E-commerce and mobile sales have come a long way, but traditional brick-and-mortar retail stores are still faring well. The success of these stores largely depends on two things: the product and location of the store. The truth is, no matter how great one’s products is, sales will be down if there are no customers trooping into the store.
Putting one’s business in the right location is a prime consideration not only for startups, but for established businesses looking for another retail outlet. Finding and choosing the best retail space for rent here or abroad entails the same considerations. The following are points of concern when renting a retail space abroad.
What is Your Budget?
There are two things that have to be defined before looking for a retail space to lease: budget for the rent and size of the store. Paying more than one can afford based on the store’s sales, and committing to the wrong-sized space are common mistakes tenants make when renting. Having a clear idea on the budget will certainly help narrow down options and avoid renting an unaffordable space.
The affordability of a commercial space is traditionally based on the rent-to-sales ratio. As a whole the average rent-to-sales ratio of small, sole proprietorship business is 2.98%, with 1.24% applied to retailers of building materials, while retailers of clothes and accessories allocating 8.93% of their total sales to rent.
Rent of retail spaces depends on the location of the property to be leased, its location among other retail stores in the same area, condition of the space to be rented, length of the lease, and its availability. Regarding availability, renting a shop in a new mall is cheaper than renting a space in an established mall.
Other costs to consider when renting are: property taxes; insurance; utilities and maintenance. It is important to note who will shoulder the expenses for maintaining the building and parking facilities. Who will pay for security services, repair and maintenance of air-conditioning units? If the location is far from the main commercial hub, how much additional marketing is required? All these items add up to the cost of the retail store rent.
It may be difficult to project sales on a new business to determine how much rent one can pay; but one can always research on similar retail businesses in the area to find out how much their lease costs. In some cases, the services of a local broker may prove very helpful.
How Much Space Do You Need?
The required space varies for each type of retail store. However, common areas for consideration in a traditional store include the main sales floor, dressing rooms (if needed), stockroom, offices and bathroom. Opting for a functional kiosk, cart, or booth requires a smaller, less detailed space. A basic formula in estimating the size of a sales floor is: Sales Volume divide it by Sales per Square Foot. Of course, this formula may not work for all types of retail store, so it is still best to determine what equipment, display cabinets, shelves, tables and more are to be incorporated on the sales floor. A too large sales floor may seem like an empty store, while a too small store may seem cluttered and chaotic. The local trend in store display is also a consideration.