The Short Version

• As costs climb and space tightens, retailers are relying on analytics to navigate a higher-stakes site selection process.
• Historical sales, demographics and third-party insights are replacing gut instinct as the foundation for location decisions.
• 1-800-Flowers.com is using legacy and e-commerce data to relaunch Harry & David and Things Remembered brick-and-mortar stores with rightsized, experiential formats.
• Aroma Joe’s is tapping Placer.ai mobile analytics to validate growth potential, avoid cannibalization and expand into new markets with confidence.
• Private equity investors in retailers are pushing for data-first rigor, making analytics central to the future of retail site selection.

Tighter Supply Is Forcing Retailers To Recalibrate How They Choose Locations

A retailer’s own historical data and input from third-party analytics providers combine to inform sophisticated decisions about site selection as retailers plow ahead on new locations in tight conditions.

Rising Costs and Limited Space Increase the Stakes

Gone are the days when Wall Street drove retailers to grow for the sake of growth. Now, the disparity between an A and C location is bigger than ever. “There’s just less room for error now,” said Holly Cohen Retail Advisory Services founder Holly Cohen. “Between rising buildout costs, rent and staffing challenges in some markets, each store really has to be terrific right out of the gate or it ends up being a drag on the whole P&L for the store portfolio.”

Additionally, competition in a supply-constrained market is adding to the pressure retailers feel to make smart decisions, and they often need to move quickly to secure available locations. “There’s almost no second-gen space, so you’re paying a premium for rent; construction costs are at an all-time high; and there’s an unknown variable of tariffs and what the impact would be on the cost of goods for various tenants,” said X Team Retail Advisors executive vice president of retailer services Owen Hutchison.

Cautious Consumers Add Another Layer of Pressure

Retailers are juggling these higher costs on one side and a potential pullback in consumer spending on the other. According to the University of Michigan’s Index of Consumer Sentiment, consumer sentiment dropped 5.3% month over month and 21.4% year over year in September. “All tenants from the fast-food space to big-box, apparel and home goods are feeling the impact,” said Hutchison. “Sales aren’t increasing at the same clip to offset where the costs are rising from a labor, buildout and rent perspective.”

E-Commerce and Legacy Data Fuel Store Revival for 1-800-Flowers.com’s Portfolio Brands

Although different categories and brands follow their own strategies, some universal themes still apply. The fundamentals of site selection include demographics, visibility, access, parking, co-tenancy and the overall economics of a deal.

Brands also are leveraging the data they’re collecting to help drive location decisions. 1-800-Flowers.com’s real estate efforts over the next few years, for example, will focus on bringing two of its e-commerce brands — Harry & David and Things Remembered — back to brick-and-mortar, according to head of real estate Dennis Marnick.

At its peak, in the early 2000s, Harry & David had about 150 retail stores. The brand shifted fully to online sales in 2020, but the company opened a Harry & David store in Huntington Station, New York, on Long Island in March and plans to open another five next year.

“We have a very loyal customer and we have an e-commerce platform that has been around since AOL, so we have a lot of data,” said Marnick. Harry & David now draws on data from online sales, as well as historical sales data from previous locations, to help identify new locations as it restarts its store strategy. “We know who our customer is, and understanding that is critical,” he said.

Harry & David also is thinking about the right size for its stores. At roughly 3,500 square feet, each will include space for events and classes like cookie decorating and flower arranging. “The experiential side of the business is important to us in driving community and making sure that we’re a part of all celebrations throughout the year,” said Marnick.

Investors Push Retailers Toward Data-First Decisions

Although site selection has long been part art and part science, retailers are leaning harder into data science to support decisionmaking, especially as private equity flows into the industry. “The private equity guys are really big on the technology piece and outside data points so you’re not relying solely on someone’s gut intuition,” said Hutchison. “These are big investments, and they want to make sure the failure rate is as small as possible.”

Aroma Joe’s Trades Gut Feel for Analytics in New Market Expansion

Reliance on data also is guiding Aroma Joe’s, which is tapping location analytics and mobile insights to identify optimal store locations. The company has 128 stores and will open five or six more this year and another 12 to 14 in 2026. Although its store base is concentrated in Maine and New Hampshire, it recently opened its first Florida location and sees growth opportunities in the Southeast and Mid-Atlantic, as well as New England.

“What I’ve been really trying to push forward in our organization is relying on datasets rather than our assumptions,” said Aroma Joe’s franchise development director Erica Tarnowski. The coffee shop is working with Placer.ai to tap into mobile data that will help it understand where people are moving throughout their days. For example, Aroma Joe’s assumed Maine and New Hampshire could accommodate another 70 locations, but Placer.ai’s white space analysis identified 40. After that, new locations would start cannibalizing existing ones.

That lesson around the chain’s home turf reinforced the value of using data to make smart decisions elsewhere. Tarnowski noted: “As we go into newer markets where we have less recognition, it’s going to be really critical to open in A-plus locations and make sure that we’re close enough so that we have critical mass in a specific area but we aren’t cannibalizing our own shops.”