New Business Location

When choosing a new business location, many companies need to consider the proximity of related businesses. For retail stores, restaurants, and service-related companies, this is particularly important. Whether related business offer competition or synergy is also important to consider.

New Business Locations: Competition Vs. Synergy

Choosing a new location in an area where there is a lot of competition can be detrimental to a startup. While some cities group competitive businesses into districts (like the fashion district in Los Angeles), lots of competition in one area is generally considered a disadvantage. Opening a restaurant or retail store in a site near its competitors will often diminish the market share of all involved.

Conversely, choosing a site in a location near complementary businesses can be advantageous. For example, opening a retail shoe store in the same building as a retail clothing store can help both stores attract more customers. This is called synergy. Compatible neighbors in the same building, shopping center, or general area can help drive sales and traffic.

Using a professional broker to find a new location site can be helpful in identifying and evaluating competitive and synergistic forces in an area. A broker can prepare a comparative market analysis (CMA) of a particular area to help clients predict how successful a new site might be.

RPI Commercial is an experienced commercial real estate brokerage and retail placement expert. Reach RPI representatives by calling 1-877-549-5210 or sending an email to info@rpicommercial.com for more information.