The Dec. 23 edition of SiteTalk referenced a recent survey, which found that driving responsible growth, in addition to protecting and building the brand, is a chief priority for retailers in 2011. We asked you, our readers, if that priority was consistent with your 2011 objectives. Here is what one reader had to say.
"Throughout my career, both in corporate real estate and now as a broker, I always tried to locate or approve sites that supported the growth plans and operational needs of my customer. When I was responsible for corporate growth, not a day went by without someone calling to offer what has to be the best location conceivable for one of our facilities. I still get those today. We have all heard the pitch: "I have this location that would be great for you. It is located in front of, or beside, or next to the highest volume XYZ Location or retail outlet in the system. You would do great here." When asked what they base this judgment on, the response was usually, "Because the XYZ Company is doing such a bang-up job."
Then, as well as now, I have always thought and taught that unless the Real Estate group has an understanding of the company business and the target customer, it will be hard-pressed to make an effective argument against this reasoning. To be effective, the Real Estate group has to understand the company's business. The expansion plan is very closely interrelated to all other business objectives. In order to make a good business decision relating to the company's investment in the proposal, the company's business objective must be understood.
Early in my career, back in the last century, I read a paper written by Howard L. Green who underscored this point in the book, Guide To Store Location Research. Although published in 1968, the recommendations he made should be in place today as we move “back to the basics” or become engaged in the “New Normal” in today’s business world. Green stated:
Appropriate financial and sales objectives of a retail firm that should be considered in retail site selection include the following:
1) Make enough profit
- To grow by renovating, expanding, or relocating an existing store, or building a new store in untapped portions of the market, or by expanding into markets new to the firm.
- To invest in new and improved supporting distributive facilities and to insure an appropriate supply of merchandise, as needed.
2) Realize a satisfactory return on investment.
3) Increase amount of sales and the number of customer transactions.
- Retain old and attract new customers.
- Increase the amount and/or quality of merchandise sold to each customer."
-- Terry L. Conley MCR, CCIM
TLC-The Location Connection, Inc.