How can you ensure accessibility while keeping rental costs reasonable? Creating a destination location may be the solution, plus more expert tips.
Sites for success: choose the right location for your business
When the owners of JustKidding wanted to expand their business, they knew they needed to move the baby store to a new location.
Despite being located in an 8,600-square-foot warehouse in the heart of Dubai, it was not enough to satisfy the company's ambitious growth plans.
JustKidding had set up shop in Al Quoz - the industrial centre of Dubai and a location that required its average 30 customers a day to have a map to find it.
"It was enough to survive, but we needed to move to expand," says Annemarie Retera, a mother of two from the Netherlands, who launched JustKidding with her Dutch husband, Ben Boenk, and fellow parents Patrick and Sencha de Groot, from Holland and Korea respectively, in 2004. "So as soon as we had the opportunity to move, we did.
"We picked Al Quoz because we thought it was different from being in a mall. We wanted the warehouse look and feel because it was also something we had back home in Holland, where you have warehouses in business areas being rebuilt as stores - and besides that we needed a lot of space."
The JustKidding team opened their Al Quoz store in 2006, selling everything from high chairs, to strollers, maternity wear and accessories and featuring 20 individually designed nurseries.
"It was more successful than we could have ever envisioned because it became a shopping destination in its own right," says Mrs Retera. "There were no cafes in the area, so people only came to shop, which means that although footfall was not that high at the time, everybody bought.
"But we knew we needed to move to get more traffic because nobody passed by the store and thought, 'That's nice, let me have a look'. It was hard being in a position without a visible landmark, but it, of course, also has to do with your financing."
JustKidding's dilemma is a perfect example of how important location is for a new start-up, particularly in the UAE, where the nation's premier cities, Dubai and Abu Dhabi, expand and change on a daily basis.
Get the location right and a business can capitalise on its site; get it wrong and the decision may not only lose customers, but also the business as well. But for companies starting out, the emphasis is often more on keeping the budget down rather than splashing out on a premier position.
"It's location, location, location because where a business positions itself can make or break a business, especially in retail," says Vikas Arora, the senior commercial consultant for the estate agent Better Homes. "Any new business needs visibility combined with accessibility. So if a retail store or an art gallery stuck in the middle of an industrial zone, like Al Quoz, moves to a prime location, such as Umm Suqeim, it can make a huge difference to their revenue. They may see their rent double, so it's a big financial commitment, but one that invariably pays off."
This was a move taken by the JustKidding team, who picked a prime spot near Safa Park on the side of Sheikh Zayed Road, the main artery through Dubai. And with its proximity to several primary schools and nurseries, most of the passing traffic would be the brand's target market - mothers on their way to school to either drop off or pick up their children.
Their launch plan was scuppered, however, when the new building was not ready by January and with the Al Quoz rental contract up, the company needed to find a stop gap to house the store. They settled on a space in Dubai's Gold and Diamond, next to More Cafe - another popular spot for the store's target clientele.
"It was a temporary solution and despite being a third of the size of the Al Quoz store, there was an immediate difference in sales as our footfall more than doubled. That did not transfer into one-on-one sales, but it had an impact," Mrs Retera says.
"We were never intending to open two stores, but when the Al Safa store opened on May 12, we decided to keep both open as footfall has also doubled there. We will see what happens from here, but the difference in the number of customers from both locations has already been significant."
The JustKidding team based their relocation decision on being closer to their clientele, something location expert Mr Arora says is among the top 10 considerations any business should give when choosing the right spot to position their business.
"A business that chooses to set up their restaurant in the Karama area of Dubai is catering to a low- to middle-class segment with the demographics of what a Karama location represents, which is a South Asian and Filipino population," Mr Arora says. "A high-end footwear retailer or nursery in Umm Suqeim, on the other hand, would cater their quality and pricing to a more high-end clientele of Emiratis and expatriates."
This was something taken into account by Yunib Siddiqui, the owner and chief executive of Jones the Grocer, a luxury delicatessen and cafe. The store recently opened its fourth UAE store in a prime location in Al Manara, on Sheikh Zayed Road, in a glass unit built especially for the store and located near to the brand's upmarket clientele.
"It was a prominent location and I did some market research in the area, walking and driving around to speak to people living in the villas nearby. We saw some more construction coming up around us and with the access to Sheikh Zayed Road, it all started to look like a very good site," says Mr Siddiqui.
What made the location even more attractive was that, unlike most commercial spaces that are rented out as a shell, which means the tenant is responsible for the financial cost of fitting out the site to their specifications, the landlord wanted to incorporate the Jones the Grocer concept into the development process from the outset.
"The landlord wanted us as the anchor tenant, so it was built to accommodate our basic requirements from scratch. We were able to talk about the type of glass on the exterior; the flooring, access and parking. It was all done from an early planning stage before it was even a hole in the ground. And it's had an effect because before we even opened, we had tonnes of enquiries and people walking in and asking if we were open yet."
