What are Business Clusters?
Business clusters can be described as a location where interconnected businesses are concentrated. For example, Saville Row in London is a street where many bespoke tailors have their businesses situated. The point of this is to create a hub where several businesses in the same field exist side by side and create an easily accessible location that potential shoppers can gravitate towards.
Other examples of business clustering in the UK include Hull which is famed for offshore wind and Dundee which is a hub for gaming innovation.
How can business clusters drive success
Business clusters drive success by providing a popular location where all shoppers know can be visited to get the quantity and quality of a specific product they want. Being part of a business cluster is in its own way an effective form of advertising that places a business in a location where it is most likely to get optimal exposure and actually make sales.
The Benefits of Business Clustering
The benefits of business clustering to small businesses today are immense and below are just a few of the more noticeable ones.
With business clustering, you can have trade channel partners located in one location. That is, a small business can be surrounded by its favourite distributors, suppliers, and manufacturers. This increases the ease of doing business and makes it easier and more cost effective for a small business to go about its daily activities.
Business clustering attracts more customers because it invites more shoppers to walkthrough and select a store of their choice among the many located in the same location. While competition can be stiff in a business clustering scenario, it still provides a great deal of opportunity for both shoppers and sellers alike.
Business clustering tends to attract more foot traffic which is often generated by the presence of neighbouring businesses. This means stores in a business cluster are more likely to have walk-ins in comparison to isolated businesses or online business.
Increased foot traffic within a business cluster will likely lead to an increase in impulse buys by walk-ins. Social media advertising and other forms of marketing can also be used to generate even more foot traffic by generating publicity about certain sale events within the hub.
Because of the synergy between establishments co-existing in a business cluster, individual firms can experience increased productivity thanks to specialised input and access to information from neighbouring companies
Because competition is often fierce within a business cluster, companies have no choice but to be constantly innovative if they are to get ahead of other companies. At times, companies engage in cooperative research and join forces to develop new and better way to appeal to customers and satisfy their needs.
New business formation
With time, innovative firms within a business cluster will develop new products to satisfy unexplored niches and thus offer more to shoppers.
As can be seen from the above, rather than fear business clusters, small businesses can take advantage of them to gain greater exposure and reach new customers. Such small businesses simply need to have a plan that will help them stand out from the crowd and win over more members of their target market.