Rising from the ashes...
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Given two brick & mortar locations, which one is better, and is it worth the extra rent/lease?
I feel like I made a break-through, and wanted to share it with you...
At any store location there will be store-front signage.
According to Signage industry, store signage is equal to 24 full-page news paper ads every year. Based on this statement, we can use newspaper calculation to compare locations!
(Incidentally, newspaper response rate is very low at 0.5% among all media response rates).
24 full-page ads in a year suggests that the subscribers see the newspaper twice a month.
As suggested, we can calculate the signage effectiveness for a given location similar to a newspaper calculation. Similar to newspaper readers, we’ll assume 10% of viewers see the ad (store signage), and see the message 24 times a year with a 0.5% response rate. We can estimate potential number of customers for a site using the following equation:
newspaper_conversion_rate = 10% * 0.5% * 24
customers_per_year = site_traffic * newspaper_conversion_rate
site_traffic - This traffic is a two week estimate; remember, we are multiplying by 24 times in a year.
In this model I've ignored the significance of location (i.e. proximity to target demographics, competition, complementary business, etc), which I will attempt to tackle in another post.
- The traffic can be the vehicle count for the nearest intersection, which can be obtained from local city engineering.
- A better option is utilizing a tool like SapStore to get foot traffic estimate
- There is also nothing wrong with doing it the old-fashion-way and sitting in front of store with a clicker (or secured mounted motion detection camera [or phone app]) to count the actual traffic.
Also, the newspaper demographics, circulation and reach is really different; so,
Signage can't be that great of estimate. Furthermore, the articles refer to billboard signs, as-appose to store-front signs.
Nevertheless, assuming all things are equal, you can quantitatively determine if one location is better than another and if the extra rent/fee is justified.