Why location matters, the key factors that influence it, and how e-commerce is changing where businesses operate.
A business's location has a major impact on its costs, sales, and long-term success. For physical businesses, choosing the wrong location can mean low footfall, high costs, or poor access to labour and suppliers. Even online businesses must consider where to base warehouses and headquarters.
Where the business sells to customers — high street, out-of-town retail park, shopping centre. Footfall and visibility are critical.
Where products are made — proximity to raw materials, transport links, and labour supply are the main drivers.
Where management and admin are based — often near skilled labour, good transport, and client locations.
Locating abroad can reduce costs (cheaper labour/land) or access new markets. E.g. UK brands opening in the US.
| Business Type | Location Priority | Example |
|---|---|---|
| Coffee shop | High footfall, visibility, passing trade | Starbucks in train stations and high streets |
| Factory | Near raw materials, transport links, cheap land | Steel works near ports or coal fields |
| Tech firm | Access to skilled graduates, city centre | Tech firms clustered in London or Manchester |
| Online retailer | Warehouse space, low-cost land, motorway links | Amazon fulfilment centres near motorways |
Businesses weigh up multiple factors when choosing a location. The importance of each depends on the type of business.
Is there enough local labour with the right skills? A tech firm needs graduates; a factory needs manual workers. Shortages push wages up.
High-street locations attract footfall but are expensive. Industrial estates are cheaper. Start-ups often choose low-cost areas to reduce overheads.
Retail businesses need to be near their target market. A bakery on a quiet industrial estate will lose sales compared to one on a busy high street.
Manufacturers need to minimise transport costs. Heavy raw materials make it cheaper to locate near the source — e.g. a timber yard near a forest.
Good motorway, rail, or port access speeds delivery and reduces costs. Essential for logistics and distribution businesses.
Too many rivals reduces market share. However, some businesses cluster to attract customers — e.g. car dealers on a "motor mile".
A business may move if costs are too high, they need to be closer to a new market, they've outgrown their premises, or technology makes their location less relevant. Relocation is disruptive — it can affect staff, customers, and suppliers — so benefits must outweigh costs.
The growth of e-commerce has fundamentally changed how businesses think about location. A business can now reach customers globally without a high-street presence.
Online businesses don't need expensive retail locations — they can operate from cheaper warehouses or home offices.
A business in rural Wales can sell worldwide online. Location is far less limiting than it used to be.
Fast delivery is now expected. Warehouses must still be near motorways, ports, and couriers to fulfil orders quickly.
E-commerce has reduced footfall on high streets. Many traditional retailers have had to close physical stores as a result.
| Factor | Physical Store | Online / E-commerce |
|---|---|---|
| Costs | High rent and rates | Lower — warehouse or home |
| Customer Reach | Local / regional | National / global |
| Customer Experience | Hands-on, personal service | Convenient, 24/7 |
| Footfall | Relies on passing trade | Relies on online search/ads |
| Staff | Customer-facing staff | Warehouse / IT staff |
Many businesses now combine physical and online — customers order online and collect in store (multichannel retailing). Examples: Argos, Next, John Lewis. It reduces delivery costs, drives footfall into stores, and offers the convenience of online shopping.
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