Chapter 3: Location, location, location
The number one reason why boutiques go out of business is because of location. I want to be really really serious about this for a second. The number one reason boutiques go out of business is because of location, not because of some terrible buy that you had or some bad weather or a bad employee. It's the location.
The money you think you're saving on rent by being off the beaten path, around the corner, upstairs, downstairs, too small of a location, you will make up that rent that you think you're saving on advertising, on doing discounts, on doing promotions, on doing off-site locations. You must wait until you find the right location.
How do we know what the right location is? The first thing is we want to take a look at a shopping district. Now, a shopping district is very different from a tourist district. I'll give you this example: Times Square, New York City. Times Square, I could give you all the demographics, 300,000 people cross that corner of Times Square every single week. There's a lot of demographics of money, Morgan Stanley is there, the W hotel is $600 a night, but it's not shopping traffic.
If we take a moment and we look at just the shopping bags that we see in the street, the only bags that you'll see in Times Square are I Love New York t-shirts, two for $10, and the M&M store. I don't know what's up with that M&M store but they sell a lot of M&Ms. Again, it's part of the experience. Take a look at the shopping bags. That's the best indicator.
The next thing is you want to try to calculate how much money people are wearing because if there's a discount kind of a customer or a very branded kind of a customer, maybe it's not a boutique kind of customer. You want to be careful with that too.
The other thing is be careful with your real estate agents because they're not usually your friend, and I mean that in the most honest way. They're not your friends. They're doing a job and that's to sell you property. They may advise you that you want to be next to the supermarket, the post office, the bank, a popular restaurant, and yes while all of those places have inherited traffic, it's not shopping traffic.
Think about the last time you went to the supermarket, the post office, the gym, or even your favorite restaurant. You didn't go for a leisurely time and then you said to yourself, "Okay, I'm going to go shopping." You don't want to be that store that everybody sees but nobody has the time to go. Good location is not necessarily visible location. It's shopping location.
The other thing is, and this is kind of hard because retailers are not that friendly but talk to other retailers. See how you would fit in to the local economy. See how you could complement other stores and always look for a national chain. I always feel like if I walk into a Gap or a Banana Republic or one of the nationals, I can get some of the employees to give me some heads-up on when's the best traffic, how business is, what kind of store that they have and some more inside information too.
The last thing is think about how you would complement the retail environment. Just because everybody on that block has a shoe store, or right now cupcake stores are so popular or yogurt stores are so popular, it doesn't mean that they're making money. We want to be in a business that makes money. Part of that is about location.