Whether you’re seed stage, Series A start-up or a seasoned ecommerce player, taking the plunge into physical retailing, or expanding your store footprint is a huge step. Launching into the world of store strategy and location sourcing can be as challenging as it is exhilarating, but has been identified as an essential post pandemic strategy for many DTC brands: Human to human contact is invaluable for brand loyalty, customer experience and continued growth.
Location sourcing and retail leasing can be overwhelming, with plenty of factors to consider. The ‘Franklin Shanks Four’ most important things to know before signing a store lease are:
1. How your space serves your brand
Physical space is one of the most powerful opportunities to build brand credibility and long-term loyalty – with your customers, your teams, and your investors. Be it brand activations, test store pop-ups, short-term leases or long-term investments, understanding your physical objectives and how to best leverage a physical footprint goes well beyond ‘that’s a cool space with good footfall’.
2. Location Location Location
Are you a convenience or a destination brand? Are your customers in centres or on cute local strips? There’s no one size fits all approach to ‘the best retail space’, and understanding who your customer is – or who you want them to be – will greatly inform your location strategy for both short and long term physical investments. It may be the general rule, but footfall isn’t always worth paying for, and being located next to major mainstream brands doesn’t always resonate. Make informed decisions with tailored demographic and psychographic data overlayed with detailed local market knowledge.
3. Realistic Optimism
New stores are exciting, none more so than your first flagship location. But balancing flexibility and surety is key to ensuring your property investment works for you. Property is typically one of the three largest costs in a retail store (after Product and People) and the largest fixed cost. Typical retail lease terms are 5-10 years to rationalise fitout costs and to build trust and loyalty through consistency. But should you outgrow the space or the strategy, or need to contract, it’s important to ensure this is factored into the business plan and your lease agreement. Considering casual leasing, shorter terms and subleases can be advantageous if balanced against your initial investment and allows you to maintain agility as your brand and strategy evolve.
4. Have you got the right stuff (terms), baby?
You may have negotiated a few commercial leases to get to this point, however the market is evolving rapidly as we exit covid. Understanding the current landscape and how to craft a market leading agreement is critical in ensuring your lease works for your business, not just your landlord. Commercial leases and retail leases can also be worlds apart, in both commercials and legislation, with very specific requirements around a wide range of clauses such as disclosure statements, market reviews and relocations. A solicitor who specialises in property is highly recommended to review your lease for legal exposure, but they may not be familiar with current market comparables, incentives and your operational requirements. Engaging commercial experts such as tenant representatives, who understand your needs can help save you time, money and headaches, and free you up to focus on meeting your customers face to face with an incredible instore experience.
If you’re looking to take the leap into physical retail, we’d love to help.
Contact Jaymie Rowland on +61 405 342 598 or [email protected]