Retail clustering, shopping made easy

In today's competitive retail climate, every business owner is seeking to achieve any advantage available, and retail clustering is one way businesses have managed to increase their sales.

However, it's not only the businesses but the potential customers of those businesses as well that are increasingly trying to make shopping easier.

If we look at the overall successful shopping experience from a customer's point of view, it becomes very simple. A customer doesn't want to drive across town and back to purchase various items. They are looking for a shopping experience that is easy, simple and has a variety of merchandise.

Retail clustering fills the bill. It offers the potential customer an easy and efficient shopping experience, and it automatically increases the sales from individual stores in the cluster. That is why it works.

Retail clustering is important to any retail business district, and it is especially important to understand the concept in small towns. A retail cluster is merely a group of retail businesses that are located in the same shopping area. They can be in a mall, a strip shopping center or a downtown. It really doesn't matter where they are located; what really matters is their composition.

Retail clustering only works when compatible business are clustered together and have the same customers. Probably the best example would be the food courts at major malls where the food vendors are grouped together in one area, the idea being that since they all have the same customers, those customers might go into the food court to buy from one vendor but end up buying from several different vendors.

This works the same way in any shopping center. If a shopping area contains businesses that have the same customers, the likelihood of those customers shopping in more than one business is greatly enhanced. Surveys have shown a majority of today's shoppers go to a shopping area with only a vague idea of specific items they are shopping for. In a shopping strip with compatible stores, the shopper rarely goes only in one store since merchandise in the entire group of stores would be items that the customer commonly purchases.

In other words, retail clustering is a way for both businesses and the customer to be served, and for both to be successful, the customer must have a variety of stores and restaurants which cater to him or her, and the businesses in turn would have higher sales. The idea that a retail business standing by itself can be as successful as a business located in the middle of 15 other compatible business defies all retail logic.

Of course, compatible is the key word, and that means a customer of one must be a customer of all. It doesn't mean a group of all stores should carry the same merchandise. It is, very simply, that the restaurant or shoe store or jewelry store must have the same customer. That customer could conceivably buy a dress at a ladies dress shop, eat lunch at an adjacent restaurant and then buy a book at one of the other stores.

Take a look at very successful shopping areas, from Main Street in the Magic Kingdom to a strip center or mall in Dallas. Disney did a study that indicated not only did retail clustering increase sales on Main Street in the Magic Kingdom, but the store fronts that were approximately 25 feet wide worked better. Disney designed some of the larger spaces with extra doors to replicate the 25-foot store fronts, which are the standard width for older downtowns.

However, there are a couple of negatives in the retail clustering concept that should be considered. In the shopping area, the stores should all be retail on the first floor, and there should be a solid line of stores. A parking lot or non-compatible store is a killer to retail clustering, and professionals should never occupy first floor space. Studies have shown that many shoppers will stop and turn around when they come to a non-compatible store or a parking lot even though there are stores past the interruption. Office space on the ground floor of a retail area is a sure way to lose the benefit of retail clustering.

Another key to a successful retail clustering shopping area is the economic level of the customer. In other words, a resale shop next to a high-end ladies clothing store is not retail clustering even though they both may sell ladies dresses. They aren't catering to the same customer, and they lose the benefits of compatible retail clustering.

In the same way, if we were to break up the existing strip of businesses with office space or even with businesses that carried products that weren't items purchased by the targeted customers, then the entire shopping area would suffer.

Of course, you can't get the benefits of retail clustering unless you have a "cluster." That problem is another reason the retail clustering shopping experience works and it is strictly numbers. A full shopping mall is a prime example of successful retail clustering, and malls fail when they lose stores. A mall with a 20% occupancy of stores is soon to be dead mall.

Most small downtowns were originally retail clusters of stores. The downtowns that have failed across the country did so because they either violated the concept of retail clustering or had another section of town, such as a strip center or mall, do a better job of attracting customers. Actually, most downtown failures are a combination of allowing the physical store buildings to become run down, adding non-compatible stores or parking lots and a mall or strip center with a better retail cluster in which to shop opening up.

As we progressed in our attempt to create a good retail cluster in downtown El Dorado, our properties on the east and south sides of the courthouse square didn't resemble a retail cluster. We began to remodel the buildings, and recruited new retail businesses, and slowly began to build a retail cluster. There were a couple of stores that didn't fit the mix, and we didn't renew those leases. As the process of developing a good cluster continued, eight restaurants opened in the downtown and became a critical part of the mix because they have the same customers as the other retail stores.

Then we brought in a retail development expert to give us some advice about how to make our retail cluster a shopping destination. His assessment was blunt and to the point.

"You need more stores."

That stuck with us and when we visited our daughter in Santa Fe, New Mexico we looked at a former department store, which had had been remodeled to where it had a public walkway through the center of the store and instead of one store it was six small shops. That was a "lightbulb flash."

We returned home and started working on the empty El Dorado House Department Store building, and a block away on the old Woolsworth store building. The result was 10 new small stores, and finally we had our retail cluster.

Richard Mason is an author and speaker. He can be reached at [email protected].

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