How to open retail shop
NARROW down your target market before opening a retail shop. In 2022, many consumers think about online shopping when they hear the term ‘retail’.
While smaller retailers are finding success online, there’s still a market for brick-and-mortar retail shops. Most of these businesses also maintain a web presence, but there’s something about the in-person shopping experience that can’t be replicated online.
Several studies suggest that in-shop purchases are not a thing of the past, and online and in-store retail can coexist.
If you’re interested in opening a retail business, it’s important to plan. We spoke with experts in the industry to learn more about how to open a retail shop.
Generate an idea, business plan
The first step to opening a retail shop is coming up with your idea and developing a business plan. You’ll want to start by figuring out what type of shop you want to open. You’ll want to answer each of the following questions:
What will your business sell? Who is your target customer? What type of prices will your business set?
Who are the competitors in your industry and local area?
Who will be on your team?
There are dozens of other questions that need to be answered, but opening a retail shop is like opening any other business.
It’s critical that you determine what you want to sell and who makes up your target audience. It’s important to create a retail shop that satisfies a need of your customers.
Choose name
In addition to the other basics that go with creating a business plan, take time to find a good business name. When contemplating how to create a good business name, you should consider a few factors.
Meaning – There should be some meaning to the name from the customer perspective. That meaning may be developed over time, but you’ll want a brand name that is recognisable to customers. Simplicity – Look for names that are relatively short and easy to say. Apple, Google, Facebook and Nike are all major brands that are easy to say. If your brand is a mouthful, it’s probably not the best name for branding purposes. Uniqueness – Don’t opt for a name that’s close to that of your competitors. Look for something original and authentic that encapsulates your business. Try to draw your own inspirations for names without looking at other brands. The name doesn’t determine the success of your business, so it shouldn’t be the focus when opening a retail store, but you do want to at least put some thought into naming your business entity.
Cover your legal basics
Covering your legal basics includes choosing a business structure, following any regulations and obtaining the right licenses and permits.
A basic business operation license, which allows you to operate your business anywhere.
An employer identification number (EIN), which is a federal tax ID that allows you to hire employees to work at your shopfront and ensures your business collects payroll tax.
A trading license. This depends on what kinds of items your retail shopfront sells.
When it comes to selecting a legal structure, you follow the same process as most businesses. For retailers, however, becoming a sole proprietor can be risky.
Taking on a business structure that doesn’t place liability solely on the individual owner is a good way to mitigate your risk, should the business fail.
Find right location
If you’re opening a brick-and-mortar retail business, you need to focus on finding the best retail space for your business.
Picking out a prime retail space for your business needs to be a focal point. While it can be tempting to try to pick a cheap location and hope your business generates a steady flow of customers through its marketing efforts, sometimes, there’s no substitute for being in a busy part of town. Picking a location downtown might be pricier than an option a few miles away from town, but the pricier option might bring in thousands more customers per year.
Create personalised experience
Finding success in retail often comes from adding value that competitors are not. This frequently comes in the form of personalisation. Many retail stores find success by allowing customers to try the products.
Whether it’s free samples at a food shop or dressing rooms at a clothing store, brick-and-mortar retailers can offer personalised experiences like that, while online retailers struggle to find the same level of personalization.
With the convenience of online shopping, physical stores need to offer a reason for customers to visit. Personalisation and a quality in-store experience are important ways to consistently attract customers.
Build vendor relationships
Developing relationships with vendors becomes critical when opening a retail location. Small business owners face challenges, and it’s important to consistently please customers despite those challenges.
Building strong relationships with vendors is a good way for business owners, especially retail shop owners, to prevent potential issues.
If you’re able to quickly develop relationships with vendors, it will set your business up for success. This could prove difficult if you’re using overseas vendors.
Plan for grand opening
If you’re opening a retail store, go big for the grand opening. This doesn’t necessarily mean you need to spend excessively on your grand opening, but you do want to make it an event. Reach out to local media outlets and share when your store is opening, as media coverage is a good way to get the word out about your business for free. Share a pitch with journalists as to why your store matters and how it fits into the local community. Be sure to follow proper etiquette when pitching journalists.
In addition to securing media coverage, plug your business’s grand opening through social media and other marketing channels weeks in advance.
Don’t wait until a few days before your business opens to get people excited. You want to start off strong and have a good first few days to get your business into people’s minds. That requires a successful grand opening event.