How to get ahead in business
Published:  18 May, 2007

Moving premises requires some serious planning. Paul Clapham offers advice on deciding a location, handling finances and attracting customers

Relocating a retail store is not a decision to be taken lightly. While non-retail businesses can resite themselves almost at will to respond to commercial prompts, retailers are subject to three magic criteria: location, location, location. And moving to a better location could mean you lose existing customers in the process of gaining new ones.

There are also changes afoot in the marketplace. Greg Shutt, associate and agency expert at the Birmingham office of national property consultants Bruton Knowles, says: "For the first time in 20 years, retailer investment in property in town centres has exceeded that in out-of-town or edge-of-town retail locations, due to restrictive government planning policies which have virtually stopped new out-of-town developments." Consequently, high street independents face tougher competition from larger multiples.

These competitors come armed with the buying power, legal teams and property specialists of a group, making it difficult for independents to stay on the high street. It is also getting more expensive: upward-only rent reviews drive costs ever higher with so much competition. On average, a small retailer's rent now represents some 7-10 per cent of sales (compared with multiples, which average around 3 per cent).

Out-of-town and edge-of-town ≠locations are often less supportive of independent s. Typical unit sizes in modern out-of-town developments often preclude small retailers - developers prefer high profile brand names, wh ich are seen as secure tenants. Older out-of-town locations or "mall" style opportunities on supermarket sites can offer suitable units but, because of their supposedly captive audience and amenities such as parking and direct public transport, they can be expensive.

But a government-commissioned report on planning by economist Kate Barker has advised the government to drop some of the restrictive policies on out-of-town retail developments. If this happens, some balance could return to the market with more multiples pursuing more out-of-town locations, taking pressure off high street independents.

Deciding whether to move must be based on a realistic analysis of costs and locations. It will depend on whether this is a new enterprise, a downsizing or an expansion. For example, for a new enterprise without a loyal customer base a high-profile location may be important in attracting footfall, whereas a business relocating to cut costs must be realistic about moving expenses and the viability of trade in a new location, compared with the benefit of lower rent.

Consider appointing a qualified surveyor to fight your corner. You'll get an expert who knows local issues, rents and planning policy. It would cost about £5,000 on a £25,000 pa lease.

Relocating is commercially sensitive: every shopping day you are closed is trade lost, so plan carefully. The earlier you arrange the stop and start of services the better the window you can work in.

Negotiation of the lease and final completion of legal paperwork will define your timetable, but you can have suppliers on standby . Equally, source specialist services such as shop-fitting well in advance - even with a vague initial timetable. Don't forget any obligations you have on your current premises, such as dilapidations (repair of premises when you quit).

Publicise the move. Plan for changes of contact information on the web, in key directories and in local media .

If you are responsible for dilapidations, draw up or have a surveyor draw up a schedule of condition to be shared with your landlord. As well as planning the move, budget tightly , including additional costs at your new premises, allowing for some decline in trade for the first quarter. Some retailers assume more expensive premises will automatically deliver increased trade and budget accordingly. Avoid doing that: even very successful independents face some fall-off while old and new customers adjust.

What to watch out for when you're moving

Check amenities: parking, traffic restrictions, public transport, deliveries and street lighting

Neighbours: will they benefit or hinder you?

Crime: how secure are the premises, and what police initiatives are there?

Tenure of lease: how long is it, what obligations are included and what added charges are there?

Extra costs: rates, utilities, parking permits.

Thriving on a compromise

Ben and Emma Robson of the Bat & Bottle looked for - and found - a high street location which was too small to attract multiples: Oakham, a town dedicated to small independents. They accepted reduced footfall for an environment in which their efforts wouldn't come to grief against a massive competitor. Their experience is that smaller towns have pros and cons - their council's admin could be improved, but equally they can gain access to councillors and be involved in the town's development.

The out of town experience

Ted Sandbach, managing director of the Oxford Wine Company, has never regretted sit ing his business out of town . He aims to sell by the case, so extensive storage, ease of delivery and customer parking are essential. He says although customers have to make a point of visiting, it's an easy shopping experience which encourages browsing, leading to increased or repeat sales. Security is an issue, but with proper precautions and good insurance it has not been a problem.

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