The advent of the Internet created a wealth of opportunities for small businesses. Gone were the days where having an idea required peddling door to door or setting up at a weekend craft market. Now, with a website and an e-commerce platform, a small business could do just that – be in business without ever having to come face to face with its customers.
But what about those businesses that are inherently client facing? Those whose customers have the need and desire to try before they buy? Retailers like clothing and other apparel makers and food and beverage companies almost always face an uphill battle garnering customers that have not seen, felt or tried the products in person first. Thus, these businesses have always relied on a necessary component – brick and mortar (aka stores).
Any small business can confirm that in terms of startup costs, establishing a storefront is possibly the most expensive one. Traditionally, commercial lease periods tend to be in larger duration (10 or 5 years). At times, landlords may consider a smaller, 3 year period, but are unlikely to go below that threshold. There are build out costs (usually tens of thousands), permitting and licensing fees and a host of other debts a business will incur before they even open their doors. The biggest cost, however, is likely the rent they will pay for leasing their commercial space. On top of that, it is nearly impossible to find a space whose square footage is suitable for a small business that is just stating out on their venture. And if you do, it will cost you your entire 401K savings.
When we began our search for commercial space, we knew we wanted the space to be small. The only problem, most commercial spaces we saw in the NYC area were large (1,000+ sq. ft.) and most landlords would not devise (break it down) under that threshold. We were lucky enough at one point to find a spot in a new food market for 150 sq. ft. (score!) and when we went to see it, found out that it leased for ($3,500/month -ugh!). We continued the search and looked at everything. The smallest space we could find was about 800 sq. ft., still too large by our standards, but seemed to be the most “reasonable” in totality. We considered it heavily, but just couldn’t bring ourselves to sign.
We firmly believe that Micro-Retail is the future. Small businesses, running on razor thin margins still need to have a physical presence for their customers to come try a product. Customers still want a place to come to, sample goods, get a feel for the items and perhaps even engage with the business owners.
Micro-retail locations, those that are perhaps 200 sq. ft. or less, are the wave of the future. With businesses, shopping malls and restaurants, increasingly closing their doors (more so since COVID-19 has struck), commercial spaces will never be re-let again until something changes. Small, manageable spaces, would allow smaller businesses to take a risk, invest a smaller amount and still create a lifeblood to their customers.
For micro-retail to succeed it requires both businesses and landlords changing their mindsets. Without reframing the approach, retail as we know it will be gone forever.
#klado #thefuture #microretail