Store Relocation Strategy: How Far to Move, and Why

Oct 5

5 min read

Relocating a store is a combination of a real estate decision and a customer decision. Every relocation asks your existing customers to change the behavior of how they shop. The further you move, the more you're asking. Whether that trade is worth it depends on why you're moving in the first place.

What is a store relocation strategy? A store relocation strategy is a plan for when and where to move an existing retail or restaurant location. It weighs two things: how far the new site is from the old one, which determines how much customer behavior has to change, and the reason for moving, such as poor performance or an outdated concept. The best relocations match the distance to the reason.

Distance: the three relocation buckets

You could measure a relocation in straight-line distance miles, but miles don't tell you much. What matters is how much you're asking customers to change their shopping behavior. I think of it in three buckets:

Relocation type	Where the new store goes	What you ask of customers	Customer impact
Same center	A new space in the same shopping center	Almost nothing. Same trip, same parking lot.	Most customers stay
Same retail node	A different center or corner in the same retail cluster	A small change, like a right turn instead of a left on the way home	Customers adapt
Reposition	Outside the current retail node, possibly miles away	A completely new shopping routine	Expect to lose customers, and gain new ones

Relocating within the same shopping center

This is the lowest-risk move. Your customers already come to this center to buy their goods and services, so the behavior doesn't change. They park in the same lot and make the same trip. You keep almost all of the demand you've built.

Relocating within the same retail node

A retail node is a cluster of retail activity, usually around a major intersection or corridor. Moving within the node asks a bit more. Instead of the northwest corner of the intersection, your customers now go to the southeast corner. That could be the difference between a left turn and a right turn on their way home. It asks more of them, but for most customers it isn't too much.

Repositioning outside the retail node

A reposition moves the store out of its current retail node, sometimes several miles away. Now you're asking customers to change their behavior completely, and many won't. There was a reason they shopped your existing store in the first place, often because it fit into trips they were already making. Breaking that routine can make them rethink where they buy altogether. But a reposition isn't all loss. You'll also reach new customers who never shopped the old store. If you're relocating because the store is underperforming, those new customers may be exactly what you need.

Why relocate a store?

There are two main reasons to relocate: an outdated concept or poor performance. The outdated concept is the simpler decision. Poor performance has more nuance, because the cause decides the move.

Outdated concept: let performance decide the distance

Your business changes and evolves with new people and strategies. Say you opened a store 20 years ago when your concept was 10,000 square feet and needed a drive-thru. Today your prototype is much larger and doesn't need the drive-thru. Relocating is how you bring the store up to your current concept, square footage, and operations. How far to move depends on how the store is doing today:

The store is performing well: Stay close. Strong sales prove the demand is there and customers like shopping your store. Look for a new site in the same center or the same retail node. Don't reposition and put that customer base at risk.
The store is performing poorly: a reposition may be warranted. There's less to protect, and the new concept deserves a location with real demand.

Poor performance: diagnose the cause first

Poor performance has several causes, and each one points to a different move.

Economics. The difference between sales and profitability. Sometimes customer demand and good sales are not the problem and it's possible that high rents or other costs are preventing you from being profitable. Stay close and look for cheaper space in the same center or retail node.
Poor site characteristics. The demand is there, but customers can't see or easily reach you because of poor visibility, signage, access, or parking. A better site within the same retail node may be all you need.
The retail around you has shifted. Maybe it opened in a vibrant center, but over years or decades the neighboring stores closed or moved. Retail and restaurant activity migrates, and a site that was great 20 years ago may no longer be where shoppers go. When the node itself is fading, follow the retail and move out of that node.
It's simply the wrong location. Site selection is an inexact science. Along the way in your site selection journey you're going to get a location or two flat out wrong. If customer demand just isn't there, rethink the strategy for that market. That usually means a reposition, maybe a couple of miles away.
The store is aging. The building is worn out or past the point where repairs make sense. Customers are likely to seek out newer cleaner nearby competitors. Whether to stay close or reposition depends on what else is going on (e.g., how sales are holding up and whether the node is healthy) and on where good sites are actually available.

Quick reference: reason → recommended move

Reason for relocating	What you'll usually see	Recommended move
Outdated concept, store performing well	Good sales, old format	Stay close: same center or same retail node
Outdated concept, store performing poorly	Weak sales, old format	Consider a reposition
High rent or operating costs	Good sales, poor profit	Stay close: cheaper space nearby
Poor site characteristics	Demand nearby, but low visibility or poor access	Same retail node, better site
Retail has shifted away	Neighboring stores closing or leaving the node	Reposition out of the node
Wrong location	Customer demand isn't there	Reposition and rethink the market strategy
Aging store	Worn building	Depends on the diagnosis and available sites
Operational problems	Issues that would follow the store anywhere	Don't relocate. Fix operations first

Measuring the strength of retail nodes over time (we use a Retail Gravity Index for this) shows which nodes are rising and which are fading. That's the clearest way to tell a node problem from a site problem.

Maintain a relocation priority list

Relocations shouldn't only happen in a crisis. I recommend targeting a few every year, scaled to the size of your fleet. A chain with 500 stores might target two or three a year. That steady pace keeps the fleet current instead of letting dozens of stores age out at once.

To do that, maintain a relocation priority list: a ranked list of the stores that most need to move, each with its reason and strategy. When a good site opens up or a lease comes up for renewal, you already know which stores are next. This also changes your lease renewal strategy, you wouldn't want a long-term renewal on a high priority location.

Getting help with a relocation

If you're weighing a relocation, Retail Gravity can help at each step: evaluating a specific new site with an Individual Site Package, searching a market for the best options with a Location Study, or estimating how a move affects your other stores. Contact us at support@retailgravity.com or 520-314-6094.