Are you always on the lookout for new stores?
Dee: Yes. In fact, I’ve just had a team meeting looking at development plans for my stores.
Nigel: I keep my eyes peeled permanently. We have regular updates from property agent Christie & Co. The problem is that the multiples pay agents retainers so that they’re offered the best locations first.
Raj: I’m not actively searching - it’s more a case of hearing about stores via word of mouth, rather than through agents.
How long should you spend choosing a location?
Dee: We order a report from location planning consultant CACI, which tells us about housing prices, average income and employment in the area. It takes about six months to review all the information.
Nigel: I wouldn’t say there’s a set amount of time, but it can be a ridiculously long process.
Raj: It can be as quick as a matter of days to make the basic decision, but it takes a lot longer to go through all the legalities.
What are the most common pitfalls when choosing a location?
Dee: The speed at which the owner wants to move out can be a problem. It’s no good to me if he wants to be out in two months as I need six months to check out the store and surrounding area.
Nigel: Future development is a risk and plans for parking meters could cause problems. Speak to the local development framework to find out what’s in the pipeline.
Raj: Seasonality can be an issue, and finding good staff can be tricky in certain areas. Research power supply efficiency as well.
How do you check out a location you’re not familiar with?
Dee: We sit outside the shop for a day and visit on a Monday, Friday and Sunday. At the weekend, we’ll look for any signs of trouble and on weekdays how many customers go through the door.
Nigel: I’d look around the neighbourhood and at the type of lines sold in the shop. I’m interested in local produce and I’d want to assess whether that was suitable. I also spend a couple of hours outside the shop and check how busy it is. If it’s near a school then that’s usually a bonus as parents tend to collect their kids on foot, so they’re more likely to visit.
Raj: The first thing I do is have a look at the store and drive around the area. It’s a chance to check out the competition and what sort of houses and cars are around - that tells you a lot about disposable income.
If you are looking at buying from another retailer, what questions should you ask?
Dee: Ask for financial information - VAT, pricing information, epos data and a copy of the lease and the terms and conditions. And ask why they’re selling the store, although they won’t always tell the truth.
Nigel: You’ll need to find out how the systems work and how the store is run.
Raj: Ask to see the accounts and a breakdown of sales data. Find out about the day-to-day running of the business - when the store is busiest and its prices.
Which other organisations can aid your decision?
Dee: The council is a good starting point. Trading Standards can also be useful for finding out if a store has a history of problems.
Nigel: I’d speak to the Association of Convenience Stores about what the licensing authority is like in that area and if they know of any local problems. It’s also worth speaking to the local council planning authority - they can tell you about the number of cars in the area, which is a good indication of the economic prosperity of potential customers.
Raj: I’d contact the council for a profile of the area.
Is it worth hiring a consultant for advice on locations?
Dee: No. Why waste your money hiring a consultant when you can do the job yourself?
Nigel: I’ve used consultants in the past and they didn’t really tell me anything I didn’t already know. However, I’m sure there are some good ones out there.
Raj: We call in the Londis team and they check out the customers and estimate the potential turnover of the store. In the past I’ve used independent advisors when I’m unsure of certain issues. It may save you money and effort in the long run.
Do you prefer to rent, lease or buy outright?
Dee: The answer really depends on the store.
Nigel: I prefer to lease at present because of property prices, but in the long term freeholding is better as you have an asset.
Raj: It’s always better to buy outright if possible.
If renting, how can you check that your landlord is reliable?
Dee: You can’t really tell if your landlord is reliable - it’s just luck.
Nigel: If it’s a private landlord, I’d ensure my solicitor goes through any agreement before I sign.
Raj: If you’re in a block of premises owned by the same landlord, you can ask other businesses how they’re treated. As long as a solicitor checks out the lease you should be okay.
Aside from the building itself, what types of additional costs can be incurred due to the location?
Dee: Check out whether the store is in a conservation area as this could limit your signage and lighting options. You also need to think about restrictions on the lease - for example, if selling tobacco or alcohol is prohibited.
Nigel: Your spend on security might be more if you’re in a high crime area, so it’s worth checking beforehand.
Raj: Parking is a real plus if you have it - you can lose a lot of trade if there’s none available
What are the most important factors to consider when choosing a location?
Dee: The main criteria for me is competition - that’s the top decider, even above cost.
Nigel: You need to look at local competition and how you can compete with it. It’s also important to take into account whether it’s a village store or on an estate, and how that will affect your customer profile. For example, people on a housing estate are more likely to walk to the local shop, rather than consumers in a more middle-class area.
Raj: Competition and rental value are important issues. You also want to know about the consumer ABC profile of the area and any passing trade. Retailing in a working-class area means lower margins, but cheaper rent, so one compensates for the other.