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Very Good Signage

Very Good Signage

Here we go. I am on a rant and I feel that this one is well deserved. Time and time again I watch independent retailers go out of business in decent centers and I see one MAJOR mistake that they make. They do not put a sign above their storefront and when allowed, they do not put a sign panel in the pylon sign. This is really retail 101 and business 101.

Several minutes ago, I was driving around a shopping center that I know very well and drove past a space that has turned over several times since the previous national tenant left a few years ago. Well, for some reason these operators do not put signs on their storefront. Sorry folks, “open and they will come” is not the way of the world. I know the landlord wants the user to put a sign above the space because it adds consistency to the center and vibrancy, but this tenant and many others do not seem to get it.

Here’s the bottom line as far as I am concerned, if you are not seeing the sales you desire and you do not have a sign above your store and any other available signage opportunities…shame on you. It is your fault! Anyone who is reading this blog and does not take advantage of the available signage is making a very costly mistake.

If you want to be the best, you have to play like the best and I assure you, McDonalds would NEVER open a store without some kind of sign, so why would you?

<Sigh> (This is one of those things that pushes my buttons.) I am stepping down from my soapbox now…

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Readers of this blog know that the rules of finding a winning site. If you are new to this blog or need a refresher, click here to catch up on the key elements to finding a winning site. As in everything in life( or almost everything) there are exceptions to the rule. Often times, retailers that do not adhere to the “rules” of site selection are known as destination retailers. Many restaurants are destination retailers because people will drive the necessary distance to eat at a particular restaurant. In the dry goods and soft goods world (non-food), there are not as many specialty retailers as there were in earlier times. This is particularly true for suburban America because some many national chains have a presence in the shopping centers and power centers.

Cities of the world are able to have maintain destination retailers, but no retail destination is as well known around the world as Saville Row. Saville Row is a retail street located in Central London that is famous for its Bespoke (uniquely individual) tailoring. Suits from Saville Row are known for their quality and people travel from around the world just to get bespoke clothing. Saville Row is the ultimate retail destination. It’s not really on the main drag, but people still go out of their way to go there because of the reputation. Is your retail business a destination?

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Just like in all sports or business ventures, it is important to have a team when growing your retail business. From a real estate/site selection perspective, the members of your team should be:

  • Broker/Agent: Look around and find the right person/group that fits your personality and goals. They should be able to help you identify the right market and site for your store.
  • Real Estate Attorney (Experienced in Retail Real Estate): This is the person that is going to review your lease and can truly explain language that might not make sense on the surface.
  • Contractor: You will need to work with a contractor to get your space built out. The contractor can also help you save money by providing an estimate of what it will cost to build out a store. You have to watch the contractors, but if you get a good one, they can really help you out.
  • Architect: You are most likely going to need to submit plans to the city showing how you are laying out your store.  In an ideal world, your contractor and architect work together to build your retail masterpiece. Either you contractor or architect should deal your local municipality in getting permits. 
These are the main components to having a winning team in your site selection. If any of the team members are weak it could result in delays and problems down the road. I would suggest getting several bids from architects and contractors before settling on one person until you know the quality of the work and are sure about the relationship.

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All retailers are subject to following building code regulations. Americans with Disabilities Act (ADA) compliance is a very important issue in commercial real estate build out. The good people of Sacramento Valley Industrial Advisors just did a small blog entry about ADA Compliance. Check it out by clicking here.

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I get mixed feedback on the proliferation of national retail chains in the Washington D.C. area (my hometown) and around the rest of the United States. I have heard people say, ” Oh my, its the doom of homegrown retailers” or ” This is great, names I recognize and I can get service wherever I go”. Personally, I can see where both people are coming from in today’s retail real estate environment, but is the end of the local hardware store and bakery here? The answer is yes in some places, but no in others.

