A retailer buying products or services from a manufacturer or wholesaler and selling it to consumers might seem easy enough, but it isn’t! The retail industry covers so much – everything from food to apparel and auto to home decor. With the numerous segments that make up the retail industry, it offers many opportunities for entrepreneurs, but it is also extremely competitive, making it a risky endeavor. But with a bit of smart planning, you can start a retail business that will succeed and will also stand out among the competitors in the market.
Step-by-Step Guide to Start & Expand a Retail Business
A study cited by the U.S. Business Administration finds that 70% of new businesses last at least two years, but drop to 50% by the five-year mark and 33% by the 10-year mark, with only 25% last longer than 15 years. The Dun & Bradstreet report also found that retail businesses failed at a rate of 11.2% in the United States and 13.6% globally. Often, retail business failure occurs because business owners aren’t aware of the critical steps to start one. Here are a few steps that are critical and you need to focus on while starting a retail business.
- Business Plan
One of the first things a person looking to start a business should do is to write a business plan that outlines their business objectives and how they intend to achieve them. A business plan describes all the aspects of your company, such as what you’ll sell, how you’ll run your business, and who your target market is!
An effective business plan allows you to get a full picture of your business at once, making it simple to determine what will work and what needs to be altered. You should make sure that your business plan is concise, informative, and detailed. It’s also important to remember that your business plan will always need to be revised as you go through the process of implementing new measures.
- Business Strategy
Defining a business strategy can help in outlining a company’s who, what, where, why, and how! For example, a business strategy outlines which market to focus on, how to attract customers, when to launch new products, and how to handle competitors. Retail business strategies are primarily intended to increase sales and customer satisfaction at the same time. Business strategies for retail stores are important so that they can market their goods and services and find the right set of customers.
To put it simply, Retail strategy helps in the identification of:
(1) The retailer’s target market,
(2) Their plan to fulfill the needs of that market, and
(3) how they look to establish an advantage on sustainable competitiveness.
- Finalization of Space
It is extremely important to consider your location when you open up a store. A good location means more foot traffic and regular customers. Consider your location carefully by talking with nearby businesses. Look for a Commercial space that is intended for companies to conduct business and make a profit. However, such a location can be expensive, hence consider the deposit, as well as funds you may need to improve or customize your retail space.
You should also consider if you want to rent or lease your commercial space and work with a landlord or if you want to purchase the space to be in full control. When choosing a retail location, be sure to check with your local zoning and planning department. They will let you know if there are any restrictions on construction or traffic in your area as this can create problems for your retail store.
- Organization Structure
Comprehending the retail store’s organizational structure is necessary for the retail business. Usually, retail businesses depend on a structure that focuses on three areas:
- centralized operations,
- store operations, and
- regional operations.
Centralized operations take care of responsibilities like store planning and human resources. Store operations form duties like merchandising and marketing which are executed regularly by retail stores. Regional operations are related to distribution & warehousing. Setting up this kind of organizational retail structure is useful as it confines almost all operations of a retail business.
- Recruitment Plan
To avoid high turnover rates, retailers should build a recruitment plan around common challenges, such as high volume hiring, seasonal hiring, and recruiting the right type of applicants. To address these challenges in retail recruitment, HR professionals and recruiters need to make use of modern recruiting software and apply recruitment marketing tactics to build talent pools. By harnessing the latest innovations in retail recruiting, you can recruit retail professionals more easily and faster.
- Layout Planning for Warehouse & Stores
Store/ shop layout planning is an important factor in influencing the customer experience and their purchase behavior. The way customers interact with your merchandise determines their purchase behavior. The checkout counter or other machines installed in the retail store should be arranged according to the nature or type of the operations. This helps in the smooth flow of goods and services and also makes it convenient for the customers to shop in the store. Besides this, proper space management techniques and strategic floor plans should be used including lighting, furniture, signage, display, and fixtures.
