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How do I Choose a Retail Location? Lesson 4: Main Drag or Side Street?

Updated on December 14, 2013

Question

Is it worth it to pay the premium rental price to have your store located on the main drag? Or, should you save a ton of money on rent and choose a location which is off of the main strip?

When you go shopping or are on vacation, do you ever venture off the well-beaten path to discover stores that are maybe down some side street... or even further, down some nook-and-cranny alleyway?

Store in a Sidestreet

It's a bit hard to get walk-by customers when you're down a sidestreet that nobody takes! Just know that you're going to have to invest a lot in marketing if your store is down a sidestreet.
It's a bit hard to get walk-by customers when you're down a sidestreet that nobody takes! Just know that you're going to have to invest a lot in marketing if your store is down a sidestreet.

Answer

It depends.

Sorry, there's no clear-cut answer of whether you should pay the premium rental price to be on the big street, or whether you should save this money and be off on some side street.

If you're going to buy your retail location, however, it's worth it to try to buy a store that's on the big street. In the future, you might not want to continue your business, and stores on main streets are easier to rent out and command higher rental rates.

However, this article is considering the rental of your retail space - not the buying of it. So, how should you figure out whether you should locate your store on the main drag, or off on a side street? Or worse... down some hard-to-find alley?

Firstly, you're going to have to decide whether your store depends on "walk-in traffic" or if it's a "destination".

If your store depends on walk-in traffic (i.e. people passing by who see your store and decide to go in), then it's imperative that you get a location on a busy road or just on the corner of a busy road. This is especially true of food establishments.

If your store will not depend so much on walk-in traffic and is more of a destination-type store (i.e. people seek you out specifically), then you can go ahead and locate your store almost anywhere! However, most types of retail are not destinations. A destination-type business might be something like a fashion designer's own store, an antiques store, or a store that makes custom items. With a destination-type store, there has to be a lot of marketing involved.

A third option is to locate your store off of the main road down a side-street, and use signs to direct customers to your store. Of course, you'll need to know if you have permission to put this sign up somewhere on the main street. You'll also want to spend good money on an attractive and eye-catching sign. And, your store should be really easy to find if someone follows the sign (one sign only... not a sign followed by another sign).

However, I have personally witnessed restaurants off on a side street that had absolutely no customers, when a similar store on the main street was packed with people. It's psychology for most people of the world not to stray from the beaten path, unfortunately.

The Main Drag

When your store is located on a busy street, you'll have to pay more for rent, but you'll spend much less on marketing. Moreover, some businesses have to be on a busy street in order to thrive.
When your store is located on a busy street, you'll have to pay more for rent, but you'll spend much less on marketing. Moreover, some businesses have to be on a busy street in order to thrive.

Case Study

One time, a friend and I were in Toronto, looking for something to eat late one night and came upon a packed Chinese restaurant on the main Chinatown street. The food didn't look particularly good, but it appeared that there were no other open restaurants nearby. I even did a 50-foot radial sweep of the area and couldn't locate any other restaurants. So... we lined up like everyone else. The food was okay, but I would have preferred not to wait in such a long line and eat amongst such a huge crowd of people.

When we left the restaurant and went down a side street on our way home, not five minutes later... we came upon another restaurant that wasn't particularly busy and looked like it had good fare! I would have much preferred to eat at this second place, but unfortunately, we didn't come across it and there were no indications of its existence on the main street.

You might depend on some sort of high-tech app for smartphones to help your customers find you... but nothing beats being right in front of the customer's face.

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