenue for instance): these streets attract millions of people each year and even if you capture a very small fraction of it you can be assured you’ll make a good business. This being said, you’ll understand that the profitability of your business will change dramatically if you are located in a secondary (or worse) street.
What should you do before deciding on the localization of your store
Here are a few advices to help you decide on the best location for your store:
Quantify your audience
This might be a simplistic advice; yet very few would-be entrepreneurs actually do it. When you have found a location that you think would fit your needs, spend a few day on the walkway and count the pedestrians. It will give you a good idea of the audience you can capture.
Qualify your audience
If you spend a few days on the walkway counting the pedestrians, there are other things that you can do in parallel and that will help you determine whether or not your store might attract customers. You should qualify your audience and evaluate whether the segment you are addressing with your store is actually used to live there, work there or simply walk there.
Observe your future customers’ behaviors
Behaviors can be influenced by a lot of things; flow of pedestrians on one side of a street can be 50% more or less than on the other side of the same street. Many factors play a role and you should understand what they are because you’ll most probably won’t be able to influence them: sun, width of the walkway, easiness to cross the street (which depends not only on the width of the street but also on traffic), obstacles (bus shelters and the like). This may sound like details but neglecting details influencing consumer behaviors and in particular pedestrian flows can be decisive as far as the profitability and the success of a store are concerned.
Advice for your market research and your business plan (be it in Brussels, Belgium or elsewhere)
Localization is key for success in the B2C sector. If your intention is to set up a local brick-and-mortar business you should carefully investigate all potential locations and use the few techniques above.
The main problem you’ll be faced with is time. Carrying out all those investigations is time-consuming and yet so crucial. If you still have a job and want to evaluate a business opportunity in parallel, chances are that you won’t find the time to do everything by yourself. Friends and relatives can help but if you still lack the time and the expertise to do this kind of research, we have the perfect service for you. Send us an inquiry and we’ll be delighted to explain you how we can help answer your questions at an affordable price.
Posted in Marketing.
