Why 20 Competitors Might Be Better Than 2

When founders run a location analysis and see 20 nearby competitors, the reaction is usually the same:

"Too crowded. Moving on."

It's the wrong conclusion. And it's costing founders some of the best locations in Malaysia.

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The Counterintuitive Truth About Competition

If 20 similar businesses are operating near your proposed location, and most of them have been there for more than a year, that's not a warning sign.

It's evidence of something far more valuable: proven demand.

Twenty businesses don't survive in the same area by accident. Customers are coming. The market is real. Someone is buying.

The question isn't "why are there so many competitors?" The question is "why are they all still alive?"

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What Location Saturation Actually Means

There's an important distinction between two types of high-competition areas.

Destination clusters are locations where high competition drives more customers to the area, not fewer. Think of a food court in a mall, a street full of bridal shops, a row of hardware stores. Customers come specifically because options exist. The competition creates the destination.

When Starbucks, ZUS, and Gong Cha all exist within 200 metres of each other, they're not fighting for a fixed pool of customers. They're collectively creating a reason to go to that area.

Oversupplied markets are different. Multiple businesses competing for a customer base that can't support them. Closures are common. The weak competitors are already exiting.

These two situations look similar in raw competitor count. They produce opposite outcomes for a new entrant.

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How To Read The Difference

The signal isn't how many competitors exist. It's the health of those competitors.

High-performing clusters have:

• Most businesses operational (few closures)
• High review counts per competitor (indicating real transaction volume)
• National or regional chains present (chains spend significant resources on site selection; their presence validates the location)
• Long tenure for established players

Oversupplied markets have:

• Multiple closed businesses, especially recent closures
• Low review counts across the board (competitors aren't generating much business)
• No anchor tenants or weak anchors
• Revolving tenants in the same units

The data for both scenarios is publicly accessible through Google Places. Closures are flagged. Review counts are visible. You can measure this before you sign.

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The Chain Validation Signal

This is one of the most underused location signals in Malaysia.

When a major chain - Starbucks, McDonald's, Maybank, Guardian, KFC is already present near your proposed location, that means a site selection team has already done significant work validating that spot.

These companies don't choose locations on instinct. They run foot traffic analysis, demographic studies, spending pattern research. They model revenue projections before committing to a lease.

When they choose a location, they're publishing a validated answer to the question you're trying to answer: does this area have sufficient demand?

You don't need to replicate their analysis. You need to notice that they've already done it.

Three national chains operating near a proposed location is a stronger signal than almost any other metric. Not because you can replicate their business, because their presence confirms the customer base exists.

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The Empty Location Trap

The opposite scenario feels safer: a location with 2 competitors, low density, "room in the market."

Sometimes this is a genuine opportunity. More often, it's a warning that competitors have already tested and left.

Low competition in a high-traffic area can indicate market gap. Low competition in a low-traffic area is usually a different story.

Before reading low competition as opportunity, ask:

• Have similar businesses operated here before and closed?
• What's generating foot traffic without generating customers for F&B or retail?
• Are the surrounding demographics a match for your product?

A location with 2 competitors in an area with low footfall and no strong anchors isn't an opportunity. The competitors are the only two businesses that have tried, and they're surviving at minimum viable levels.

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What The Data Actually Shows

When we analyse locations across Kuala Lumpur and Selangor, a consistent pattern emerges.

Areas with cluster strength scores above 60, meaning high-review competitors, chain presence, low closure rate tend to support new entrants better than "empty" locations, even when competitor count is higher.

The reason is straightforward: the customers are already there.

You're entering a proven market and competing for share, rather than entering an unproven market and hoping to create demand.

Creating demand from scratch is expensive. Competing for existing demand is a different problem entirely, and a more manageable one.

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When High Competition Actually Is A Problem

This isn't a universal argument for crowded locations.

There are scenarios where high competition is genuinely dangerous:

• When the dominant competitors are so established (1,000+ reviews each) that they've locked up customer loyalty and switching costs are high
• When margins are structurally thin and price competition has already commoditised the market
• When your differentiation is insufficient to attract customers away from entrenched players

The point isn't that competition is good. The point is that the number alone tells you almost nothing.

Two businesses in an empty area is not better than 20 businesses in a proven cluster.

What matters is whether the market works, and whether you have a credible reason customers would choose you over what already exists.

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Before You Walk Away From A Busy Location

Next time you see 20 competitors on a location analysis and feel the urge to move on, pause.

Check how many are still open. Check their review counts. Check whether any chains have chosen the same street.

You might be looking at the best location on your list.

→ Analyse competitor health and cluster strength for your location at app.zono.my