There comes a time in the journey of an independent retailer that calls for expansion to a new location. Business is going well, you are enjoying profits and operations are stable. Now that you’ve created the perfect store, the question you ask yourself is: how can I replicate the same successes and take the business to a new level? Growth is the holy grail for retailers, but with today’s ever-changing market now even more competitive, the added pressure of developing your brand to a new location can bring an abundance of benefits — if executed correctly. Essentially, you’ll be moving from a small business owner to a medium business owner status, so it is important to understand how sustainable expansion is for your business. Below are four essentials you should consider when expanding to a new location which will help you understand whether you are ready.
Do your research before moving to a new location
What market analysis or research signals the potential for success in a new location? Are there alternatives to a new location that can potentially be as a profitable? Understanding the ‘why’ of a new site can serve as a strong barometer for what is needed before you commit finances and manpower, such as how established the demand and competition are in your proposed locations for a new store. It could even simply be a case of increasing or restructuring the number of employees or products and services to deal with influxes of demand. Don’t forget to invest in marketing, focusing on the cost of implementing your strategy. Market research will help you understand whether the risk of a new location is worth the hassle.
Location, location, location
Opening new stores is a common expansion strategy for many retailers, and a new location can broaden your brand presence, as well as attract new customers. Look for an area that lacks — and needs — your products or services. After all, you’re trying to find new customers. This is why location is just as important as any other aspect of expansion. Success will depend on how well you balance both your local strategy and the standardised components of your business, as a new location may require a completely different strategy. While much of your branding is similar, each strategy will require a tailored approach to enable you to connect with local shoppers. Conduct surveys, set up a pop-up store and spread your brand in the locality to get an idea of the demand of your brand when picking the perfect new location.
Money, money, money… money!
Can you afford a new location? Whilst your profit margins are looking good, would the expansion be sustainable? If you treat your new location as a new business, you are more likely stay on top of creating yet another self-sufficient business that can welcome growth. Your current location can be affected by any failures of the new location, so bear this in mind when planning. Similarly, you must spend money to make money, so you should be prepared to invest some capital before the new business starts seeing a profit. A fixation on growth can be detrimental to profitability in the absence of a clear focus on the financial impact of expansion.
Seamless integration across the business
It’s impossible to be in two places at once, so it’s essential to integrate a system that enables you to centralise the controls of your business from different locations. Investing in an omnichannel solution across your business provides a strong foundation when creating an online and offline presence. Despite all the costs attached to opening a new location, the management of your website and where you showcase the products/services available across the business are relatively inexpensive features.
There is much to consider when expanding to a new location, hence as a retailer, you should carefully evaluate the pros and cons before making this commitment. Nevertheless, opening a new site can be fruitful to both your business and brand if executed the right way. Taking into account the location and target groups of the proposed site for your new store are essential in knowing whether the time is right to scale up. It is also crucial that you carry out extensive market research, as this can highlight the complexities of expansion for your business and provide an overview of how your competitors have adapted their strategy.
Don’t forget to enjoy the process of expanding. There’s clearly something special about your brand that has warranted the discussion of growth, so never forget why people love your brand! This will enable you to understand what strategies from your existing store you could implement to improve the performance of the new site. With the essentials covered, you can now proceed in reaping the benefits of your hard work and resulting business growth developing of your brand in your new location. Godspeed!
Dax Dasilva is the founder and CEO of Lightspeed and a member of Modern Retail’s Editorial Board. Founded in 2005, Lightspeed develops a cloud-based EPOS platform used by over 50,000 independent retailers, restaurants and eCommerce merchants worldwide to run better businesses and process over £12 billion in transactions annually.
Visit https://lightspeedhq.co.uk for more info.