Starting a retail business autumn lores by Spring & Autumn Fair

OPEN FOR BUSINESS: THE DO’S AND DON’TS TO HELP NEW RETAILERS SURVIVE AND SUCCEED

In Partnership with:

WELCOME Welcome from Louise Young, MD of Retail, i2i Events Group

CONTENTS Why independent retailing matters

The shop of the new

Here’s the good news for start-ups

The online challenge

Selling to the world

Banking on success

How pr and social media can work for you 18 On setting up shop independently

Case study Young Ideas

Case study Aria crafts

Case study Aubeterre blue

Contacts

I2i Events Group is proud to play such an important role within the retail industry with some of the biggest retail events in the UK. Spring Fair and its sister show, Autumn Fair, are vital to the home and gift sectors of retail; Pure London, the womenswear and accessories markets; the Jewellery and Watch Show for the UK’s jewellery retailers and Glee for all those involved in the £1.7 billion garden centre sector. What we’re particularly conscious of is that across all these shows, it’s the independent retailer that represents the volume of all visitors. I’ve been involved with the retail industry across many sectors for some years now and I know just how tough it has been for independents. Not only have you had to defend your businesses from the power of the big multiple retail groups but also the effects of economic downturns. Somehow, the costs of doing business rarely go down accordingly, which has had a knock-on effect on the ability of many independents to survive.

But the UK’s retail sector is incredibly entrepreneurial and it is heartening to see so many new retailers continuing to open as well as new online retail concepts. At i2i Events Group we feel strongly that we can in some way play a proactive role in helping and supporting those budding retailers considering opening a business, or indeed those that have only just opened. Through our new Inside Retail initiative we want to provide help and support through important publications such as this, but also via our teams of market experts attached to each of our retail shows. We very much hope you find this report helpful, supportive and inspirational. Please do talk to us if you’d like more information or would like to find out more about ways in which we can support you or direct you to association partners like Bira. We look forward to seeing you at one of our shows and finding out how you’re successfully building your new retail business.

“ THE UK’S RETAIL SECTOR IS INCREDIBLY ENTREPRENEURIAL AND IT IS HEARTENING TO SEE SO MANY NEW RETAILERS CONTINUING TO OPEN AS WELL AS NEW ONLINE RETAIL CONCEPTS”

WHAT THIS REPORT WILL DO FOR YOU Total retail sales in the UK in 2014 were an incredible £333 billion. Retailing is an enormous part of the UK economy and its importance goes well beyond just the volume of money being put through tills. It employs more people in the private sector than any other, the value of goods purchased by retailers generates jobs around the world and is 5% of our Gross Domestic Product. Retailing is highly competitive and is undergoing enormous change and associated challenges. That much is undeniable. But it is also highly dynamic and responsive to consumer trends and demands. Get it right and you can build a great business. This might explain why retailing accounts for 9% of all VAT registered businesses or 192,595 companies. That translates into 281,930 shops – the majority being run as small, independent businesses. New retailers are being launched constantly and this has picked up in recent years as budding entrepreneurs spot the opportunities on high streets being vacated by many larger national chains. This report has been produced to provide invaluable help, support and inspiration for anyone thinking of launching or who has just launched a retail business. It would not have been possible without the help and partnership of a number of associations, companies and publications. In particular, the British Independent Retailers Association (Bira) which

“ THIS REPORT HAS BEEN PRODUCED TO PROVIDE INVALUABLE HELP, SUPPORT AND INSPIRATION FOR ANYONE THINKING OF LAUNCHING OR WHO HAS JUST LAUNCHED A RETAIL BUSINESS”

provides invaluable support for its members and also to anyone seeking help and information on the retail sector. Throughout the report you will be able to hear from experts on: how to make your business idea and concept robust; how to select your first store; your key considerations during the nerve-wracking early months and years; how to embrace the essential online opportunity and how to ensure that you have that vital point of difference that attracts and retains loyal customers.

