How Businesses Decide Exactly Where to Set Up Shop

Tracy Alloway (0:10)

Hello, and welcome to another episode of the Odd Lots Podcast. I'm Tracy Alloway.

Joe Weisenthal (0:15)

And I'm Joe Weisenthal.

Tracy Alloway (0:17)

Joe, do you remember our conversation with Ali Webb, the founder of Drybar?

Joe Weisenthal (0:22)

Yes, that was a really great conversation. And we talked a little bit about how she selected optimal Drybar locations, and I think both of our interests were peaked at that exact moment about the art of location selection.

Tracy Alloway (0:35)

Yeah, it was sort of a light bulb moment for me, because obviously you think, yes, if you're a business, you're putting a lot of thought into where you're opening up a store. And presumably you want to find a location with lots of traffic and try to sell as much as you possibly can. But there were all these new and intriguing factors that were sort of lurking behind the scenes. So I remember Ali was talking about how for Drybar, it's really important that you select a location where you can effectively slot into a customer's sort of day-to-day routine next to a grocery store or on the outside of a shopping mall so that there's easy access. But there were also things that I had never considered, like if you are in a shopping mall, does the shopping mall owner actually allow more than one hair salon in that space?

Joe Weisenthal (1:29)

Speaking of shopping centers, there's this location that I drive sometimes when I'm on the Long Island Expressway that I always pass. And in this one shopping center that I always see from the highway, there's a dry bar, a soul cycle, and something else. And I just imagine...

Tracy Alloway (1:47)

That's perfect.

Joe Weisenthal (1:48)

Yes, the person, most likely a woman in this case, who's like, yes, this shopping center basically knocks out three of the things that they have to get taken care of during some two-hour block of free time that they have.

Tracy Alloway (2:01)

Man, that is a lifestyle right there.

Joe Weisenthal (2:03)

Yes, it's a lifestyle location for sure.

Tracy Alloway (2:06)

But the point is, there are all these sort of like hidden things happening behind brick and mortar site location. And I feel like we should get a better sense of them, particularly in the context of what's happening with commercial real estate. We've done a couple episodes on CRE and offices, but also on shopping malls. And again, there are things in the shopping mall world that I have never considered before, such as the maintenance or how important are holiday decorations and how that can feed into values and things. So I'm curious if you're a business, if you're thinking about, well, I want to open a store in this particular strip mall because they have really nice Christmas decorations or something like that.

Joe Weisenthal (2:47)

Totally, or where in the store or where in the mall or the strip mall the store physically is, the types of turns that you have to take, could matter, all kinds of things. It's like, yes, we all know location matters, but it's like they're real professionals in true location optimization.

Tracy Alloway (3:06)

The secret art of choosing shop sites.

Joe Weisenthal (3:09)

Yeah, and so we should, I'm eager to learn more.

Tracy Alloway (3:13)

Okay, so this is actually a two-part episode. That means we have two perfect guests for you. To begin with, we're going to be speaking a bit broadly about this whole idea of site location. We are going to talk with Tom McGee. He is the CEO of something I didn't know existed, the International Council of Shopping Centers, the ICSC, which is a trade association for shops. We're going to talk to him generally about how businesses choose where to set up shop. But then we have a second guest. We're going to drill down into even more detail, Joe.

Joe Weisenthal (3:49)

That's right. After our conversation with Tom, we are speaking with Chris Hatch of Forza Development. His actual real expertise happens to be in drive through locations. And so things like Starbucks drive throughs and in and out drive throughs. And so after our sort of general conversation with Tom, we're going to be speaking with a specialist in one area about how a national chain figures out the optimal spot to put in a drive through location.

Tracy Alloway (4:17)

Here is our conversation with Tom McGee, the CEO of the International Council of Shopping Centers. Tom, what is the International Council of Shopping Centers?

Tom McGee (4:26)

Well, the International Council of Shopping Centers, which we go by the term ICSC, is a trade association. We represent about 55,000 members, landlords, owner developers, tenants, service providers, brokers, accountants, attorneys, everyone that serves the retail industry with a particular focus upon physical retail.