Businesses need customers so locating your business where customers are seems like a logical move. But how do you know if your scouted location draws the right customer for your product or service? Understanding the demographics of your target customers and area is critical for the success of your business.
In order to properly evaluate a community or neighborhood for the best location for your business, you must research the profile of your potential customers. In order to do this you must look at a few factors:
• Income – the degree of disposable income within the community.
• Residences – Are homes rented or owned and the value?
• Means of transportation – Do prospective customers in the area own vehicles, ride buses or bicycles, and so on?
• Age ranges – Does the community consist primarily of young people still approaching their prime earning years, young professionals, empty nesters or retirees?
• Family status – Are there lots of families in the area or mostly singles?
• Access – Proximity to interstates and traffic counts of surrounding roads.
Demographics are the average or typical characteristics of your target market — the people who buy your products or services. These characteristics might include age, annual income, educational attainment, type of occupation, region of the country they live in, or number of individuals living in their household.
Demographics can also include the age of children, status of home ownership, value of the average home, and whether that home is in an urban or rural location.
Average age: There are distinct buying differences among age groups. For instance, baby boomers tend to be more fashion conservative than the forward-thinking members of Generation Y. If your brand is meant to be a trendsetter, make sure the area that will surround your store isn’t comprised of retirement communities.
Income: If you sell higher-end goods, make sure that the surrounding population can afford them. There is a reason why stores such as Nordstrom are only located in affluent regions. Only those who are affluent can afford their products.
Easy transportation access: There is a mall located near where I live that is almost completely deserted. It had the same stores as other successful malls in the area. The biggest difference…it didn’t have access to a major highway. The most successful shopping centers have easy transportation access — either by subway, train or highway.
• Is the location currently a destination or are you the only store? Many people who shop aren’t searching, they are browsing. How many times have you said “I’ll just go to the mall and pick up something for this weekend?” Most shoppers tend to walk in and out of several stores before they make a purchase.
• What types of stores are in the location? Your business should fit in with the businesses in the surrounding area. Most shops in a particular area cater to the same demographic. Rarely do you find a conservative clothing retailer amongst a group of fashion-forward retailers.
• Employment status in the surrounding area: This is a key indicator as to whether the area is growing. If businesses are hiring, that means you will have more potential customers coming to the region. If they are struggling, or laying off, then your customer base will decrease in size.
In the end, it’s always best to have help from an expert. A commercial broker or real estate agent can assist a business owner in finding the perfect location for their new or growing business.