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The retail world is split into brick-and-mortar stores and e-Commerce, with online shopping options reaching their peak ever since the pandemic began. In terms of physical stores, the retail space definition is based on the foot traffic involved within the building, which is what makes a retail establishment different from other commercial building types like offices. The retail landscape includes various small-scale, medium-scale, and large-scale store options depending on the size of your business and the type of services you offer. While most retail businesses have a common link in terms of the work they do and the audiences they serve, there are a few key differences in their commercial contexts as we shall see below. Here are some key insights into a typical retail space that you can lease, including ways to find the best location for your retail establishment.
Retail space definition
A retail space refers to a physical, brick-and-mortar store that sells various products and services directly to customers. These may include anything from cosmetics, food, and beverages to electronics, clothing, furniture, and more. The physical, accessible location marks the commercial footprint of such a business, which also sets it apart from online retailers. There are two important interconnected terms to remember while defining a retail space: foot traffic and anchor business.
All retail spaces are centered around customer foot traffic, as it is important for a retail establishment to be built where it is most likely to be frequented by clients. The retail space definition also zooms in on the concept of an anchor business, which is the primary hotspot on the street or within a shopping center. Retail spaces are ideally located near such an anchor business – like Macy’s or the Apple Store – because of their already well-established foot traffic. So, this increases the chances of customers wanting to stop by and explore the neighboring store as well.
Retail types and features
Retail spaces have different settings depending on factors like the retail concept, square footage, foot traffic, brand popularity, display options, and so on. Such retail establishments can take the form of grocery stores, shopping malls, boutique stores, big box stores, and other businesses. They all have one major goal in common, which is to prioritize the available space for the flow of customers. This includes conducting a thorough spatial planning that focuses on the main shopping area and aisle layout, inventory storage, dressing rooms, window displays, and a parking lot. A retail space with optimized layouts allows the store owners to highlight their brands in terms of the overall décor and signage, showcase their products in a way that catches attention, and have an interior that customers enjoy being in – all of which boosts your chances of repeat customers because the shopping experience you create is as important as the products you sell.
Retail space grades
Another important element of the retail space definition is the commercial grading system that ranks a retail building as Class A, Class B, and Class C based on the overall status and quality. This ranking system allows retail tenants to differentiate between properties and set their budgets accordingly. The retail space categories are as follows:
- Class A retail spaces form the top tier of this hierarchy. They include high-end retail establishments with superior quality, luxury amenities, sustainability focus, and ideal locations with the right demographics – checking all the boxes for aesthetics, technology, and functionality. Naturally, these Class A retail spaces are also the most expensive.
- Class B retail spaces are a step below and lack some of the luxury appeal of Class A stores. They are primarily more functional than aesthetic, so they are also less expensive and offer the best, mid-level options for retail tenants. In addition, by renovating a Class B store in order to improve its condition, technological status, and amenities, it is possible to promote the building to a Class A category – which is an excellent incentive for Class B owners to consider an upgrade and improve their property’s value.
- Class C retail spaces are the low-end category. These stores have the bare-minimum features to offer, which makes them the cheapest commercial real estate options. They lack essential elements like good technology and décor, so retail tenants aiming for popularity or regular foot traffic should consider Class B spaces instead.
Choosing the right retail space
While choosing a suitable retail space, make sure to consider the following aspects:
- Visibility. You want to open your retail business in an area that makes your store prominent in terms of the products or services you offer, your brand image, and customer satisfaction.
- Demographics and foot traffic. Building your retail establishment in a favorable spot includes finding the right audience to ensure regular foot traffic to your store.
- Local competition. Opening an accessories store near already well-established clothing/accessory stores is one way of generating sufficient foot traffic – though it is important to know the difference between business compatibility and market saturation.
- Accessibility. According to the retail space definition, a retail store should be accessible, which means that customers should be able to drive up to the store, park their cars, and begin shopping. For this reason, every retail establishment requires proper parking spaces, especially for stores that sell large products like furniture and appliances – as these require exterior spaces for loading/unloading.
- Product merchandising. Lastly, the retail space should have the right layout to support your display ideas, so according to your budget, you can either choose a spot that already includes merchandising features or customize your own options.
The in-store shopping experience simply has no substitute – especially for people who love window shopping and enjoy going on shopping sprees.
Apart from curating a relevant catalog, you also get to dive into the whole process of customer service and feedback, so the retail brick-and-mortar really keeps you connected with your business. Therefore, the key benefit of brick-and-mortar retail spaces over virtual shopping is that physical stores allow brands to build their image, connect with customers, and celebrate a destination that people love to visit.