It has long been believed that the three most important factors in retailing are “location, location, location”. Often attributed to Sir Charles Clore (the founder of Sears), this assertion has been a guiding principle for successful retailers everywhere, for much of the last century. Yet, does it still it ring true today in our increasingly digital world?
Clicks & Mortar
One might think that the physical location of bricks and mortar retail is less of a concern in this age of on-line retailing, when you can shop virtually and to your heart’s content on your home computer or mobile device, instead of venturing out to the stores. However, in this age of convergence, omni-channel retailing is allowing for a seamless experience and unprecedented inter-connectedness between mobile, desktop and bricks and mortar, allowing customers a plethora of shopping options and reasons to visit physical stores (such as click & collect services which bring customers who make on-line or mobile purchases into retailers’ locations to pick up their orders).
The internet has also transformed the way that we shop, giving rise to both showrooming and webrooming. With the rising trend in showrooming, where customers having physically handled products in person, go online to comparison shop and buy, some experts have predicted the demise of bricks and mortar retail. However on the flip side, the internet also allows customers to complete their research on-line prior to venturing out to the physical store to experience the product first-hand and make their purchase (webrooming). In fact, the recent FutureBuy study by GfK indicates that webrooming far surpasses showrooming in popularity.
Google isn’t all that!
Aside from on-line research and shopping, customers do indeed use the internet to simply locate retailers, products and services; the Yellow Pages have been eschewed for Google. So it might seem that customers will find and seek out a retailer, regardless of where they are geographically located. Not true. Convenience (including location) is paramount – unless the retailer’s product offering is exceptionally rare and there are no competitors located in closer proximity to the customer.
So is location still important? Absolutely! Location is everything!
Retail relies on traffic and location is the most important determinant of traffic. The more convenient the location, the more likely customers will shop it. Retail needs to be where the customers are! And not just any customers – the right customers!
Location and the right customers
Today, traditional criteria used for selecting a retail location remain valid: population, infrastructure, retail outlets and cost. The criteria are all about determining an ideal location within easy access to the right customer whether they live in or frequent that neighbourhood and whether the location benefits from the synergy of similar retailers with similar target customers. Essentially the criteria are all about reaching the right customer. And as far as cost is concerned – it comes down to a cost benefits analysis based on meeting the first three criteria. Even on-line retailers opening their own physical stores look to the same criteria when selecting sites.
Location is everything
Location remains one of the most important factors in successful retail. In fact, it is so important that even on-line retail is impacted by location of the both the retailer and the customer. David R. Bell, a professor at the University of Pennsylvania’s Wharton School has written a book on the subject Location Is [Still] Everything: The Surprising Influence of the Real World or How We Search, Shop and Sell in the Virtual One. The book is a revealing and insightful look at both the virtual and real world shopping habits of consumers. According to Bell, on-line purchases are significantly affected by which stores are near the consumer and whether they have trendy and friendly neighbours. Through his research and analysis, he has also come to the conclusion that due to our location enabled mobile devices,
consumer behaviour will become more local and more spontaneous
The opportunity is there for retailers to reach out and engage with customers who are in their vicinity, further amplifying the efficacy of their location.
We live in a digital world where customers have access to an endless assortment of products at a mere click – yet bricks and mortar stores can still remain vibrant especially when they focus on location, location, location!
