Someone emailed me today and asked the question:
Where would you chose to open a high end retail store? In a: (a) high income, low population area; or (b) low to mid income, high population?
My response was: I’ll open the high end retail store where my target market lives. And since this is a high end store, then the ideal location would be the high income, albeit low population area.
Assume that you will open a Tiffany & Co. store., which sells high-end jewelry, diamond jewelry, engagement rings, and relatively affordable silver jewelry (if you consider $400 sterling silver necklace cheap). One effective strategy of this store is to focus on higher end jewelry, with the price of their gemstone jewelry averaging at around $3,400.
If you open this store in a low income area, who would buy the $21,125 Tiffany Swing double drop diamond necklace? Instead the bulk of the sales will be the $170-$400 silver jewelries, or what is called “aspirational sale” from products with “accessible price points.” Aspirational customers are those who cannot afford the $2000 Tiffany diamond earrings, but will stretch their budget enough to be able to buy the $200 Tiffany silver earrings — in order to say that they own a real, genuine Tiffany. So the strategy of focusing on higher end jewelry goes pfft.
The choice of location really depends on where your target audience can easily be reached. An internet cafe would do well around college campuses or even tourist destinations, but will not work for a small rural farming town with so very little customers. Or a ski sporting supplies store will work well in ski resort towns and destinations, but not work on the beach.
Know your target audience, find out how best to reach them, determine how they can be reached, find out the stimulus they need to purchase your type of products, and then choose the location where this market can be reached easily.
Do you agree?