Site Selection and Understanding Your Customer

Retailers should utilize a 6-point site selection process.  First, you need to understand your customer.  

The first step: Determine your customer profile. The first critical step in the site selection process is to fully understand your target customer.  Once a customer profile is determined it is relatively simple process to identify where and how many potential customers live within a targeted market area. 

Since we are writing for the franchisee and retail community we assume that existing customer data exists, either in an operator’s existing stores or in other franchise stores.  Typically, some form of data is collected by all retailers, although the robustness of this data can vary widely. 

The most rudimentary form relates to the address of a customer, whether it is an actual address, telephone number or zip code.  Vendors can then append demographic data to these addresses enabling the operator to begin to profile its customers based on characteristics such as household income, age, ethnicity, and marital status.  This type of customer profiling data can be very accurate and is utilized by many retailers. 

If the operator is fortunate enough to have access to a database which includes transactional data, then a more robust profile can be developed.  This is superior to knowing simply where your customers live because you can use this data to project revenue potential to every unit of geography within the market area.  In this case, the operator can understand where its “best” and “worst” customers live and then be prepared to properly analyze potential sites.  

The operator without customer data

As we have stated, a strategic approach to site selection reduces risk requires customer data.  For operators without customer data, recent innovations with web-based applications now enable any operator to inexpensively collect this critical data.   

The authors developed one of the original web applications called e-buyersguide, which enabled retailers to use the internet to understand their customer profiles via surveys.  This technology has since been refined by other vendors and can be easily and economically utilized to collect customer data. 

About the authors: Peter Nizwantowski pnizwantowski@retailinvest.com is a real estate consultant specializing in the retail and shopping center industry. Irwin Barkan ib@ijbcorp.com is an investor and developer who has owned and operated both retail businesses and shopping centers. Should you have any questions about how to collect your customer data do not hesitate to contact us.

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Related reading:

Part 1 of this series: How Do I Find Right Real Estate Site for My Franchise