What are the five key factors in selecting a good location for a "brick-and-mortar" retail store? Which of these factors do you believe is most important? Why?

Expert Answers

An illustration of the letter 'A' in a speech bubbles

There are more than five (depending, in part, on how one categorizes them) factors in determining the optimal location for a “brick-and-mortar” retail store. If one peruses the various small business “how-to” manuals and textbooks that are widely available, including those the links to which are provided below, the list of “five key factors” in choosing a location includes:

  • City or county zoning requirements, and the regulatory environment in which a potential location resides;
  • Ease of access for clientele or customers;
  • Real estate or lease costs;
  • Proximity to supply chain; and
  • Level of competition

Deciding which among these five—and, again, there are additional factors, such as neighborhood or local demographics that could also be used—is the most important is entirely subjective. Some lists of important factors in determining the location for a retail store include quality of life considerations, for example, distance from the business owner’s home. In short, the “big five” offered above represent, at best, a near-consensus among business analysts. If forced to select only one of these five, however, a good pick could be “city or county zoning requirements, and the regulatory environment in which a potential location resides.” It would be extremely unwise to select a location for a “brick-and-mortar” retail store without first confirming that local zoning requirements are conducive to such an operation. The regulatory requirements for building and operating a business may be sufficiently bureaucratically-unwieldy as to make a potential location unpalatable to the owner. This is what is often known as “business-friendly.” A business-friendly environment is one in which a city or county hopes to entice businesses to open up in a certain location, for example, a dilapidated neighborhood desperately in need of renovation, by creating a regulatory environment that is accepting of certain types of businesses, and retail businesses are highly valued for their “cleanliness” and for the “traffic,” or consumers, they attract.

In the State of Maryland, the City of Silver Spring successfully convinced the headquarters of The Discovery Channel to relocate from nearby Bethesda, which is a much more prosperous community than Silver Spring. By offering both regulatory and fiscal incentives to The Discovery Channel, Silver Spring officials enticed a large employer with a “clean” business (i.e., non-polluting) to open a new headquarters building in the dilapidated downtown section of the city. Once this company agreed to relocate to less-expensive, more business-friendly Silver Spring, a slew of additional, smaller businesses, especially restaurants, followed suit. The result, as intended, was the complete revitalization of downtown Silver Spring, with throngs of consumers and a vastly expanded corporate tax base (Note: an expanded tax base is a larger number of taxpaying businesses, which is different than a higher corporate tax rate, which incentivizes businesses to move to a location with a lower tax rate). More businesses paying a lower tax rate is better than fewer businesses paying a higher rate.

By creating a “business-friendly” environment, one city was able to completely rejuvenate its previously decrepit downtown area. This, admittedly, involved two of the five factors, the other being “real estate or lease costs,” but establishing a regulatory and zoning structure friendly to business was a key part of the equation.

Approved by eNotes Editorial Team

We’ll help your grades soar

Start your 48-hour free trial and unlock all the summaries, Q&A, and analyses you need to get better grades now.

  • 30,000+ book summaries
  • 20% study tools discount
  • Ad-free content
  • PDF downloads
  • 300,000+ answers
  • 5-star customer support
Start your 48-Hour Free Trial