Get to Know Your Neighbors

Ever wonder why a McDonald’s might pop up right across the street from a Burger King? While a Brooks Brothers might not want to open next door to a Jos. A. Bank Clothiers, some retailers do prefer to be near their competitors.

“Think of the auto industry,” says Olivia Duane-Adams, executive vice president of marketing for SRC, an Orange, CA-based provider of site-selection software. “If someone’s going to buy a car, he’ll go to an auto mall so that he can see all the brands in one location. Those competitors want to be near each other. Same thing with McDonald’s and Burger King. Consumers want options.”

And what if children’s clothing marketer Hanna Andersson were to find the ideal retail space next door to an archrival in an area that attracts just the kind of upscale customers Hanna Andersson seeks? Even if the competitor were in a similar market position, “it would attract me rather than push me away,” says Phil Iosca, president/CEO of the Portland, OR-based Hanna Andersson. “The theory is that more of our type of customer are coming, and our offer is strong, so we could compete effectively.”

And although The Talbots competes at least partially with such stores as Ann Taylor, Chico’s, and J. Jill, the Hingham, MA-based apparel cataloger/retailer would also find it “attractive” if either or all of these stores were its neighbors, says spokesperson Margery Myers.

“Specialty retailers are typically clustered together in malls and lifestyle centers,” Myers explains. “This increases traffic from customers who share many demographic characteristics and who tend to shop at specialty stores. And although there may be some overlap in our customer bases, we’re all a little different.”

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