What is Location Strategy, and Why Is It Essential for Finding the Best New Store Locations?

In today’s fiercely competitive retail landscape, where margins are tight, customer expectations are high, and the cost of getting it wrong is unthinkable, location strategy has become an indispensable tool. But what exactly is it, and why must retailers utilise it to not only survive but thrive?

At its core, location strategy—often referred to as geospatial or network strategy—is the art and science of identifying the most lucrative locations for new store openings. It’s about answering the question: "Where should we open stores that will thrive?" while factoring in a vast range of data points that go far beyond intuition or past performance. This strategic approach combines cutting-edge geospatial analysis, real-world data, and a deep understanding of customer behaviour to deliver actionable insights.

Why Does Location Strategy Matter?

In the past, retailers relied on traditional methods such as gut instinct, broad market surveys, or simple demographic reports to decide where to expand. While these methods worked to an extent, they often lacked precision. In today’s retail market, where consumers have access to more options than ever, those blunt tools no longer suffice. A poorly chosen location can drain resources, erode profitability, and create long-term damage to your brand.

Consider this: the right store location can be the difference between a store exceeding its sales targets by 20% or failing to break even. It impacts everything—from footfall and conversion rates to operational costs and customer loyalty. Location strategy ensures every new site aligns with your business objectives, customer base, and market dynamics.

The Ingredients of a Winning Location Strategy

A modern location strategy blends multiple layers of data to create a complete picture of opportunity:

• Footfall Patterns: When and how often people visit a potential location, their dwell time, and visit frequency.

• Demographics: Who those people are—age, gender, affluence, and other key traits.

• Spending Power: How much consumers in the area are spending and in what categories.

• Location Composition: The surrounding retail mix—whether it’s a value-led high street, an upmarket shopping centre, or a convenience hub.

• Competitor Landscape: Which competitors are nearby, their performance, and how they might influence your sales.

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By layering this data, retailers can identify high-potential locations with a level of certainty that was once impossible.

Why Retailers Must Use Location Strategy

Failing to employ location strategy isn’t just risky—it’s actively detrimental. In today’s data-driven world, retailers who still rely on outdated methods risk falling behind competitors who use advanced geospatial tools.

For example, one UK-based fashion retailer recently used data-led location strategy to optimise its store network. By understanding consumer behaviour, footfall patterns, and competitor positioning, they identified an untapped suburban market. That one decision led to a 35% increase in new customer acquisition, demonstrating the ROI of getting location strategy right.

In contrast, a homeware brand relied on intuition to select a prime high-street spot, only to find it was oversaturated with competitors. The result? Revenue fell 20% below forecasts, and the store was closed within two years.

Looking Ahead

As retail continues to evolve, the importance of location strategy will only grow. Consumers’ shopping habits are shifting, and the need for precise, data-led decisions has never been more urgent. Whether you’re planning your first store or your 500th, a robust location strategy isn’t optional—it’s essential.

At h3hex, we specialise in helping retailers identify high-potential locations with certainty. With decades of experience and cutting-edge tools, we ensure every site you open is a step towards long-term success. Don’t leave your growth to chance—partner with us to get it right.