Choosing the right location for your retail business

Choosing a location for your retail business can often be full of unknowns. Is opening in a shopping centre the best way to maximise your business’ potential, or is being on the ‘high street’ within a retail precinct a better way to go? You may operate a ‘destination’ type retail business and therefore do not need to pay a high rent to be in a high foot traffic location. 

We have provided some helpful factors to consider in evaluating the various options before making that next big business decision. Opening a retail premises is often a big investment in time and money and therefore, it is crucial to give the decision serious consideration before going ahead.

Shops in Shopping Centres

There are many mis-truths about operating a business within a shopping centre. Prospective retailers often shy away from shopping centres, citing that ‘the rent is too high’ or ‘fitting out a shop in a shopping centre is exorbitant’. Whilst it is true the cost of setting up a shop and the rent to be paid in a shopping centre is often more than compared to a ‘high street’ retail shop precinct; retailers in shopping centres are in effect ‘paying’ for customers to be delivered to their shop front and, are paying for the conveniences and amenities customers have come to expect in order to stay and shop for longer.

The benefits to retailers in shopping centres include constant foot traffic, carparking convenience for customers, a nicely lit environment to shop in with clean and modern conveniences like heating, cooling and parent changing rooms. Retailers are also paying for the opportunity for their retail business to be included in a diverse retail tenancy mix, where a broad range of retailers are curated by the shopping centre owners, to encourage different customers to all converge on the one location. Many shopping centre owners also engage in extensive marketing and promotional activities, to ensure customers continue to return to the shopping centre as their choice of location to shop.

One thing to be mindful of when evaluating a retail premises in a shopping centre is most landlords who own and operate shopping centres seldom offer rights to renew a lease for a further lease term after the initial lease term has expired. This means a renegotiation of the rental to be paid and the conditions of the new lease around the time the existing lease is coming up for expiry, if you would like your business to remain in that shopping centre.


Shops on the 'High Street'

Some retailers prefer to have their retail stores in ‘high street’ locations or retail precincts, and not in shopping centres. For those retailers; the benefits to them are being able closely align their brand or business to the main customer demographic they are targeting, by locating a retail shop within the primary trade area of their customer base. It is often true that the rental costs of locating a retail premises in a ‘high street’ retail precinct are comparatively cheaper than being in a shopping centre due to less lease related expenses and obligations as well as more modest sales expectations. For destination type retail businesses, where the prospective customers seek out the specific location a particular retailer, this can be a superior business strategy as your occupancy cost will typically be lower allowing you to retain more of the businesses’ earnings. These locations usually allow for the ability to negotiate further rights to renew the lease (such as a 5+5+5 years for example) which gives the business a longer timeframe to recoup the initial set up investment costs. It is also unusual for these leases to include a percentage rent clause or, for the retail business to have to report their monthly sales figures to the landlord.

Having a retail premises within an on street retail precinct also provides the opportunity for permanent marketing and advertising of the business simply from having branded signage on the external façade of the shop. There is also some flexibility to the opening and closing times of a business on a high street, which may be more beneficial to a food retailer who prefers to open in the evening and night time, or a business which only wants to operate 9am- 5pm, Monday to Friday and not on the weekends.


Choosing the right location for your retail business is never easy or straight forward. To some extent, deciding on the best location does depend if your retail business is a destination or whether it relies on a high volume of passing foot traffic in order to generate sales. The team at ALM have been involved in assisting thousands of clients Australia wide with this retail business site selection process to ensure each and every one of those businesses is given every chance of success. As the retail environment is ever changing, we believe site selection is one of the most critical decisions a business will make. Contact us today to see how we are able to help you > Contact Us.