Sunny side of the street: The right location is vital for every business

Posted on July 3, 2007 · Posted in The Independent

A large proportion of independent retailers close in their first year of trading. And the mistake of many, perhaps most, is that good ideas are ruined by opening in the wrong place.

Not only is “location, location, location” the retailing mantra – but renting a shop on the wrong side of the street can be the difference between healthy profits and commercial disaster.

This is where the big multiples have the edge. They spend thousands of pounds analysing local retailing environments before deciding where to locate. In particular, they use software that enables them to compare their knowledge of their existing customers with the demographic profile of a new investment area.

Until now, it has been very difficult – and very expensive – for a new, small independent trader to match this expertise.

Now, though, the expertise used by the major multiples is available to small independents. Cartogen is a retail consultancy established by retail analyst Stephen Kennedy, who believes that his business is the first to offer the EuroDirect Cameo profiling system on a consultancy basis and at affordable prices to independent retailers.

Through EuroDirect’s Cameo profiling system and GMAP Consulting’s RetailVision system – used by Woolworths and the Post Office – Cartogen gives clients a clear indication of the mix of customer types within a catchment area, their behaviour and purchasing habits.

Demographic data such as age, ethnicity, family structure, employment status and housing type in any location is held on the database, along with behavioural information indicating the local population’s lifestyle and spending habits. The database also provides information on potential competitors.

“It contains 5,000 locations, including some without any shops, but where there used to be shops or post offices. This service is suitable both for independent retailers and smaller multiples,” says Kennedy.

Kennedy suggests that the type of retailer likely to gain most will be an independent who has perhaps five shops and thinks the concept could roll out in other areas. Comparing the shop’s existing customer profile with that of a possible new location should give a clear steer on whether the new location will be viable.

The service is offered across commercial retailing sectors – including bars, cafés, restaurants, health clubs and salons. “It works for all sectors, especially for customer profiling information,” says Kennedy. But what makes the service particularly attractive is its affordability – a basic survey costs just £95, rising to £450 or £750 for more comprehensive information. Cartogen is keeping its charges low in the hope that initial surveys will lead to continuing retail consultancy services.

Paul Jukes is managing director of Vivid Design & Print, one of Cartogen’s first customers. “It’s great,” he says. “I moved into my premises two years ago.” But he remained concerned about the quality of his local market analysis, which he admits was “amateurish”. “Cartogen checked all the area for me to check that my research was correct,” explains Jukes. As a result, Jukes is able to commit more strongly to his existing marketing strategy, knowing that he chose the correct location for his business.

For Kamil Soud, proprietor of Matrix Mobiles, Cartogen’s analysis had the opposite effect – making him realise that a proposed retail strategy and Brighton location would be unsuccessful. “I run an e-commerce business selling phones,” explains Soud. “With e-retailing you are always fighting to provide the lowest price, so I thought it might be good to get a shop. Cartogen did an analysis of the areas where I had thought about opening a shop.

“I could tell from the traffic on my website what type of people bought from us. Brighton was just not right for that client group. Cartogen gave me an analysis of the people in the town. There are a lot of lifestyle businesses which are set up there which really never make enough money to survive, so there is a high turnover of businesses, but they drive the cost of shops up. I am glad that I did not go ahead.”

As any business advisor will say, saving a firm from making a bad decision is just as important as helping one make a good choice. And retailers that understand much more about their potential locations are likely to make much better commercial decisions.