Great question!
Are you using Shopify POS as well? Any chance you’re on Shopify Plus? If you are gathering email options at the Point Of Sale, it can be a challenge to segment those customers based on which POS location they came from. Shopify just makes a customer profile without any real source information.
However, you can use predictive location segments and create a radius around each store. We work with a couple of bike/ski shops and use this tactic. Each shop will use the location segments, but then we also send out more general, non-location specific newseltters as well.
Another great tactic is to make a popup targeting people who are already on your newsletter list. This popup can ask for their zip code/location. Sometimes we ask other questions like activity interest (road bike vs mountain bike).
By using a couple of different sources, hopefully you can build out those location segments a little more!