PARTNERS

WHY INDEPENDENT RETAILING MATTERS

“There’s an evolutionary resilience in smaller format retail that suits our appetite for localism and convenience. If these trends are captured and enhanced huge progress is possible. We’ve recently seen a recession driven retreat from the High Street by many of the big names. Yet, what many people wouldn’t have predicted even a few years ago is that they are being replaced by independent retailers. This is great to see; it gives the variety and difference that the people who regularly shop there desire whilst enhancing the sense of community.” Mary Portas, Broadcaster, retail consultant and campaigner for the UK high street. Taken from “Why our high streets still matter” 2014

Retail Week has been covering and reporting on UK retailing for over a quarter of a century. It was launched in 1988 when the big story was the rise of what became known as the multiples – the major retail groups that were opening stores at a frantic pace. Since Retail Week launched, the number, shape and identity of many of these giant multiple groups has changed dramatically. Many of the big names have disappeared. Others have emerged. Throughout this time, the independent, small retailers have gone unnoticed. However, the focus that has belatedly fallen on our high streets, town and city centres has also meant that commentators, planners and politicians have woken up to the importance of independent retailers. They represent the entrepreneurial spirit which lies at the heart of retailing and as those that have survived begin to move into units vacated by many multiples, we should see them as offering vital lifeblood to UK retail.” Chris Brook-Carter, Editor in Chief, Retail Week

Independent retailers continue to play a vital role within the retail infrastructure across the UK. To understand more about the importance of independent retailers, we asked a selection of experts and retail editors for their views.

Running a fashion shop remains an attractive option for many budding entrepreneurs despite the obvious challenges in the current economic climate. Remember that the rate of growth for online is plateauing and more than 70% of fashion is still bought offline, that is in a physical store. The most important aspect of a fashion retailing business plan is to have a good financial footing – cash flow management is king. For established retailers too, it is essential to have an honest and transparent relationship with suppliers. It behoves all enterprises to be aware of what’s going on in the world and how a significant proportion of consumers now research the market. I am not convinced that every independent ought to sell online – in fact, many find it too much hard work for too little reward – but every progressive shop owner should have an attractive website for marketing purposes. They also ought to find someone to explain the benefits of an active social media strategy and to implement one. They must make it easy for consumers to find the shop among the competition. Eric Musgrave, Editor in Chief, Drapers

“Modern retailing is evolving rapidly right around the world. When I travel to many different markets it is incredible to see the vibrancy of retailing in Asia, the Middle East, India or Africa for example. International retailers and luxury brands are a key part of this and you increasingly see familiar names in shopping malls anywhere in the world. What fascinates me though is that what really gives character to any country are the small, independent retailers. And closer to home, here in the UK, this is also true. UK retailing is long established and mature but remains truly dynamic. Despite the pessimistic forecasts about our town centres, new ideas do still spring up. Literally. Landlords, keen to fill empty units, are happy to encourage the phenomenon of pop up shops. Artisan and craft markets are booming as consumers crave something new and different. Retailing will always remain one of the most competitive sectors but it does also mean that it responds fast to change. Independent retailers bring much needed excitement and variety because they know that to survive they have to offer something different.” Ian McGarrigle, Founder and Chairman, World Retail Congress

THE SHOP OF THE NEW Finding the right shop for your start-up business is one of the biggest decisions to get right. Property editor Mark Faithfull asks the experts for their advice.

Britain might once have been called a nation of shopkeepers but the post-2008 recession has left far too many high streets up and down the country with little more than betting outlets, charity shops and the odd tatty corner store nestled between boarded up shop-fronts. With online marketplaces and low cost websites an alternative to the big financial undertaking of opening up a first shop, it is perhaps a wonder that so many independents continue to spring up around the country. Yet even among the global powerhouses of the pure online players there is a growing interest in establishing a physical connection between the brand and the consumer and it is something that arguably only a store can provide.

Taking that first step is a major decision for any young business. Location, size, rent, neighbouring tenants, category mix and the affluence and demographics of the local catchment are all important, as are the terms of the lease and how easy it is to get out of a contract if things don’t work out. Tough times have turned many – though by no means all - landlords into more responsive and collaborative partners, while there are also some shopping centre operators and local councils which will dedicate space and resources to entrepreneurial newcomers. Add to that the huge rise in short lease properties and the choice of how to establish that first retail presence has never been greater, nor more confusing.

TOP TIP POP - UPS: A SMARTER WAY TO SET UP SHOP?

Abigail Freeman, director of projects & partnerships, We Are Pop Up

WHAT IS POP-UP AND HOW DOES IT DIFFER FROM A STALL IN A MARKET OR STAND IN A MALL? We classify pop-up space as any short-term, empty retail space. This can be anything from an empty shop on a high street, to an entire building, a gallery, a warehouse, or a more quirky space such as a boat or a disused bus depot! It’s also possible to book ‘ShopShare’ space, which is a concession space within an existing store.

