Getting it right the first time – How to ensure retail store
success
So you have decided to make the plunge. You have decided that the corporate
world and the rat race of working for someone else have worn thin. You have
decided to go into business for yourself and open your very own retail
storefront. Congratulations, your drive and courage must be recognized. But
before you count your freedom to financial success as a given, you must realize
that in the world of small business, 4 out of 5 businesses fail. In the highly
competitive retail space, these percentages can be even higher – to ensure your
chances of success, you must plan and outline the elements of your business to
maximize your revenue opportunity.
This article is here to help you on your way. Touched upon are the three
key aspects that you must make sure you execute properly if your retail business
is going to be a great success. As in anything that is an unknown, patience and
planning are critical. As you read this article, consider your own situation and
your own business model to make sure that you are heading down a path of least
resistance. Let's get started…
Key factor #1 – Your location
Your location is by far the most crucial factor to drive your store
success. You can have the greatest selection of products, the coolest idea, the
most talented and friendly staff, but if you are not in a location that receives
a high amount of foot traffic throughout the day; your store will crash and
burn.
Look in your local newspaper for new leasing options at retail stores in
high traffic areas in town. Assess the local strip mall landscape to see the
incoming traffic within the stores. Look for patterns as it relates to the
weekend and weekdays. Assess to see if you would have any direct competitors
that would be in clear competition with you. Talk to local government employees
within the towns you are considering to see if you can obtain census data. Weigh
the benefits of opening a store in an area that has a high growing population
versus one that may have tapered off. Factor this information into your expenses
model to ultimately make your decision. WHATEVER you do, do not lease a store
just because it is in close proximity to your primary residence. This is a clear
cut recipe for disaster.
Key factor #2 – Your products and associated margins
When deciding what products to sell, a business owner needs to make some
clear cut decisions. Go down the specialty route or be a general retailer. Sell
products that are geared to consumers only, businesses, or both? Source products
domestically or within the United States ? One thing is clear when you go down
the route of purchasing products – be conservative with your inventory at first
to gauge the levels of success within your customer base.
In today's economy, with the advent of Wal-Mart and The Home Depot, a
small business may be best served opening up a niche business with a distinct
theme. By doing so, your business will more likely appeal to a core segment of
customers that will be loyal to your store and come back for subsequent
purchases. Examples of this could be a candy boutique or a high end jewelry
store that specializes in rare gems.
Be careful with product margins. In sectors like electronics, the amount
you make on a retail sale will likely only be 15% higher than what you
originally paid for the product. This percentage decreases the longer you own
the inventory. When possible, consider looking overseas for your products.
Attend trade shows and expos that are geared for your potential sector. By
sourcing in places such as China or Taiwan , your business will be able to sell
products at margins closer to 50-60%, dramatically decreasing your risk
associated with holding inventory.
Key factor #3 – Marketing and attracting new customers
Your business needs a value proposition, something that differentiates it
from everyone else and conveys your core benefits to your customers. If you are
starting a business from scratch, as opposed to buying a franchise, crafting and
refining your value proposition becomes even more important. Ask yourself one
crucial question – Why would customers want to both come to and buy from my
store? Once you have nailed that question, you have identified your value
proposition.
Now its time to market your business and get the word out to potential
customers. Creativity and a little research can go a long way in maximizing the
effectiveness your marketing dollars. Think about both traditional media and
also emerging media. Newspapers and the radio can be great forms of advertising,
but do your customers typically interact with those forms of media? Maybe your
customers are prone to using the internet and search based advertising is your
best bet. Consider creating a website and hiring a specialist to do search
engine optimization for your business. Search engine optimization, or SEO, is
the task of constructing your site and executing various elements to make your
website rank high in Google or Yahoo.
The key to maximizing your marketing investments is to track what works
best. In a retail environment, that means simply asking your customers "where
did you hear about us". By tracking this data and seeing what works and what
does not work, you can shift your spending towards the forms of media that are
best driving your store traffic.
Your retail journey awaits and is sure to be one of the greatest
adventures of your life. Follow the pointers we give above, believe in yourself
and have fun – you will be sure to reach the levels of success that you deserve…
