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Choosing for the business site

Regardless of the business type when you are planning to start, be it a retail, wholesale, manufacturing, or service establishment, site selection will play an important role in its development. Evidence of this was found in a major study conducted by General Foods. The company wanted to know why certain grocery stores achieved greater profitability than others, so it compared seemingly identical stores carrying the same merchandise and utilizing the same operating and promotional procedures. Management effectiveness was also considered.

Surprisingly, the stores that stood head and shoulders above the rest in profitability weren’t always the best managed ones. Another factor was needed to explain this discrepancy—it turned out to relate to the sites of the various stores. Because of errors in site selection, some of the stores, though well managed, could never hope to achieve the success of the stores with better locations. Such site-related liabilities as competition, declining neighborhoods, and inadequate parking space were just too much to overcome. The success of Wal-Mart can largely be attributed to the company’s recognition of the importance of site selection. Instead of locating its stores in the already overcrowded downtown areas of large American Cities, where other retailers were focusing their efforts, Wal-Mart decided to open its stores in small, rural southern and midwestern communities that had been neglected by the major retailers. In this way, Wal-Mart was able to grow virtually unnoticed without having to go head-to-head against the competition.