WHY A POP-UP AND WHAT TIPS WOULD YOU GIVE ABOUT CHOOSING LOCATION, TENURE ETC? Think about a pop-up as an excellent way to test your business concept, build awareness of your brand and meet customers. We Are Pop Up has worked with hundreds of designers who started out over a weekend or a few days and have grown to established, successful companies. The beauty of a pop-up is that you can test different locations

TAKING THE PLUNGE WITH YOUR FIRST STORE

Martin Acton, partner, retail services team, Cushman & Wakefield

WHY THINK ABOUT A PHYSICAL STORE AND WHERE SHOULD IT BE? It makes sense to choose a first location close to the main business because that makes life easier as you will probably be spending a lot of time there in the beginning. That will probably outweigh the issues of cost. However, if your brand has a very specific proposition then you also need to be sure that the location is right for that brand placement WHAT COSTS DO FIRSTTIME RETAILERS NEED TO ACCOUNT FOR? All of a sudden you will go from having very simple costs at say a concession to paying rent, rates, service charges, electricity bills, phone bills. You will be involved in design costs and bringing in a shopfitter. There are a lot of things to consider in one go and you need the finances to cope.

Mark Faithfull, Editor, Retail Property Analyst

easily – don’t be afraid to experiment, and try something unusual or unexpected. Choose somewhere that complements your unique brand and your style. When you’re picking a space, look at what’s going on in the surrounding area – who are the neighbouring brands, is passing foot traffic the right demographic for you, does the culture fit your brand? If you’re going for a ShopShare, is there an exciting brand clash you can do that will draw attention to

AND WHAT ABOUT COVENANT ISSUES? If you have run a good wholesale

your story? Why not pop-up your floral prints in a florists or your menswear in a barber’s shop? HOW DO YOU MAKE A POP-UP WORK? People pop-up for a number of reasons, so to make a pop-up work, really think about what success looks like. Is it purely sales? Is it purely awareness of your brand? Is it educating customers about your product range? It could be any or all of these, but keep the aim in

business then you may well have strong accounts to back you up. However, it is likely that you will set up a new business to run the property operation and this may well mean the landlord asks for a guarantee or more probably a rent deposit of six months. For the retailer this means finding the deposit, then paying the quarterly rent bill up front. This can be tough if rent free periods are short in a good location. Landlords on stronger retail streets or malls may be more flexible about deposits if they like the brand or can see a good shopfit going in, as they will be more confident of being able to re-let the unit. SO WHAT DOES A PROSPECTIVE RETAILER DO FIRST? Don’t be frightened by the prospect but take advice. Get yourself a good solicitor and bring in a property agent. You will have to pay them a fee but this is an important decision and just as in many walks of life, getting good advice is extremely important.

mind. We like to encourage brands to use the ‘lean start-up methodology’ of measure, test, learn as you go along. We encourage our customers to not be afraid to experiment and take risks. Collaborate with like-minded brands to build your networks and tap into each-others’ customer base, and make use of all the incredible social media tools at your fingertips, to tell your current customers where you are, and to reach out to new ones.

HERE’S THE GOOD NEWS FOR START-UPS At the heart of any successful retailer are its customers. Retailers have to persuade them to enter their stores. It is probably one of the hardest things to achieve consistently because customers are human beings and hard to predict. To help provide some answers, we asked Martin Butler, author and lecturer, to share some of the secrets to help any aspiring retailer establish that all-important customer appeal. The future of retail is local! Not only does my global research indicate this… but Wal-Mart, the largest retailer on the planet, is on the record agreeing with it too. In fact, around the world, the biggest challenge the heavyweights are having is making their gigantic businesses genuinely relevant to local markets, local people, local feelings. That’s why convenience stores are the flavour of the month or why individual coffee shops are stirring things just the way customers like…nowadays people want to be ‘excited and delighted’ and they love it when you make it personal! So for start-ups and small businesses the time couldn’t be better. The modern customer is loving localness, loving dealing with someone they know, someone they can relate to. The big boys use algorithms, analysis and big data but it’s nowhere near the same as being served by someone who genuinely ‘cares’ ….deep down, customers don’t like being treated as one-ofthe-cloud. Winning the war for the modern customer is all about curated ranges, curated services… acknowledging that customers want authentic, not synthetic experiences.

