When consumers hear the word “retail,” they typically think of online shopping. Yet brick-and-mortar stores still thrive today. It’s true that most of these businesses also maintain a website, but the in-person shopping experience has something that can’t be replicated.
According to several studies, in-store purchases aren’t going away, and online and in-store retail are coexisting. The preparation for opening a retail business is essential if you’re considering it. The following are some tips we learned from industry experts on how to open a retail store.
Develop a business plan and an idea
A business plan and an idea are necessary before you can open a retail store. Identify the type of store you want to open before starting anything else. Answer these questions:
- Which products will your business sell?
- Are you targeting a particular group of customers?
- Are there any prices that your business plans to set?
- Do you know who your local and industry competitors are?
- Your team will be made up of whom?
Although dozens of other questions must be answered, opening a retail store is no different than any other business. Determine your target audience and what you want to sell. Retail stores must meet the needs of customers.
Funding and marketing ideas are also important considerations. Will you have to take out business loans? Is it going to be possible for you to attract investors? Which channels will you use for marketing? Do you need special people to work on social media marketing? Where do your customers go to buy online?
Business plans should include marketing and funding. To obtain funding, you should research business loans and how to attract investors. In order to market your products online, you need to understand online marketing channels.
Ensure that you take into account all your costs. Determine the fixed and variable costs that may affect your business. Sometimes, a potentially successful idea is forgotten because hundreds of thousands of dollars are involved. Your research may indicate that starting a brick-and-mortar store is too costly for your budget, and, instead, you should start an online business before you save up and open a small physical store.
Considering inventory costs and other business items may also lead to new ideas. The more you plan for your retail business, the more likely you will be to succeed when your store opens for business. The system you will need to process credit card transactions will include a point-of-sale system. The right accounting software will also be important.
Name your retail store
You should also take the time to find a good business name as part of creating a business plan. The following factors should be taken into account when creating a good business name.
- Customer Meaning – Your brand should have some meaning for your customers. You will want a brand name that is recognizable for customers, even if its meaning changes over time.
- Simplicity – Select names that are relatively short and easy to pronounce. There are a number of major brands that are simple to pronounce, such as Apple, Google, Facebook, and Nike. Unless your brand is a mouthful, you probably shouldn’t brand it.
- Make sure your name is unique. Don’t choose a similar name to your competitors. Your logo should be original and authentic. Make up your own names without taking inspiration from other brands.
In opening a retail store, your business name shouldn’t be the focus, but you do want to at least think about it before you take the plunge.
Learn the basics of the law
In order to cover your legal basics, you’ll need to choose a business structure, adhere to any regulations, and obtain the proper licenses and permits.
Deborah Sweeney, CEO of MyCorporation, said, “If you plan on opening a retail store, you will need a few common business licenses and permits in order to remain in compliance.” They include:
- You will need a basic business operation license so that you can operate your business within a city, county, or state where you do business in.
- Getting an employer identification number (EIN) will allow you to hire employees for your storefront and collect payroll taxes.
- The license of a seller. Your retail storefront’s items will determine how much you’ll need. It’s recommended that you check with your state’s government office before applying.”
Legal structures are selected similarly to other business structures. In contrast, being a sole proprietor can be risky for retailers. It is best to take on a business structure that does not place full responsibility on the individual owner should the business fail.
Often, retailers form limited liability companies (LLCs) or corporations. The use of either of those options helps to limit personal liability.
Locate the right place
Your first priority should be finding the best retail space for your brick-and-mortar business.
It is crucial to select a prime retail space for your business. Although you may be tempted to choose a cheap location and use your marketing efforts to generate steady sales, sometimes you need to locate your business in a busy area. Downtown locations might be more costly than options further from town, but they might bring in thousands of more customers each year.
If a retailer is not a ‘destination retailer,’ start-ups should be wary of trying to save money on rent,” says Bethany Babcock, founder of Foresite Commercial Real Estate. Clients can be deterred from booking appointments because of poor access or awkward positioning in the center. Most retailers put the price [of real estate] at the bottom of their list of considerations given the highly psychological nature of the retail real estate industry.”
When choosing a location, consider where your customers spend their time. A downtown location might be more expensive if your customers primarily live outside your town and will draw fewer customers. Choose a location where your target audience lives or works and spends its time. This tip may seem simple, but businesses often focus on finding a facility they think is fantastic instead of narrowing down their target market.
