It is often said that “Retail business is one of the easiest businesses until you have to make money.” While there may be some truth to this, it is NOT the complete truth. There’s still a lot of money to be made in the retail business even after the COVID-19 pandemic, even if you are NOT a big chain.
Sam Walton became the richest man in America by starting a retail business. Walmart became the biggest retailer in America by starting in a small town in Arkansas.
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What is a Retail Business?
Retail in simple terms is buying in wholesale at a low price and selling at your store at a higher price. It is as simple as buying at a shirt for $8 and selling it at $ 10.
Your local convenience store that sells all kinds of items from toothbrushes to cigarettes is a retail business. Your specialty store where you go to buy your designer clothes is a retail business.
How to Start a Successful Retail Business
What do you need to do to start and run a successful retail business?
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1. You’ve got to love people.
Retail is all about selling, and selling is all about people. It’s a really dynamic environment where you are meeting new people every day. If you like people, you will definitely love and enjoy being in the retail business.
2. Choose a Niche.
I am NOT a big fan of everything under one roof. I prefer niches. And with good reason. If you plan on getting into the clothing business, for example, there are so many options to choose from, women’s clothing, men’s clothing, formal wear, casual wear, party wear, lingerie, swim wear, etc. Specialization is key in the retail business.
If, for example, you choose a niche like women’s fashion, you can narrow that down to women’s lingerie. This will position your store as the “GO TO” store for that particular niche. The only important thing to keep in mind when choosing a retail niche is that there needs to be a big enough market for that niche.
The success of your retail business depends a lot on the business location. There have been stores that may have done well in skanky locations, but those stores are rare exceptions more than the rule.
Choose a high traffic location, it could be a high traffic mall or a high traffic main street. The most important considerations when choosing a location for your retail store is visibility, traffic, and neighborhood. The neighborhood where you set up your store has to be in an area where your target market frequently shops.
4. Inventory Management
Retail is a very capital-intensive business and to be successful, you will need to manage your inventory very well. Inventory is like cash sitting on your shelves – if you don’t sell fast, you’ll likely run into problems since the business can’t support expenses like rent. Again, without the profits, you won’t have cash to restock your inventory and mesmerize your customers with new items all the time. This is why many retailers run promotional sales so often to get rid of their old inventory and prepare for the next season.
5. Sales and Marketing
Sales and marketing is important in every business, and retail is no different. You will need to promote your store and create effective promotion programs on a regular basis.
Besides this, you will need to hire and train good quality sales people who can connect with your customers easily. People buy from stores where their favorite people work.
These are just some of the things to look for when starting a retail business. Some of the other factors that you may have to look at are, your cost structure – it is important to choose a niche where you can get high profit margins and it is important that you keep your costs under control.