The cookie cutter is dead - scale no longer guarantees success. It’s all about the individual. And the great news is, this all means the time has never been better to start (or reimagine) your own businesses. Big is no longer beautiful, done properly: small trumps everything. Customers want everything on their terms; it’s called ‘me-tail’ - modern businesses selling products and services for individuals, by individuals.

So here’s my ‘High Five’ for small business success: 1

CHOSEN: Understand you sell nothing that can’t be bought somewhere else. Even if it’s unique at the moment, it’ll soon be copied. So it’s not what you do, but it’s how you do it that’s the key to success. Broadly speaking, customers are looking for solutions so you must always adopt a mind-set of being in the business of being chosen. No matter how different your particular dress design is, how flavoursome your pies are or how well you cut hair – you are just one of the many ‘solutions’ customers can choose. So you must fully embrace the fact that you’ll only be chosen, or repeatedly chosen, if you make the

customers feel they are very special indeed…I call it ‘emotional edge’. As this suggests it’s something that’s emotionally based and something that will give you cut through…by being authentic as well as emotionally based it should also make it more difficult for competitors to copy!

PURPOSE: Know very clearly why your business exists. As Steve Jobs is believed to famously enjoy asking, you must be able to passionately explain to everyone and anyone ‘what wrong you’re going to right’ in this world. When you explain your purpose to customers they should be as excited as you and your teams are! And guess what, if making money is your purpose there’s very little chance your customers will be as excited as you. Profits should only ever be viewed as an outcome – making you rich is certainly not the ‘reason’ a customer will chose you. So keep it passionate, and change the world for the better by knowing exactly why you and your business exists.

HUMAN BEINGS: Hey big surprise, customers are 100 per cent human beings… so always keep it appropriate and personal. And most importantly remember, according to various stats’ women control over 85 per cent of customer spending including 60 per cent of boys’ toys and incredibly they influence 70 per cent of male fashions. It doesn’t really matter how accurate these actual figures are in your

“PROFITS SHOULD ONLY EVER BE VIEWED AS AN OUTCOME – MAKING YOU RICH IS NOT THE ‘REASON’ A CUSTOMER WILL CHOSE YOU”

Martin Butler, Author and lecturer

BOOKS: People don’t buy what you sell, they buy what you stand for…published 2005 The art of being chosen…published 2010 Towards customer obsession (working title)… in research, publishing late 2015

– and don’t be tempted to run your business for the 2 per cent of customers who’ll try to rip you off, 98 per cent won’t!

5 particular village, city or country - you get my point. When it comes to customers, women are significantly more important than the 51 per cent they represent numerically!

TRUST: Never ever, ever forget the most important point about human beings - no one is going to buy anything from anyone they don’t trust; certainly they won’t buy from them ever again if they can’t trust them. Trust is a feeling, an emotion and it has to be earned. So at all times view your business as being on the customers’ side in all its dealings. Do this and you will start to earn their respect and from this, over time, trust will develop…hey why not underpin your business with a proper ‘no quibble’ guarantee

“NO ONE IS GOING TO BUY ANYTHING FROM ANYONE THEY DON’T TRUST. TRUST IS A FEELING, AN EMOTION AND IT HAS TO BE EARNED”

EASY: And as all customers are human beings please remember …we are hard-wired to ‘love’ easy. So in every way, every day, strive to make life as easy as possible for your customers. Success is all about developing a mind-set of ‘easy everything.’ Forensically look to remove all psychological and physical barriers to purchase. When a customer wants to browse in store or online, make it easy. When they want to buy, make it really easy. When they’re ready to pay make it really, really, easy! No human being ever said, oh I wish they’d made it a bit more difficult for me! And finally where does digital fit into all this? The answer is everywhere. The world’s most successful businesses realise the digital landscape changes every time the sun rises. But digital is still only a mechanism – albeit a vital mechanism. The art is to use this wonderfully evolving science to help your business be chosen by more people, more often. Use it to recognise what a good business decision looks like, use it to acknowledge your customers are human beings not numbers. Use it to stay relentlessly relevant. But sorry, by the very nature of the beast, there’s no other advice I can give on digital that will be relevant tomorrow! So passionately go follow your dream… the time is perfect to be in the business of being chosen.

