According to statistics, more than 70% of retail stores close before they have worked for five years, brands are rapidly entering new markets and leaving them just as quickly. What is the problem and how to open a retail store to be successful and profitable? With our expert - the leading consultant of FCG on business technologies in retail Natalya Chinenova - we will consider the main questions, the answers to which must be obtained before starting a retail project.
The idea of opening a retail store arises among many; it is hatched by wholesale trading companies and manufacturers, individual entrepreneurs and online operators, novice businessmen and owners of large non-retail companies. For the launch of a new retail project to be successful and for the store to break even later, its owner needs to have a clear business plan in his head and on paper, which should be based on the basic principles of the “supplier-retail store-retail buyer” scheme. Let us consider step by step those stages of preparatory work that must be carried out before the store opens.
Step One: STRATEGY
To develop a strategy, you must have answers to simple questions, without which a retail business cannot develop:
Your own little strategy will allow you to understand how to trade, what services to provide and who will become your customers. It should not be forgotten that the retail business is fundamentally different from the wholesale or marketing of manufactured products. For a retail store, goods are important.
Step Two: PRODUCTS
Today, when there is no shortage of goods, but buyers have certain price preferences, it's time to create a full-fledged and high-quality assortment. Of course, you can only trade one item, for example, socks, but then the assortment of goods should grow in depth. It can be socks of all colors, of different composition, for different age and gender groups and for all seasons. Product assortment is half the success. Strange as it may seem, for customers the product range is not just a collection of manufactured goods or even a designer collection. Buyers are important store in which they can purchase a full set of necessary things. If socks, then long and short, and sports, and classic - in general, are different. If this is a shoe store, then buyers would like to see related products in it: shoe care products, bags, socks, laces and other necessary accessories.
Step Three: SHOPPING AREA
It makes no sense to look for a cheaper room: save on rent, but lose in traffic. As a rule, the cheapest shopping areas are located in the most impassable and “non-selling” places. The more customers walk past the doors of your prospective store, the more likely they are to drop by and make a purchase. Even if the store is located in a small town, the likelihood that customers will walk along the main street and enter the store is much higher than the expectation of visitors and purchases on the outskirts. When choosing a trading platform, the following factors should be taken into account: the trading neighborhood, the location of the retail outlet, and the audience of customers.
Step Four: INVESTMENT
Of course, the size of the investment depends on the size of the wallet of the owner of the retail store. Nevertheless, there are several rules that must be followed in order to ensure profitability of sales:
The business is right and successful when the investment pays off over a period of one and a half to five years. The shorter the return on investment, the more successful the business and the higher the likelihood of the correctness of the chosen strategy.
Step Five: STAFF
The best seller is always the owner. Therefore, when planning to open a retail store, think about whether you need hired sellers at the first stage? If you still need it, then try to spend as much time as possible on the trading floor in order to understand what your customers want and how you work and interact with sellers. For sellers, an important stimulating factor is their salary. But, unfortunately, the seller’s salary is not directly proportional to the number of goods sold by him. When planning staffing and payroll, it is better to make the level of salaries average for the market, but tie the bonus to personal sales and KPI of each store employee.
Step Six: BUYERS
Buyers - this is the wallet that came to the store itself. In order for shoppers to like the store, they need to be interested, namely:
Actually, these six steps are the basis of the business plan of any retail store, not just a shoe store. Of course, there are many nuances, depending on the goods, the size of the retail space, the population of the city, the price positioning of the store and other features of each particular retail business. But before opening your first retail store, you need to consider and implement in your head or on paper all of the above steps, and then formulate the answers to each of the questions asked. Only when you have a clear idea and understanding of who will do what, who, how and to whom will sell your goods, the store will earn money and will soon begin to bring some income.
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