Right-Size Your Retail Business
How much space do you need for your retail business? The answer isn’t as straightforward as a quick equation or widely accepted standard. Try these tips and tricks to figure out how much space you need for your retail operation.
The Basics
If you’re opening a new business rather than moving an existing one to a new location, you’ll want to start by doing research on similar retailers in your area and similar cities, as well as larger industry trends in your type of retail. Use that research to estimate what your sales volume will be, then divide that by your industry’s average sales per square foot (this figure should be easily accessible on the internet). Alternatively, multiply the number of customers you plan to serve by the industry standard number of 15 square foot per customer for retail and use that to estimate your needs. Either result will give you an idea of how much space you’re likely to need, but of course, an equation can’t tell the whole story. Use the answer as a starting point and build on it by factoring in other considerations that can affect your space needs.
Retail Inventory
Consider your space and planned inventory side by side. A space that’s too empty is off-putting, but by the same token, very few businesses can pull off a cluttered, overstuffed look. Spaces that are too big also tempt you to fill them with inventory that you may not be able to sell for a while, which eats into your finances in multiple ways. Not only do you have to pay for inventory that sits around for a while, you also have to pay extra for lighting, HVAC and other building services for the extra room. Be realistic about the amount of space you’ll need over the next several years.
Commercial Retail Space Layout
If you haven’t developed a store layout for the new space yet, put together at least a preliminary one that accounts for all product areas, plus non-sales space like offices, restrooms, storage and perhaps a breakroom. Also consider how you’ll design around the features that come with space – for example, what products will face the window line for customers to see as they walk by, as well as the location of the entry door and how you’ll position the cash register.
Location of your Commercial Retail Space
Believe it or not, the location you choose can impact your square footage. A great location that will drive lots of traffic to your store is better than a larger space in a less optimal location, even if you can get a great deal on the larger but out-of-the-way space. Good locations reduce your advertising budget and give your new store some much-needed visibility, so if all other factors are equal, let a perfect location break the tie between your options.
These four principles will get you well on your way to picking the perfect storefront for your retail business. Dive deep into available store locations with your commercial real estate advisor and consider how each option could benefit your business in terms of its location, a unique shape that could affect layout, and whether it can provide the right amount of square footage. The right space is out there – you just have to find it.
