Much depends on choosing the right retail real estate site. Store sales. Company growth. Your bonus.
You could squander time, money, and resources if you pick the wrong site, particularly if your site selection process is flawed. But even when you pick great sites, if you take too long, you’ll often lose them to another retailer. However, you can maximize real estate results if you pick a site based on accurate, up-to-date market and business intelligence using a process designed to be fast and efficient.
Find the right site quickly by avoiding these common mistakes in your retail real estate selection process:
1) Following when you should be leading
Don’t let brokers set the agenda during market tours. Given the unintentional opportunity, they will happily take your real estate rep to see every site in the market, particularly the ones they list and the ones the previous rep passed on two years ago. Instead:
- Insist that brokers screen sites based on your company’s criteria. Confirm that they use methods and data compatible with your process, and be sure that they know if any of the submitted sites don’t meet the screening criteria.
- Tell the broker to send a list and map of all the sites on the tour. With the proper information and tools, real estate reps can then eliminate the ones that don’t make sense due to demographics, demand, and/or cannibalization of existing stores.
- Require your reps to use their tools to find areas in the market that are promising from a demand and cannibalization perspective. Push brokers to find more opportunities in those areas.
Managing the broker instead of letting the broker manage you will make your real estate reps more productive by reducing their travel time—and expenses—and focusing their attention on better-quality sites. Focusing everyone on a shorter list of higher-quality sites will also increase the likelihood that good deals are approved and are finished quickly enough to keep sites from competing retailers. It can also drastically reduce dead-deal costs.
2) Not documenting your findings
Your real estate rep collects the most valuable site selection information, such as first-hand observations of your stores and competitors, while touring a market. Unfortunately, reps often store this information only in their heads. Gather these observations through documentation so others in your company can access it anytime. If you do not, and the rep is transferred to a new market or, worse yet, leaves the company for a competitor, the new rep must start from scratch.
3) An uninformed research team
Research folks often lack the same knowledge that the rep does about what is really on the ground. But if your research people know what is really there and where things really are, particularly with respect to competition (the third-party store location data is rarely accurate), their analysis will be more reliable. Therefore, don’t leave your research team in the dark.
Researchers are also more likely to view a retail real estate deal in a similar light as the rep if they are better informed. Ensuring that research people are up on what’s where in the market means they can spend less time seeking for information, which, in turn, speeds the decision-making process.
4) Improperly equipped VPs
When your vice president tours a market, give him or her as much detailed information as possible. Sending VPs with nothing more than a broker package is inefficient because they really won’t know what they need to know—for example, detailed info on the performance of your existing stores in the market or competitor info from store casings. Informed decisions are hard to make without good information.
Also, VPs should have the benefit of the notes from the original real estate rep site tour because, even though the rep is likely on the tour, memory is unreliable. Analysis done by research on each site should also be made available. This sounds obvious but, amazingly, is not always the case.
5) REC meeting delays
At most companies, many deals are tabled until the next real estate committee (REC) meeting while they wait for more information because the person with that vital intelligence is not immediately available. Delays are dangerous because another retailer could scoop the deal and leave you practically starting over to find an acceptable site.
As an owner of shopping centers, I can assure you that I haven’t often blown off a retailer ready to sign for one that hasn’t yet approved the deal in REC. Find a way to get the information collected about the market and the deals into one place so that the likelihood of delaying a decision is reduced as much as possible.
You must choose wisely when picking a retail real estate site to seize the best opportunities. But you must also work quickly and efficiently to actually land the deal.