The retail location and site selection process has changed in numerous ways due to trends that have caused disruption in the retail industry. It appears that these trends, centered around consumer behavior changes and technological advances, are likely here to stay and will continue to impact how businesses choose their next new location.
In this blog, we’ll explore not only these retail real estate trends but also cover best practices for developing a successful retail location strategy.
Trends Shaking Up the Retail Location and Site Selection Process
Experiential and Mixed-Use Retail
You’ve probably read headlines about the shift to more mixed use and experiential retail in the retail industry, and it’s important to take notice. Experiential retail is becoming increasingly important as consumers are looking for a unique shopping experience that gives them a compelling reason to visit a brick-and-mortar store rather than buy online.
One way that this has affected the retail real estate industry is that companies are starting to open smaller locations with less inventory and more room for experiential events and promotions. This pushes more sales to the online space, which is one of the driving forces behind the trend. While the majority of sales still occur in brick-and-mortar stores, stores are becoming more than a place to conduct transactions. They are now used as places to be introduced to a brand, strengthen customer loyalty, and pick up online orders as part of an omnichannel sales strategy.
In new retail development, it will become more common to see a wide variety of tenants including medical offices, retail, restaurant, fitness and experiential retailers like aquariums, bowling alleys, etc. Retail is also being used as part of live, work, play mixed use developments. This allows people to do many things in one centralized location. While the coronavirus pandemic and period of high interest rates that followed paused a lot of new mixed-use development, industry experts expect the trend to revive.
Additionally, malls across the country are starting to implement an experiential approach. They are also finding creative ways to utilize a resource they have that some new developments do not have: ample parking. It’s not uncommon to see a mall hosting a concert, pumpkin patch, carnival, etc. in their parking lots to encourage shoppers to spend time at the mall.
Pop-Up Stores and Shorter Lease Terms
Pop-up stores are not a particularly new topic, but the trend has picked up momentum and gained popularity in recent years. A pop-up store can work for both traditional retailers looking to make a splash with a new product or offering, as well as e-commerce retailers looking to dip their toe into a physical store without the long-term real estate commitment.
Pop-up stores require very short lease terms, but retailers are pushing for shorter lease terms in non-pop-up locations as well. In the past, it was common for retailers to be locked into 20-year lease terms. That just is not the case today. Retailers are on the hunt for shorter lease terms to accommodate the tumultuous retail environment. Landlords are also jumping on this trend to fill vacant spaces left by recent store closures.
Both pop-up stores and shorter lease terms mean the real estate team must play a more active role in reevaluating existing sites and determining whether to stay or move to a new location.
Competitive Real Estate Environment
The sustained period of low construction volumes following the coronavirus pandemic means that the competition for good retail space has become even more competitive. National retail vacancy rates reached a 20 year low in 2024, despite continued store closures. Demand for space has been fueled by formerly online-only retailers making the move into brick-and-mortar, discount retailers, fitness concepts, entertainment concepts, newer entries into the restaurant space, and more.
With little new inventory coming into the market, retailers are turning to second gen space and redeveloping properties left vacant by struggling brands. Retail real estate professionals need to be prepared to act quickly when opportunities arise, since many brands are often vying for the same space in prime trade areas.
Why Location Matters: 4 Key Strategies for Retail Success
Here are the top three factors to consider when selecting a new retail site: location, location, location.
The importance of location in retail success cannot be overstated—choosing the right location directly impacts foot traffic, visibility, and your brand’s connection to its ideal customers. A prime location boosts sales by attracting more customers and making shopping convenient. Additionally, positioning near complementary businesses or in popular shopping areas can elevate brand perception and increase revenue. Securing the right location is more than a logistical choice; it’s a strategic investment in your bottom line.
While trends are constantly shifting and influencing retail real estate strategy, the fundamentals of good site selection remain consistent. Here are 4 site selection best practices that will ensure your success regardless of the trends that come and go.
Understanding the Role of Demographics, Zoning, and Real Estate in Location Strategy
Demographics remains a cornerstone of retail site selection, as it provides an essential piece of the puzzle in finding the right locations, helping retailers outline the basic profile of a potential customer base. Retailers analyze population density, age distribution, income levels, and lifestyle preferences to find areas with promising potential. These insights – when combined with other factors that influence store performance – provide a helpful foundation in selecting sites.
It goes without saying that zoning laws can make or break a site selection decision. While petitioning for a zoning change is possible, it can be a time-consuming process, which is why prioritizing space that already has the correct zoning for retail can reduce the time to market.
Keeping a pulse on the local real estate market in the areas where you are expanding is also helpful as you plan your expansion strategy. Understanding the challenges each market is facing in terms of new development, redevelopment, vacancies, average rents, and more can help you as you prioritize which markets to focus on next. If you have taken the time to complete a market optimization analysis, also called a potential or whitespace analysis, you will already have a list of markets and trade areas that are generally good for your brand, which makes it easier to pivot if a market you planned to develop is facing some unexpected real estate headwinds.
Analyzing Traffic Patterns and Foot Traffic to Make Informed Decisions
The era of intuitive decision-making in site selection is fading thanks to the wealth of data that provides insights into consumer behavior and preferences.
Foot traffic data, for instance, provides valuable information on the number of potential customers visiting a location or shopping center, enabling retailers to assess its viability. It can also be used to track consumer journeys to identify other areas frequently visited. This data-driven approach allows retailers to make informed decisions, minimizing risks and maximizing profitability.
Equally important is analyzing road traffic patterns, which reveal crucial insights into accessibility and visibility for potential sites. Understanding peak traffic times, road congestion, and directional flow enables retailers to select locations with optimal exposure and convenience for customers. This ensures retailers aren’t just selecting a site with foot traffic but one that benefits from high vehicle visibility, further enhancing customer reach and maximizing site performance.
Using GIS and Data Analytics in Retail Site Selection
Technological advancements are revolutionizing the site selection process through the use of specialized software and tools. GIS mapping systems and retail site selection software, such as the Buxton Platform, have become strategic assets for retailers looking to expand their footprint. These platforms streamline the process of identifying and evaluating potential locations by enabling users to visualize and analyze various metrics, such as demographics, competition, and other market/location data.
The use of technology in site selection not only speeds up the decision-making process but also enhances accuracy and precision. By leveraging these tools, retailers can gain a competitive edge in the market, ensuring that their chosen locations align with their strategic goals and customer base.
Aligning Location with Business Goals, Marketing Strategy and Retail Operations
When location selection is approached strategically, every part of your business benefits – from marketing to operations.
For instance, a location aligned with your company's broader goals ensures that your marketing strategy effectively reaches target customers in the right trade areas. This alignment also means that your retail operations are primed to support demand, from supply chain logistics to staffing readiness in each market. In addition, the influence of a well-chosen location extends directly to your store layout and signage, allowing you to craft an engaging in-store experience that resonates with your audience.
Ultimately, by placing your brand where it can thrive, you're creating an integrated, growth-oriented foundation that supports long-term success.
The Bottom Line: Location’s Impact on Profitability
While there are always trends that affect site selection decisions, the fundamentals remain the same. Trends may influence where to look and how to operate, but aligning location with proven site selection principles is what drives sustained success. The right site reaches loyal customers, optimizes operational costs, and supports sales growth, creating a solid foundation for financial health. Ultimately, the profitability of any retail business is deeply tied to a well-chosen location that balances current trends with core site selection principles.
To learn more about the site selection process, read our blog “The Ultimate Guide to Retail Site Selection.”
