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Specialty Retailers/Opening a retail store near another similar store


Hi Stu,

First off all, I would like to thank-you for answering my question about two years ago. I was in a slump and was not sure what direction to head in with my retail shop. Since then I have opened a second store and I am looking at opening a third soon. Your answer helped improve my business in many ways and I am very grateful.

My question today is about our third shop. We have two in one city, but would like to take the plunge and open a store in another city. After researching what area I would like my store in (socioeconomic, customer base), and weighing up the costs of rent, shop size etc, I finally found the perfect shop. Except for one thing - there is another store within walking distance, that will be very similar to ours. Our business is a niche craft store.

At first I thought I would definitely have to continue my search, but then I got to thinking that perhaps having two of these shops within walking distance could be a good thing. People will be drawn to that suburb as there is not only one shop there, but two.

But of course maybe I am just clutching at straws! The suburb is ideal, so I don't want to give up on the idea of opening a store in that city just because someone beat me to it. Thanks very much!

Hi Michelle

Glad my earlier answers were of some assistance.

Before you decide to open close to a competitor, you must first understand more about that competitor. A detailed competitor analysis is a must.

I know of many retailers who have had success with a couple of stores and then opened one which has not worked out and ends up being propped up by the profitable stores, draining cash and resources.

Your competitor analysis must include the following:
* pricing - how do you compare
* service
* range
* points of difference and/or unique selling points
* marketing (how do they promote themselves?)
* merchandising
* store presentation (is the store well presented? are there things that need fixed - faulty lights, bad flooring, broken signage? if so, it may indicate they are stuck in their ways and not likely to cause a threat to you)

If you can demonstrate to yourself that your business is ahead on all the key areas, and you have detailed forecasts taking into account your rents etc, and fully understand your break even cost, you can then make a decision.

Is being near a competitor bad? Not for you - but certainly for them, especially if you have the better range, pricing strategy, fit out, service, etc. Just make the decision based on the facts, and if the numbers and analysis show the store will generate profits, then go for it! Just make sure you have all the information to hand - you can never have enough.


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Stu Jordan


Simply put, I help Retailers make more profit! You will NOT hear me talk about excessive stock control mechanisms, specialized POS software, or sales training. Instead, I am available to answer questions relating to retail fundamentals - the art of buying and selling - and making a healthy profit along the way. Areas of specialty include: - CASHFLOW - how to keep your business in the black (or get it out of the red!) - PRICING - strategies, margin, mark-up, wholesale to retail, etc - PRODUCTS - what to buy, what to avoid - PRESENTATION - the science of product placement! - SALES - how to grow these fast, and keep the cash register ringing - AGED STOCK - a silent profit killer! How to manage this area of your business - SUPPLIERS - leveraging these relationships so you get more from them! - MARGIN EROSION - and how to prevent it If you have any general or specialized retail issue, I am happy to help you out. Also happy to talk to manufacturer/wholesalers who are looking for advice on breaking their products into the retail market. Follow me on Twitter @retailguru, or check out my blog for other useful advice (free!)


15+ years experience in the Retail industry - unlike many experts, I have made my money from my own retail ventures, not from selling my advice! Over ten years of my retail life was as a troubleshooter - my job was to fix the messes! I have worked with a huge variety of retailers to turn their struggling businesses around, and have found there are a number of principles that apply to all types of retail businesses, from luxury boutiques through to 2nd hand stores. I own a successful retail business in New Zealand, which has recently been franchised. My success comes in retail from the same strategies I am happy to share with you. I am also the author of The Retail Prosperity System - a handbook for Retailers who want to make more money from their retail businesses. This outlines the strategies I have developed and used in retail myself.

A number of Retail Associations, including NZRA, BNI (you would be amazed how networking can improve your revenues!), EMA, New Zealand Franchise Association

Author of The Retail Prosperity System, various forums and blogs, including

Studied Law at Otago University, and let's be honest - nothing beats 15 years real experience in the retail world, including building my own successful retail chain from scratch!

Awards and Honors
Finalist - New Zealand TOP SHOP 2010.= for my own retail business.

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