The 21st Century has been a tough time for retail. What with the global financial crisis, the phenomenal rise in e-commerce and of course, the Covid pandemic, providing serious challenges to it.
However, at a time when many major retailers have streamlined the number of shops they run, there are still plenty of opportunities to launch a successful outlet.
Indeed, according to the Australian Retailers Association, 59% of shoppers prefer in-store shopping to online. Predominantly for the face-to-face customer service they receive and the chance to physically examine products themselves.
Another bonus for retailers is that people spend more money in a shop than they do online.
Against this backdrop, the desire to open a new retail shop might be strong. But you’ll need to ascertain if it is viable.
With that in mind, here are ten things to consider when starting a brick-and-mortar store. These factors should help you decide if it is the right move.
1. What will I sell?
The first thing you will need to do is decide what you want to sell.
The marketplace in terms of brick-and-mortar and online stores is massive. So, there are lots of things you can sell.
If you already have an idea of what you want to sell from a personal passion that is great. If not, then you should consider various factors such as what customer pain points you might be able to solve.
You should also evaluate if there is a hobby your products could cater to. Or a trend you can jump on board early too.
To do this you will need to do some thorough research. Surveying people in the street, checking out online forums and scouring business reviews will provide you with plenty of data to make your decision.
2. Manufacturers and Suppliers
Once you have settled upon what you want to sell, you will need to work out where you can source them.
In this respect manufacturers and suppliers are critical to the success of your business because they need to be able to provide you with the products you require when you need them.
Working with a poor or unreliable manufacturer can also seriously damage your business in terms of inadequate sales revenue, excessive costs, unimpressed customers, and lower margins.
Before embarking upon a business relationship with them, it is crucial you research the company and their products thoroughly and negotiate operational terms that work for you.
3. Who are my customers
When finalising what you want to sell, you will need to pay attention to who your customers will be.
This is crucial because if you know exactly who you are going to sell to, it becomes easier to devise a strategy to sell to them.
In this respect, your customers should be the key consideration in every marketing decision your business makes.
To work out your customer base you should create a customer profile or persona. This defines who your ideal customer is. It will also help you understand their buying motivations, patterns, how they shop is it through mobile or visiting stores? or do they prefer visiting social media before going to an actual store? It’s important to know your customers and how to target them so the most common and effective way is using social media since most customers have smartphones and buying is now convenient for them. Statistics show that mobile purchases make up half of overall eCommerce sales every year so it’s wise to think of strategies to target your mobile customers. Click here for more information about mobile eCommerce statistics and how it will affect your business.
4. Location & Demographics
When it comes to setting up a store, its location is critical.
When considering location, there are several factors you need to analyse. These include how much foot traffic there is, what public transport serves the area and whether parking is easily available.
You should also consider how many competitors or related stores are in the immediate vicinity. As well as how much your rent will be. Give thought to whether your store is in a tourist area or a residential shopping centre too.
Finally, try to establish how many shops have opened and closed on the street in the last 12 months. This will give you a good indication of how successful it has been as a commercial centre.
5. What kind of lease
Unless you intend to buy the property outright where your shop will be based, you will need to sign a lease with the landlord.
Before you do this, it is important to contact a real estate agent to ascertain if the rent you will have to pay is fair market value.
Also, seek proper legal advice from your lawyer on its finer details. It is critical as they will work in your best interest, to negotiate a lease that clearly outlines what you and the landlord are responsible for in terms of obligations to the property.
Before signing the lease, make sure you are happy with its length.
It may involve a balancing act because you will want the security of knowing you will be there for a specific period. However, you also don’t want to be committed to paying long-term rent for a failing business.
6. How will you fit out your store
With the lease signed, you will need to think about how you will fit out your store.
If you have taken the time to create a customer profile or persona, this will help you develop a space that will appeal to their senses.
For instance, if your customers are 18-30 years old, you might fit out your store with funky shelving, bright colours, and loud music.
When it comes to shop fitting, there are several layouts you can choose from, all of which maximise sales potential, enhance your products and make the act of browsing much easier for your customers.
7. What type of payments would you accept?
Once you have settled upon how your store will look you will need to determine how customers can pay for the products you sell.
Will you be purely a cash business? Or will you accept other payments like Eftpos and credit cards?
When it comes to paying for their purchases, most customers like choice and convenience.
If you are not familiar with the process for accepting electronic payments, you can find out more about eftpos, surcharging and integrated payments here.
8. What competition do you have?
Whatever you decide to sell, you will have competition as someone else will offer comparable products.
It is worth fully understanding the strengths and weaknesses of your customers as you can build your business offering around them.
For instance, if a rival has received several negative online reviews about their service, then to gain a competitive advantage, this should be an area you focus on becoming renowned for.
Likewise, you can gauge their prices from their website, as well as which products they sell the most, according to reviews and their best sellers list.
It is important not to get overawed or concerned with competition. Especially if it is close to your store, as sometimes that helps to create the market. It can even reduce advertising costs, as you can benefit from residual foot traffic from campaigns your competitors run.
9. How will you promote your new store?
Before you launch your store, you will have to promote it to potential customers.
This process should start long before you open your doors. So, it is worth writing a detailed and well-considered plan of action.
This plan should include specific activities you will do to promote your business – for instance, social media campaigns, advertising, PR, direct mail, and email marketing.
When devising this strategy, it is important to think of what your unique selling point will be and what budget you have available.
10. Are you ready?
Lastly, before opening your brick-and-mortar store, you will have to ask yourself, honestly, if you are ready to do so.
Running a store comes with a lot of responsibility and takes up a significant amount of your time.
It is not a 9 to 5 job. In fact as a business owner, you are rarely off the clock.
It also comes with a lot of stress. Sometimes a lack of sleep and even a reduction in your family and social life.
All of these must be considered and managed if you decide to set up your own brick-and-mortar store.