Tag: retail setup

Your Quick Guide To Retail

Your Quick Guide To Retail

Some may consider the retail industry to be the toughest.  Tons of competition all vying for the sellers attention.  How do you win?  How do you survive?  Many factors are involved for a winning retail business.  If you’ve heard of the term “spinning plates”, all the “plates” need to be up and spinning simultaneously to accomplish a successful retail store.  Let’s look at several “plates” or “aspects” to retail.

Genre – A very important aspect to retail is genre.  Which genre are you getting into, sports, fashion, casual, footwear, accessories, etc.?  Once you’ve pinned down your genre, take a look at your competition within that genre.  What is the competition doing?  Who closely resembles your brand within your genre?  How geographically close is that competition?  These are all questions you are going to need to answer and be able to answer them well.  You will need to dissect and research your genre inside and out.  Do some reconnaissance work.  Visit those closely-resembled stores and take in everything they are doing.  How organized does the store look?  What kind of cash register system are they using?  Which brands do they carry?  Talk to the store employees.  See how knowledgable they are about the products they sell.

Knowledge – Another aspect to any retail store that is often overlooked is product knowledge.  I’m the type of person that will research a product to death prior to purchasing, specifically with a value of $50 or more.  I can’t tell you how many times I’ve walked into an electronics store knowing more about that product than the salesperson.  A shopper will be impressed that you know about the products you sell and will feel much more comfortable purchasing from your store than anywhere else.  There are shoppers who appreciate your wealth of product knowledge and will reward you for it.  I’ve received many compliments from shoppers that were grateful we were able to answer any questions accurately.  This is where you can win!

Product – We all know the basic idea of retail, you buy a product at a certain price, then sell at a higher price.  Sourcing your product is one of the most aspects of your business.  Typically, the best source to purchase your products from is the manufacturer.  Purchasing directly from the manufacturer will give you the best price.  Whether you are purchasing a low volume or high, always ask for discounts.  Every manufacturer wants to sell and simply by asking, they can give you discounts.  This can save you thousands of dollars a year.  I live by this motto in just about every facet of my life, “Nothing ventured, nothing gained”.  For very high volume retailers, by getting discounts on the products they sell, they can save up to millions of dollars per year.  That’s an incredible savings.  Simply done by asking.  Most manufacturers charge shipping for the goods they sell to you.  By asking for a discount, the money you save would be like getting your product shipped for free.  I can’t emphasize enough the importance of discounts when purchasing your products.  Always ask and don’t settle for no!

Inventory – Inventory is a crucial aspect of any retail biz.  How much inventory you have, what kind of inventory, and how often you order product is another crucial aspect to focus on.  The idea of retail is to have that product in your store for as little time as possible.  Order it, receive it, put it on the shelf, then sell the item.  This sequence of events is referred to as “cashflow”.  Keeping the cash flowing from start to finish is super important to keep your financials in check.  Of course you’ll need to make a profit on the item that you are selling in order to stay in business.  Some retail stores will actually offer a product at or below cost just to attract shoppers in hopes they will purchase other products, as well.  Beware of dead stock!  The last thing any retail store needs is “dead stock”.  This simply refers to any products that don’t sell well.  It’s almost impossible to avoid.  You place your stock orders with the manufacturers and you think you have selected great products to sell.  However, you learn that some products don’t sell as quick as others or simply don’t sell at all.  Every retail store experiences this.  Some are going to sell well and some are not.  Recognizing this and being active on the issue is how you fix it.  Leaving stock on the shelves unsold is money sitting there.  That stock needs to move and turn into money.  As I’ve mentioned above, it’s impossible to hit a home run with every product you stock.  If you have the ability to pick winners every single time, please move to Las Vegas for a gambling career or allow our store to hire you!

Financials – An easy-to-overlook aspect is the financials.  If you do not like to have a close relationship with your business financials and your business can afford it, please hire a professional that can.  I absolutely cannot stress enough the importance of knowing your financials.  The world is more entrepreneur-like more than ever.  Popular tv shows like “Shark Tank” or “The Profit” question business owners about their financials and some do not know their numbers!  What is your sales on a monthly, quarterly, or yearly basis?  What is your net profit on those sales?  How much does it cost to operate on a monthly basis?  Since most expenses or bills are based on monthly payments, it is important to know what your operating costs are.  Operating costs include:  rent, insurance, phone, internet, garbage (dumpster), electric, gas, payroll, etc.  Deducting your monthly gross sales from your expenses and operating expenses will reveal your net profit.  The object is to keep your net profit positive and work toward a “working capital” status.  Working capital refers to profit after all of your expenses and operating expenses have been deducted from your gross sales.  This profit can work back into the business.  It’s difficult to maintain a working capital status.

Make no mistakes about it, retail can be a tough business.  However, if you put in the time, and apply all of the aspects mentioned above, you’ve got a great shot at creating and maintaining a successful retail store!