Do you agree with me -location doesn't work anymore?
by chee Leng (on coffee makers)
Empty F&B outlet
Asked anyone doing retail business and they would tell you that only three things matters "location, location, location".
It is really?
I am residing in Singapore, one of the most densely populated city in the world, and a city of eating and shopping fanatics (Singaporeans are known for their passion to shop and eat).
Thus, in this place, one would think that getting a good location in a shopping mall is a sure win for their retail business right?
In the world renowned shopping belt -Orchard road, millions throng the mall but retail outlets are still closing down.
Not only that, they are closing down within less than a year of operation. You probably do not have that in your area right?
These are places that are known as premium location, visited by tourists and locals, and the shops that closes down are well known F&B brands, so what happened?
They have a product that are selling like hotcakes else where, they are in a good location, what brings them down?
Everywhere, you hear F&B retailers lamenting about the difficulties in running their business. This is despite the fact that their queues of people are patronizing their shop.
So, are they bluffing? What went wrong?
If you are in F&B retail, you know that there are actually two time period for you to do business -lunch and dinner.
The more turn you can for those two timing, the more you would make.
And of course, for most outlets, what you make in a weekend can probably cover what you make in a week.
This is a fact and is tabulated in the calculation when one wants to run a F&B retail. And that is the reason why "location, location, location" is so important.
The good location in theory should mitigate the effect of the "dead hours". The timing where
everyone is working and there are no one to patronize your shop.
Unfortunately, due to factors such as competition between malls and outlets, even good location does not mean good human traffic to your outlet.
And that is one reason why F&B outlets are not able to survive. They paid premium rent but are not getting the required business to stay afloat.
The way to mitigate the "dead hours" is to own a community.My $0.02
The fact is, one do not need to depend so much on location these days. If you have a community of raving fans, why do you need to have a good location?
The mall traffic do not belong to you and probably are not there just to visit your shop. Any changes to the mall affects your business (i.e. change in anchor tenant).
However, if you owns a community on Facebook, Twitter or any of the social media platform. The community belongs to you, they like your products thus joined this community.
If you manages them well, you can even get to assist in promoting your F&B outlet.
Moreover, if you manage your social media well enough, it is like your customer never really leaving your shop thus they are more likely to increase their frequency of visit.
My thought is, "location, location, location" is a marketing tactic that mall owners and real estate folks highlight to gather the correct "tenant mix" and that in turn benefit themselves more than anyone else.
With good tenants, they would proceed to charge higher rent for the incoming tenants.
Thus, by being in the mall, you are contributing financially and also in terms of building up their reputation.
I think the money is better spend building on your social media assets and the community that you have build would follow you wherever you are going.
Do you agree?