Alternatively, you may have a location with extra space for storing inventory. Your business may require more space if you expect to have a lot of inventory because you offer a lot of items at affordable prices. The inventory of some stores may not require a lot of space since they sell a few high-end items. When choosing a location, keep inventory in mind.
Provide a personalized experience
When it comes to retail, finding success often comes down to providing something that competitors don’t. Frequently, this occurs through personalization. Retailers find success by letting customers try their products. It’s easy to get personalized experiences at brick-and-mortar retailers, but you don’t find them at online retailers. Samples at food stores and dressing rooms at clothing stores are two examples. As online shopping becomes more convenient, physical stores must find ways to keep their customers interested. Providing a great in-store experience and personalizing the shopping process are key factors in attracting customers in the long run.
“I think an entrepreneur should ask himself or herself the following question: Can I provide a new experience to the customer?” said Marco Castelán, co-founder of The Navio Group. There is only one way to differentiate yourself from the competition – by creating an unforgettable experience for the customer. When you do that, you are creating value that cannot be replicated.”
Your customer should always be your priority when determining the location and size of your shop. Discover a location where you can deliver a unique experience to your customers and fit the model of your business. Your in-store decision-making should emphasize customer experience.
Establish relationships with vendors
The importance of developing relationships with vendors grows when a retail location is opened. Small business owners face many challenges, which is why it’s important to consistently satisfy their customers. Having strong relationships with vendors is one of the best ways for retailers to prevent potential problems.
The sooner you can establish relationships with vendors, the better. Using overseas vendors may prove challenging.
According to Lasso, global supply chains are changing rapidly. Trade uncertainty makes it hard to develop global relationships that will provide you with quality goods and services. Make sure you have support if you plan to source your products outside the U.S. You should partner with experts in sourcing, logistics, customs, and taxes as a part of your operations planning.”
Examine marketing options
An important part of building a successful retail store is marketing. Consider these steps if you own an online retail business and are interested in expanding to a physical store experiment Pop-up shops are available. For a short period of time, these shops operate in temporary locations. You might set up a pop-up shop at a one-day downtown event just for the duration of the event.
Pop-up shops are an opportunity for your business to move around or offer a physical location to attract new customers. You can use pop-up shops to test whether your online retail shop is appropriate for brick-and-mortar stores.
You can still run pop-up shops even if you don’t own an online store. In addition to your brick-and-mortar location, you may open a pop-up shop periodically to broaden your customer base.
Occasionally opening a shop in a new town 20 to 30 minutes from where you live may attract customers there. Those who love your products may decide to drive 20 to 30 minutes to visit you, or they might buy online from you. A pop-up shop is an effective way to build buzz around your business.
You can also offer discounts in-store or through social media. Sales are a great way to attract customers to your store. During a holiday weekend, you could increase foot traffic in your store by offering 30% off select items. Depending on the marketing opportunity, you might be able to get creative. In an effort to attract more customers, you could offer your products at a 10% discount for three days between Dec. 20 and 24
Additionally, you may be able to sell holiday items at a discount from Dec. 26 to early January to attract customers looking to buy items well beforehand.
Be creative no matter what marketing and sales tactics you use. Utilize creative marketing ideas to reach out to your customers. Managing a retail business requires quality marketing campaigns throughout the year. Would you like to market your store using direct mail? Visit our small business guide to direct mail.]
Organize a grand opening
You should go big for your grand opening if you’re opening a retail store. It doesn’t necessarily mean you need to spend a lot on your grand opening, but you should make it a memorable one. Reach out to local media outlets to let them know when your store will open so that they can provide coverage free of charge. Describe your store’s significance to the local community and how it fits into the local economy. Whenever you pitch to journalists, remember to follow proper etiquette.
Ahead of your grand opening, ensure your business’s opening is promoted through social media and other marketing channels. Be sure to get people excited about your business early. To get people’s attention, you want to start off strong and make the first few days count. For that, you need a successful grand opening.
The grand opening doesn’t have to be extravagant to be successful, but it should be viewed as something to be taken seriously by the local community. Consider the timing as well. In the afternoon of a Tuesday, opening a store would probably not make sense, but opening the following Saturday could be a great idea.
It doesn’t make or break your business, but it should excite your customers.
Your first step toward opening a retail store should be to narrow down your target market. As soon as you decide where you’re going to sell and what you’ll sell, look for a location and check off the legal requirements. Upon locating a location and fulfilling all legal and financial obligations, examine marketing channels that might work for your business. Your retail operation will be open for business after the grand opening.