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Location-location-location does not work? How can that be?
Talk to anyone in the coffee shop business and he or she will tell you that the three most important things are location, location, location!
I am sure as a coffee shop owner, you had probably heard of this statement before. Heck, in fact this might even be your mantra when building your coffee business.
Here is the crusher. Location-location-location does not work that way anymore. Since shop owners are always talking about these three things, we will give you three reasons why it does not work that smoothly anymore.
1. Too many "prime" locations
Orchard road in Singapore has a lot of shopping malls. It was like that 10 years ago and it is so even now. The difference is that in the last 10 years, there was probably one new shopping mall opening biannually.
Four new shopping malls have been opened in the past year along Orchard Road. This pretty much kills off the novelty factor for the shopping malls. Space is plentiful but the variety of shop offerings is pretty narrow.
While Ngee Ann city might have 2-3 years of novelty and appeal to consumers, i.e. walk in traffic. Ion and Somerset 313 might only have a few months.
Then a new shopping mall opens. To make matters worse, new malls springing up in the sub-urban areas are taking away a fair share of Orchard Road’s business.
2. Too many "me too" shops ( Can use replica instead?)
Even if you have a good idea for a F&B outlet, you can be sure that the shopping mall nearby also has a one with a similar concept.
In fact, there are so many similar coffee shops, F&B and retail outlets that they decided to group them into one shopping mall, i.e. Square 2 in Novena -Korean theme.
3. Too many F&B outlets
The space allocation ratio is going up by the years for F&B outlets. This is probably due to the dining-out habit of most Singaporeans.
We need a place to eat. It started with 30%, then 40% and now you have shopping malls that has 70% floor space dedicated to F&B outlets (i.e. Bedok Point)
Regardless of walk-in traffic, the high concentration of F&B outlets diffuses the crowd and lowers the possibility of customers choosing to patronize your coffee shop over others.
In addition, the potential of consumers walking into the shopping mall is also lower as there is nothing to window-shop or buy there!
And “location-location-location does not work?” is not the only question you should worry about. Check out the link below for some other questions that you should consider too.
Can we provide you with some solutions? You can check out our coffee business section for more information -hope it helps.
Ebenezer Heng chairs and speaks regularly in F&B, FMCG and digital marketing conferences. He runs a community that reaches out to 0.5 million people. Lecturer in a Singapore Tertiary Institution and advises digital marketing for Organizations such as Singapore Chinese Chamber of Commerce, National Sports Associations, People Association’s constituencies.
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