Mr Siddiqui already has experience of setting up stores in the UAE. His first opened in the Al Mamoura district of Abu Dhabi in 2009, his second in Al Raha Gardens and his third in Khalidiya earlier this year.
While the first store caters to a business community and the second to a residential area, Mr Siddiqui says his least successful store has been in Khalidiya.
"The Khalidiya site is the trickiest one - the problem there is that it's a bit of a construction zone around it, so we had to take a long-term view on that site. There are four or five towers coming in, which will be great in the future, but it doesn't make it very accessible now. The site is not performing in terms of expectations."
What is clear from both JustKidding and Jones the Grocer's stories is that positioning on Sheikh Zayed Road, the main road through Dubai, was a significant and lucrative step.
The road literally cuts through the heart of the city, offering offices and retailers the opportunity to put prominent signage up to advertise their presence. But getting a location right first time is hard, particularly in a nation that has witnessed such enormous expansion over the past 10 years.
With dozens of new residential communities and commercial hubs emerging in Dubai and Abu Dhabi, a business can pick a prominent location and find that five years down the line the city has shifted. This forces companies to think ahead - particularly as the two cities appear to be developing towards each other.
Over the past 10 years, Dubai has seen a whole host of communities - residential and commercial - emerging, including Media City, Internet City and the Marina. Similarly, Abu Dhabi has progressed towards Dubai with developments such as Yas Island, Al Reef Villas and Khalifa City, which is why it makes sense for new businesses to locate themselves in properties that give them easy access to both markets.
This is the scenario for Adventure HQ - a 30,000 sq ft outdoor adventure superstore launched by the Sharaf Group last month in the Times Square Center on Sheikh Zayed Road.
"The geographic location is fantastic because it's got the local Emirati contingent living in Jumeirah, high-net-worth western expats in Jumeirah plus the upwardly mobile western expats in the Marina and Old Town area, which are all just 10 minutes from Times Square," says Sam Whittam, the founder and general manager. "And we will attract a lot of people from Abu Dhabi because it's easy to take Exit 42 off Sheikh Zayed Road and pull straight into the centre."
Adventure HQ has already transformed Times Square - also owned by the Sharaf Group - knocking out 10 fashion retailers to accommodate the new venture and creating a climbing wall and high-wire adventure trail to help attract visitors to the store and the mall. And the choice of location obviously works. In the first week of business, there was a 30 per cent increase in traffic to the mall and the electronics retailer Sharaf DG experienced a 25 per cent increase in footfall.
"It means that people are not only coming to see us, but more are coming also to the mall itself," Mr Whittam says. "Times Square has a lot of parking, which, for a destination store like ours, with bulky goods, makes it very easy for people to come in, shop and get out. If we were in Dubai Mall or Mall of the Emirates, sure we'd get more footfall, but they would not specifically be our target market. You'd get people wandering in and not buying anything, so we may not be able to give that same level of service that we offer here."
And Mr Whittam believes it's all about getting it right the first time.
"We could have done a concept like this in a shed out the back of Al Quoz and had a big open ceiling, but it wouldn't have had the polish that we have here because it's a lovely centre. And we picked this location for good business reasons - to create a destination centre."
This philosophy is certainly something shared by JustKidding's Mrs Retera, who hopes to achieve the same success for the company's first Abu Dhabi store - set to open in 2012.
"Location is very important to Abu Dhabi because I know from people living there that Abu Dhabi people don't like to drive too far, so it needs to be an easily accessible location. We haven't found the right spot yet, but we want to get it right first time. We have to move faster now."
Vikas Arora, a senior commercial consultant for Better Homes, identifies the key factors businesses need to consider when finding a suitable site for their company.
1. Legal status Your licence will decide early on where you can locate your business. Quite simply, you can either be in a free zone or you can be outside a free zone
2. Budget You can either afford your dream location or you can't, so your budget will determine both the location and the quality of the building
3. Size How big you want your office or retail space also determines your budget and location and companies need to factor in their future expansion plans to ensure they do not have to make a costly move to bigger premises within two to three years
4. Visibility Having a prominent presence in your chosen location defines who you are and the product line you are offering to your clientele
5. Accessibility Make sure you have easy access to a major road - something that is necessary for your clients, vendors and your staff
6. Facilities Ideally, you need adequate parking and to be located near restaurants, cafes and a grocery store to keep both your clients and your staff happy
7. Transport Proximity to the metro, other public transport and access to taxis is, again, crucial for both clients and employees
8. Stick with your speciality Establish your business in a shorter time span by setting it up in a hub specific to your product, such as a media company in Media City
9. Proximity to clients Position your business in close proximity to the people whose needs you target
10. The landlord Choose a landlord who has experience in leasing properties, understands the ongoing requirements of tenants and is flexible in the length of the leases he is willing to offer. This gives you options during time of expansion or a downturn