Internet Sales Bury Local Business

Everyone who thinks about where to locate their new business or open a new store has heard the phrase, “Location, location, location”.  What the big deal about location? The area a business is located can mean the difference between a thriving, growing business and a business that goes from startup to shutdown in a matter of weeks.

I want to focus on a local business that has been in business for decades. (What really occurred is unknown, below is my thoughts.) The business of this business is shoes, and a small amount of shoe accessories. Their business model is very good, and the customer base reflects this fact. Some businesses like to track where their customers live, this is one of them. Keep selling shoes in mind as you read on.

Tracking where customers live provides more insight in knowing how far your customers are willing to travel for your product and their likely economic status. This business tracks customers by zip code.

Over a period of time, say five years, you find your most active customers are within xx miles of your business street address. It is also obvious from your tracking that new customers are emerging from areas where the city is growing and expanding.  This is usually families moving into new growth areas, or perhaps the city has grown into one or more small communities and the roads have improved enough to bring consumers looking for better prices.

We have to be realistic here. Most shoes are not unique. Competing businesses sell the same shoes we do. Companies that produce shoes are more than willing to sell the same shoes to locally competing businesses. It is all one income stream to them.

This shoe store did the smart thing and opened a second store in a new location where competition between stores would not be an issue. Each store had its own area and market. Sales in the new location skyrocketed. New customers were coming in the door daily. The original store maintained all its previous business.

By opening in the new well chosen location, the second had thousands of potential drive-by customers every day who were eager to spend money. The new location was located in a stand alone building at a mall. Prime territory.

After a few years, the second location had to find a new location. No business would willingly want to vacate such a prime location. Sales were terrific, and the repeat customer base was large. It was apparently decided a move of a few miles should be a non-issue.

The move it turned out, was to not only an issue, but a deal breaker. The second store closed within a few years of moving off the mall property to it’s new home.

Sixty years ago this Gas Station was in a prime location. Slowly business dwindled as expenses increased.

 

What happened at the second now defunct store? The second store according to circulating rumors blames its closing on the Internet. Too many customers found they could buy the same products online for less and online their customer base ran away it was decided by rumor control. How about a reality check?

While the Internet may have caused some sales erosion, the first store is as healthy as before. The true cause of the second store closing was the lack of the thousands of eyeballs from mall traffic.

People generally want to touch and try on shoes. No matter how descriptive and detailed the online ad is, it does not give a customer the opportunity to feel and try out a shoe. People also prefer to support local business whenever possible.

The second store closed not because of the Internet, but because of location. Tens of thousands of mall shoppers a week knew they could probably find the shoe they wanted at the store across the parking lot, for less than they would pay in the big box mall stores. Mall shoppers flocked to the store across the parking lot.

Money is money and savings are savings after all. More importantly it was not two minutes across the parking lot. It was a headache of major proportion to drive to and from the second stores new location.

When the store changed location to their second less desirable location something major happened. The new store lost  the eyeballs of thousands of mall goers every day. The store had relocated to near a major artery road, but it was choked traffic with poor store access. The good times were over.

Location is critical in a saturated market such as shoes where almost every big box and Mom and Pop store is selling everything from $1.00 flip flops to high end heels and boots. If a business is selling a highly desirable product not readily available at every strip mall, customers will put up with a more remote location and poor off the street access if the price is right because of perceived need.

Before you decide on a location, ensure your business model reflects how serious location is for a business that depends on customers driving to your business. What does your future business have to offer customers in exchange for inconvenience? If the answer is very little, look for a new location.