I think it is important to remember that all of the national chains one can find around the country were once independent homegrown businesses. Fortunately, the owners went through a metamorphosis and created a real business system(key word being system). Probably the world’s best known example of an organically grown business that developed into a multinational business empire is McDonald’s (to get the whole story behind McDonald’s click here!).

You may or may not want to grow your retail business into a multinational business, but I do think it is critical to business success to have systems in place. Ideally, you want to have systems in place allowing you to expand your retail concept across your town, state, region or country.

Landlords tend to prefer working with retailers that are organized  and have a bonafied structure and business system. Operators that are wishy washy and not systematic have a hard time impressing landlords. Additionally, they are subject to paying higher rents and greater security deposits because they are deemed a greater risk.

The other thing to remember is that Co-Tenancy is such an important aspect of the retail site selection. Sometimes, it works to your advantage to be next to certain national chains.

By focusing on working on your business, you will have a true business system up and running.

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Let me start out by saying that I recommend everyone work with a broker when procuring a site for your new business or having someone lease your retail property. One of the great things about the retail real estate industry is that most brokers(agents) are active on a full time basis. Working on a full time basis allows brokers to really be in touch with the industry and market. In addition, if they are very active, they should have a good amount of experience and contacts to draw from in procuring a site for your new business.

One thing that I really value is working with specialists or experts. When I want to find out about tax laws, I work with a tax attorney. When I want to get my teeth checked, I go to a dentist as opposed to going to a optometrist. And the point of this is to say, it is really important to work with a specialist. There are all types of commercial real estate brokers. People specialize in land, retail, industrial, office, and investment sales. The guy that works in the office sector is likely to have a surface knowledge of the retail sector, but is not the expert that you need if you are looking to open a store in a strip center. The office broker is about as much a retail specialist as the optometrist is a dental specialist – he knows the basics of biology and the human body, but not enough detail beyond that to really do his job moderately well.

Now, you might be saying, “That’s an extreme example, my sister is an office broker and she can help me open a store just like any other real estate agent.” Well, to a degree that is true, but you are not likely to get the expert service needed when opening your first store. I imagine it would be very hard for someone unfamiliar with the rental rates in the retail center around the mall to really know if the price you are being quoted is competitive or if the pricing is ridiculous. The other thing is that people tend to like working with those whom they like, trust, and know. The retail real estate community is very small and people in each market know each other and often do deals with the same people over and over again, so being represented by an outsider is not going to ease the process of getting that winning space.

There are some Jacks of All Trades out there that can do office deals, industrial deals, retail deals and land deals. One of my mentors has worked in all sectors of the real estate business and seems to have a grasp on many markets due to his resources, but in my experience these people are few and far between. You are much better off working with a specialist who knows retail real estate in your specific market.

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One might ask, what are the ingredients of a winning site? I am going to try to answer the question in a very general way. The truth is that, only you know your business and what might work for Bank of Anywhereville, is completely different from Supermarket Deluxe. However, there are some basic elements that go into a great site, so here are the 5 Elements YOU need for a winning site:

  1. Visibility/Frontage: if everybody can see you, you are much better off.
  2. Access: it’s great if everybody can see you, but stinks if it is hard to get to your retail store. People love convenience and getting to their destination quickly.
  3. Co-Tenancy:the people that surround you are very important. The right Co-Tenants could make or break a site.
  4. Management/Appearance: you might have a great site with visibility, access, and good co-tenants, but if the center looks and stays crusty and dusty you better believe, that center is a center in decline and the other tenants are going to not stick around there for too long.
  5. Demographics: this is the location of your business and it is important to realize that your customers need to be around you. You need to know the profile of your customer for marketing, merchandising and to really know if the location is a viable location for your business. It makes no sense to open a Steakhouse in a community that is largely Vegan/Vegetarian. Your business is not going to do well even if you have the other factors working in your favor.

All in all, if you have these things working in your favor, you are likely to have a very good retail location for your business. However, you know your business the best.

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