Do you agree with me -location doesn't work anymore?

by chee Leng (on coffee makers)

Empty F&B outlet

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?

Comments for Do you agree with me -location doesn't work anymore?

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by: Anonymous

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by: channingck

Guys I am starting a new coffee shop named café coffee in this area. So everyone must come and enjoy the coffee of my shop. You will get some discounts and offersquality equipment and spray. Come and enjoy. Always welcome.

Reply to Chee Leng

Agreed. At times I wonder if shops in shopping centers even make any decent profit at all.. Include cost of labour of 22%, f&b 28%, rent 25%, other ops/misc cost 5%, depre 3%, director's fees 10%... Technically the shop makes a nett of only 7%.
The good thing is that I've seen many hole in the wall shops sprouting up across the island which can only mean that business owners are more aware of their bottomline.

reply to Jamil
by: Chee Leng (oncoffeemakers)

In addition, the mall also charges marketing fees so mall might not be the right place to run business after a while (too high cost).

Who needs a 'Prime' location.. If your social media is in place.
by: Jamil A

Yea I would be inclined to believe so. While it makes perfect business sense to include location when drafting your marketing proposal as its the easiest tool to measure projected market segmentation & targeting, I would personally move away from malls due to their ridiculously high rents especially in 'prime' area. With many charging 1% or 2% GTOs, rent can effectively go into the sub 40% of the monthly operating overheads. While the mall should be able to generate the no of consumers, it doesn't necc equate to an automatic patron for your shop.
In trying to move in tandem w the Gen Y consumers, many businesses are scrambling to adopt social media as a marketing tool to attract business or create vibes about their business. But in doing so, many also fail, as creating a social media platform is the right approach but a constant and consistent follow up has to also be in place otherwise it will only generate the wrong/negative perception amongst its followers.
But if done right, the social media creates a growing stream of like-minded 'brand' loyal consumer for your business. It spreads like fire and it's cheap.
So who needs a 'prime' location when you can generate your own clientele/consumer thru social media.

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