To maximize efficiency, an effective warehouse floor plan is crucial. From manufacturing and assembly to order fulfillment and shipping, a well-designed warehouse floor plan can minimize costs and maximize productivity. Maintaining the flow of goods in the warehouse is the most important factor. Before deciding how to design and layout your warehouse, consider how it will be utilized, how it will store products, and how it will flow within the production area. Additionally, take into account your business inventory management system, as your layout will affect your ability to manage inventory.
- SOPs & ERP for Retail Business
SOPs, Standard Operating Procedures, are a set of critical documents offering step-by-step instructions as to how employees within an organization or business must work about completing their tasks efficiently. A Standard Operating Procedures document guides both new and current employees on how to complete their tasks and maintain consistency and quality throughout business operations. When the expectations of the business are well documented, there is no miscommunication or confusion. Hence, SOPs are one of the most important parts of any business.
Retail ERP is a vital enterprise technology solution for companies and brands specializing in retail. It is also an essential tool for finance, accounting, retail business management, and many more industries. Because retail brands focus on selling directly to consumers, the ERP for retail business needs to include consumer-oriented functionality in addition to standard ERP features. ERP for retail helps retailers manage their businesses effectively and efficiently by providing consistent information flow. It helps in easy tracking of all business transactions. A retail ERP system allows automatic recording of transactions in a real-time environment.
- Procurement Plan
The goal of a procurement plan is to increase the efficiency, effectiveness, and transparency of the procurement process. The document specifically describes how products or services will be acquired and how vendors will be managed during the project. It includes information such as the types of contracts that will be used, the planned delivery or implementation dates for the contracted products or services, the types of metrics that will be used to evaluate the vendor’s performance, and an explanation of how the procurement process will be performed.
Creating a procurement plan helps an organization avoid surprises and last-minute considerations. The document helps leaders decide what to buy or when to buy it, and what sources to purchase from! A procurement plan also allows project planners to determine if their expectations and requirements are realistic and can be completed in the proposed project timeline. Many organizations use procurement software to automate and accelerate the procurement processes and optimize their workflow.
- VM Guidelines
A good visual merchandising strategy maximizes sales & increases walkins by strategically presenting your products in your retail space. Creating a unique image of your business becomes possible by strategically presenting your products. Having a warm, friendly, and approachable retail space will help you to stand out from your competition.
Displays can heighten the perception of your business and help you to achieve sales because they help the potential customers to build trust and confidence in your business. The way you present your products and the way you set up your window, shelf and stock displays are critical to branding your business. If customers enjoy the way your store looks and your products are displayed well, they are more likely to spend time and money at your business.
- Pre-Launch Plan
Creating excitement before the launch of your products is a key goal of the pre-launch plan. Various methods are available to create this effect, but not all can create enough buzz or create enough anticipation for your business. Hence, for your brand to attract the right audience and your products to sell well, a good pre-launch strategy is a must-have! You can avoid having to wait for years or months of zero to negative profits with a good pre-launch strategy. For instance, you can take future marketing into account while creating a pre-launch plan. Make a pre-plan for your marketing by knowing who you will reach out to, what platforms are best, and how you will utilize each one.
Having followed all of the above steps, e-retail business startups can easily launch or expand their business! Startups may also consider retail business consulting services to implement the steps outlined above and begin their business successfully.
About YRC Retail Consultants
Are you wondering how to run a retail business? At YRC (Your Retail Coach), we assist our clients in all aspects of starting and managing a retail business through our strategy-based consulting services. As a result, our retail consultants can assist you with almost everything related to retail business, be it concept, strategy operation, ecommerce or ERP implementation. To put it simply, we can assist clients with just about everything related to the retail business. Our key retail consulting services include retail store business plan evaluation, website design strategy, operations manual or SOP, marketing strategy, layout planning, Software recommendation, ecommerce consulting, project report development, process audit, etc. If you are interested in having the most profitable retail businesses or want to know more about how to develop retail business, contact our retail management consultant at YRC.