Commercial Real Estate Group of Tucson, LLC

Picture Your Customers When Considering Commercial Property Lease

When and why customers visit you are crucial information when doing a site evaluation.

When evaluating commercial real estate sites for your office or retail business, knowing who your customers are and why they want to visit your business is crucial.

We’ve identified several factors that affect customer activity to your business in Tucson or elsewhere.

Overall, look for sites where your customers have numerous reasons to be in the immediate vicinity or in the larger trade area. Linked clusters of businesses that serve your customers provide this activity.

Time of Day

Most of your customers spend the bulk of their money depending on the time of day, such as

• mealtimes
• after-work shopping
• before-work fueling and snacking.

If your business in convenience-oriented, it needs to be near daytime convenience-oriented populations.

Destination-oriented business will often generate their own draw and can therefore do without being located near day-part populations, though that business is at risk of being out-positioned.

Some businesses get by with depending on one part of the day to bring in the bulk of a day’s revenue. It would be a dire mistake, however, to apply this across the board.

This thinking is often referred to as “the law of compensation.” Blind followers of this law often find their business struggling. Low volume in one day-part is not always compensated by strong volume in another day-part.

Only highly successful locations can excuse the loss of revenues from any normal day-part.

Location also affects this “law of compensation.” Just because a business does well on a particular day-part does not mean it will do as well on the same day-part in another location.

If you are considering opening an additional location of the same business, do a full site evaluation process. This will make you money in the long run.

Infrequent Customers

Frequent customers, whether they come in numerous times a week or a couple times a year, are a key consideration in site selection. But infrequent customers usually are more vital to a business’s success.

A site with a high number of frequent customers and a low number of infrequent customers is at risk of changes in the marketplace such as

• new competition
• out-positioning by a competitor
• cannibalism by one of your other locations
• closure of large manufacturing plant, military facility or school.

Infrequent customers are not as fragile. Increased competition can even increase the trade area’s attraction, thus increasing your business’ volume.

A site evaluation can predict whether there will be a large enough infrequent customer base. A business will rarely be unsuccessful with a solid infrequent customer base, even if that business has a low frequent customer base.

The best location is often a convenient stop for your frequent customers and an easy destination for your infrequent customers.

Image and Competition

With the exception of a few small town and extremely competitive city sites, the amount of customer sources and the supply of actual customers is not a risk factor.

The problem to consider in a site evaluation is not so much the supply of customers, but the demand, the amount of actual customers for your particular business.

The amount of actual customers for your business is a result of the complex, changing relationships among these factors:

• customer sources
• image
• competition.

Customer sources  include residential areas, employment areas and populations who use your service as a convenience or as a destination.

Image is a composite of the features influencing customer perception to visit your business:
your location’s surroundings
your business’s visibility and access
the market presence or customer familiarity with your product.

A strong image can increase the demand for your product over your competition.

Competition, both direct and indirect, is a composite of all businesses a customer considers when making a purchasing decision.

Competition will influence your site’s success by adding visits to your business or dividing the visits among all competitors. This composite interaction provides a quantitative measure of the demand for your product.

A high number of total customers can allow for a high amount of competition, while a low number of total customers requires lower competition.

A successful site has a strong supply of customers relative to the amount of competition. It possesses an image that attracts those customers with the quality of location and market presence.

Commercial Real Estate Group of Tucson can help you evaluate a potential site with customers in mind. Contact the tenant representation company to learn more.