Last Updated: February 11, 2022
Starting a new business venture can be challenging, rewarding, and fulfilling at the same time. Unfortunately, many small retail businesses struggle for their first few years or even shut down entirely. Building a thriving business is certainly not easy. Sooner or later, without proper business planning and a retail business plan, chances of success are slim.
So what should be your priority when you’re thinking about how to start a retail store? Whether it’s your in-store experience or your retail POS system, here’s our list of a few of the most important to remember:
Location Is Everything!
There’s a reason that prime retail real estate is more expensive. A suitable location will typically generate more sales. However, this doesn’t mean that you need a spot on 5th Avenue, instead choose your location wisely and don’t be afraid to spend a little bit extra for a great spot. Many new retailers think a lower rent is worth minimizing overhead. Not to mention, it’s vital to manage your budget well when opening a new business, but there are certain realms where the money spent is worth it.
Traffic into your retail store will never be instantaneous. Surely, having a great location with a lot of foot traffic is key to your initial success. People who stumble upon your business will also be more likely to tell their friends and family. Plus, without foot traffic, you’ll simply be spending the money you save with your cheaper rent on more advertising and marketing. Aside from making sure you have steady foot traffic, here are a few other factors to consider with your location:
- History of the Building – What other companies have been there and how successful have they been? If five restaurants have been in and out in the last seven years, you might not want to open yours there.
- Structure and Utilities – Is the building structurally sound, or will it pose problems of running a smooth operation down the road? What would the additional costs be? Make sure you ballpark your utility bills.
- Accessibility – While lots of foot traffic is the most ideal, convenient parking or pull-off space is also crucial.
- Demographics – Who lives/works/shops in the neighborhood? Are they your target audience? You want to be in a location that is filled with potential customers.
- Competition – Check out any competing businesses in the area. Some competition isn’t necessarily bad and is often unavoidable. Equally important, you also don’t want to open a fourth party store on the block.
- Other Businesses – Those who aren’t direct competitors – are great to just have around. If you plan to have employees, look for restaurants nearby for lunch or happy hour. Gyms and daycares are also nice to have nearby.
Facilitate an Excellent Customer Shopping Experience
Brick and mortar retail is one of the most competitive fields of any type of business. No longer can a typical retail store compete with prices offered online. Despite trying as they might, eCommerce has yet to replicate the person-to-person contact that a customer gets in a brick and mortar setting. Most customers still prefer this, even if it comes at a higher price. For this reason, focus on how you can facilitate excellent customer service when opening a new retail business. Here are a few things to keep in mind:
Staff and Training
- Get an idea of your ideal staff member and write your employment postings and interview questions strategically. Look for people who are passionate and detail oriented. Your staff will be reflecting on you and your business, so make sure you like them! Just one bad customer service experience can send a client packing for good. To point out, they’ll probably tell their friends too. Positive word of mouth is the most important marketing tool for any new retail business. Also, be sure to implement a consistent and thorough training program. Be open to feedback from staff and potential changes in procedures and policy. Starting a new business means working out some kinks in the early phases. Plus, this will show the trust and appreciation of your staff.
Smart Store Layout
- Put yourself in your customers’ shoes. Walk through your layout and have some friends do so as well to get outside opinions. Then, think about what you want customers to see as they approach your storefront and as soon as they walk inside your doors. A good initial impression is crucial. Make sure the space is welcoming and optimistic. Sprinkle some of your favorite products near the front to get customers excited right off the bat.
Engage the Customer
- Add a benefit that the customer wouldn’t find elsewhere, especially online. Highlight your promotions and grand opening sales to inspire curiosity. Offer free trials, samples, or anything hands-on that is applicable to your product. People like to try things before making a purchase. In any event, you can also host a community event or party to celebrate the opening and promote your new retail store.
Carry the Right Products and Implement Great Inventory Management
Order Product Wisely
You’ll have to order a large amount of products prior to opening. For many retailers, this is the biggest investment in the entire process. Conduct extensive market research prior to your purchase. It’s unfortunately not as simple as picking products that you love. While you might have impeccable taste, everyone else doesn’t. You want to cater to a larger audience initially and narrow it down from there.
Find Reliable Suppliers
Find the right suppliers for the products you want to carry. Suppliers want you to sell the product as much as you do. They often offer bulk order discounts and will be happy to suggest related products that might be a good fit. Prior to opening, form a good relationship with your suppliers and choose people you trust and respect.
Use Advanced Inventory Management
Once the products arrive, you’ll need a proper inventory management system through your retail point of sale. The best retail POS systems come with versatile inventory software. You can easily catalog each of your products, create automated ordering, and see detailed sales reports down the road to help you better gauge a certain product’s value to your store.
Automate as Much as Possible
Not only can you automate inventory and ordering, but your POS solution can also help with payroll, scheduling, accounting, loyalty programs and much more. Try to automate as much as possible from the beginning to streamline operations once open. Be open to technology; overall, it will save you time and offer more peace of mind when you’re not physically on site.
See Related: ABC Retail Analysis – ABC Analysis Inventory Management Software
Determine Your Pricing Strategy
Pricing products properly is a much more difficult task than it might seem. Rarely do retailers mark up each product at a consistent percentage. Rather, each must be optimized to maximize its profit potential. Some items will be marked up higher, but you plan on selling fewer of them. Others will fly off the shelves, yet provide a smaller profit with each sale. Adding a layer of promotional strategies: discounts, bundling, coupons, and other sales must be approached with caution, especially during the opening of a retail store. Pay close attention to the numbers and final bottom line to determine the best course of action going forward given these points.
See Related: Increase Retail Profits with Advanced Pricing Strategies