Area Demand Reviews for Retail, Leisure, Health & Fitness & Restaurant Locations.
Before you sign the lease or buy your new business:
- Test whether local market demand will support your business
- Check likely customer flows
- Consider competitor impact on your proposed site
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Q. What is Location Planning?
A. Location planning is the act of determining the best physical site for the provision of a new service or product. The requirements for successful location planning are many and varied. It is used by commercial organisations and also by local authorities, charities, health organisations and trusts.
Q. Why is Location Planning Important?
A. Finding the right location is important for any and every organisation. Selecting the location for an activity is probably the most important decision that any organisation will take. Choose the right location and the day to day operation becomes easier. Choose the wrong location and operating costs, including wasted time, may be higher than expected due to inefficiencies caused by the wrong decision.
Q. What Factors Should Be Considered In Location Planning
A. The factors will vary according to the type of organisation undertaking the planning. But in general most of the same factors will apply: high visibility; easy access; close to similar or supporting organisations or business; close to the market, suppliers and/ or customers; acceptable fixed overheads; good supporting facilities such car parking; limited negative factors in the area. In the following paragraphs a few of the key issues for a range of specific businesses are discussed. The availability of a suitably skilled workforce is another demographic factor to be considered. It may be necessary to draft qualified staff into an area and then use them to train local people.
Location Planning for Retail – Non Destination Site
Preferred factors include: high levels of footfall for prolonged periods during the day; the ‘right type’ or right customer demographic at a higher than average ratio within the customers drawn to the area; probably similar types of business in the neighbouring area to provide a critical mass that will lead to the attraction of a greater number of potential customers; good visibility to main customer types; close to a ‘demand generator’ such as hospital drawing many visitors in the case of a food shop or florist, close to a train station for a dry cleaners, ironing service or food shop. Similar types of ‘ideal locations’ will exist for other businesses too.
Location Planning for Gyms, Health and Fitness Clubs
Preferred market characteristics will include: specific population counts within selected drivetimes. 10 and 15 minute drivetimes are popular but are not always the most appropriate. Selected demographic characteristics will depend on the type of club – gym only clubs tend to attract more single people, clubs with pools get more families. Some gyms attract more females, other draw higher ratios of men. Different types of people are available to attend at different times and on different days of the week. As a result gyms will also seek to draw different types of members through different offers. Age levels also vary according to gym type. As a result of these variances, selecting the right location depends on the target customer – and their numbers within the local resident community.
Location Planning for Restaurants
The best restaurant locations are also dependent on the type of business to be operated. Fast food restaurant require locations that see high levels of footfall, such as busy road junctions, high footfall retail parks, leisure parks where there are cinemas and/ or theatres. Mid market restaurants need to be located in areas with a reasonably high level of population and with a demographic mix favourable to dining out. Whilst dining out is becoming an increasingly popular past time, growing levels of national demand do not indicate that any location will do! High visibility is a further factor, linked to easy car parking and, if it is parking subject to a fee, low fee levels are essential, especially in the evening. A safe evening environment is also essential for the restaurant to survive, indicating that site analysis needs to be undertaken at more than one time of the day.
Suitable locations for fine dining restaurants require a safe environment and a sizable number of potential customers within a 30 minute drivetime area. Experience says that there is correlation between restaurant price and the distance people will drive to get there. This assumes of course that the price gives value for money!
Location Planning for Hotels
Hotel locations depend on the market they plan to serve. Lodges tend to be located by busy transport intersections, though they are now being developed closer to city centres too where accommodation demand is high and other facilities are available to service guests. Conference and ‘quality’ hotels tend to be located where land is available at a cheaper cost to enable additional facilities to be developed. However conference and leisure hotels can also be developed in more expensive locations, subject to the availability of sufficient market demand at a right price to support them. During the last decade leisure demand has become the main driver for much hotel development so the benefits offered to visitors by a location are also important planning factors. Demographic marketing is now more important that simple location analysis.
Location Planning for Visitor Attractions
Many visitor attractions are dependent more on the market to support the location available, rather than result from the selection of a suitable location. Museums are usually a case in point and result from the availability of a suitable site. In this case the development depends on the availability of sufficient demand. This is almost location planning in reverse! But audience profiling will be crucial to the success of the venture.
Location Planning for a Logistics Company
One of the main factors required for a suitable location for a logistics company is cheap land. However it must be close to the national communications network and, if the company has existing customers, within an economically effective distance to enable them to be serviced. Geo mapping will assist the logistics company to identify the best location or, the best existing location from which to service selected customers.
Q. Are there any bad locations for a New Business?
A. Yes. There are poor locations for any business such as a fast food restaurant with no passing traffic, no place to park or people with the wrong demographic characteristics in the neighbouring area, a fine dining restaurant located in the wrong demographic area, a gym located within a community too small or too old to support it, a restaurant or lodge located on a stretch of fast road that doesn’t allow potential users time to slow down safely.
Q. What Are the Economics of Location Planning?
A. Any new development should be subject to a market feasibility study. This is distinct from a feasibility study that should look at the physical factors affecting a site and its development. A market feasibility study will consider the market available to the business. This requires an understanding of the potential users or the levels of demand available for the new business; consideration of factors that may constrain or enhance the ability of the location to attract this demand; a review of competitive activity. Based on the assessment of these factors, the estimates of demand for the project site should then be developed against which should be set potential costs. The resulting profit contribution should then be calculated and set against known funding costs to assess the financial viability of the project.
Q. Which Tools Assist Effective Location Planning?
A. One of the most important tools for many types of local planning activity is demographic analysis of the site’s catchment area. Reviews of standard market research data will also be useful as part of the demand assessment.
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