THE ONLINE CHALLENGE Just in case you didn’t know, the internet is shaking up retailing. But does it affect even your new, one-shop business. Yes, says retail expert, Martin Newman, and sets out what you need to do to ensure you win your share of business. Are you thinking of starting an independent retail business? If you are, then you also need to consider the requirement and the opportunity to have a website to support your store business. It is important to let customers choose how they shop with you, which is why it’s key to have a website as an alternative channel for customers to engage with you. It also represents an opportunity for you to extend your reach as you can potentially reach out to more customers over a broader geographical area than you can do with your local store business. WHAT’S THE CUSTOMER VALUE PROPOSITION? You might also think of this in terms of what’s your USP? What will make your retail business stand out and why will customers want to buy from you? What’s the value to them in doing so? And how will you price in relation to your competitors?

Martin Newman is founder and CEO of specialist retail consultancy Practicology. He brings years of experience as head of ecommerce for retailers such as Ted Baker. He is also currently a Non Executive Director for White Stuff and Conviviality plc.

You also have to think about what the customer convenience proposition will be. From an online perspective, you need a clear convenience proposition. What delivery and returns options will you offer? Will you charge for these or offer them free? Much will depend upon what you sell, what your average order values are and what your competitors do.

“ A WEBSITE IS AN ALTERNATIVE CHANNEL FOR YOUR CUSTOMERS TO ENGAGE WITH YOU”

“ IT’S CHEAPER TO RETAIN CUSTOMERS THAN ACQUIRE NEW ONES, YET MOST RETAILERS FOCUS ON THE LATTER” WILL YOU OFFER CLICK AND COLLECT? There are advantages to doing so. You’ll convert more customers, and you’ll be able to sell them more products when they come into your store to pick up. PRODUCT RANGE You’re only as good as the product you sell. Are there any gaps in your local retail environment that you could fill with an independent retail store? The web also provides the opportunity to offer a slightly different product range. Unlike in your store, you’re not limited by physical space therefore you can potentially offer a broader range of products online. SUPPLY CHAIN Continuity of supply is absolutely crucial. So whatever, you sell, you need to know that you can replenish stock in a timely fashion, otherwise you risk disappointing customers. TECHNOLOGY If you’re going online, you need a web platform. This is the technology that sits behind the front-end customer experience and drives the functionality of the website. When you start your retail business, you also need to think about the store. You’ll need electronic point of sale (EPOS), and when you’re planning the selection of your technology, you need to think about how all of these systems will talk to each other, as they will need to do so if you want to offer click and collect. There are potentially other systems you might need including systems to manage finance, stock, product information and content.

SITE DESIGN There is a saying that you shouldn’t get your creative (Site design) from technology companies (Who build your platform). You will need someone to design the front end of the website and build out your ecommerce proposition. You also need to ensure that your site is fully optimized for mobile devices (That includes smartphones and tablets) as that is where you will reach most of your customers moving forward. HOSTING AND DOMAIN NAME The website needs to be hosted somewhere. Your web development provider, sometimes known as a web development agency or system integrator, will be able to help with this. When you’re coming up with a name for your retail business, make sure you check the domain name availability for your website at the same time. There’s no point in coming up with a name for your store that isn’t also available for your brand online. You can acquire this from a vast number of domain name registration companies online. CONTENT AND VM You will need to produce content for your website. This is also known as visual and product merchandising. Of course, you’ll also have to produce visual merchandising, also known as point of sale material for the store. CUSTOMER ACQUISITION Customers can just walk into your physical store, but the same may not be true for your website. First of all you need to ensure that the website is search engine optimized (SEO). You will need your agency to advice you on this, but in essence the site should be populated with content and meta data that enables the search engine to crawl and index your site. This will also include relevant keywords that relate to what you sell, a good site map that can be successfully crawled by search engines, the meta tags that tell the search engine and web users what your site is about and alt tags for images that provide a brief description of the image.

THE WEB CONTENT YOU’LL REQUIRE WILL INCLUDE: • Product images You will also need to consider how else to market your website. You can promote it in the windows of your store as well as on all packaging. You will also need to promote it online through search engine marketing (SEM). This is where you pay or bid to acquire traffic when someone keys in a relevant keyword for your business such as black dress, cheap flights, gifts, washing machines etc. The other marketing opportunities include retargeting; this is where the user has been on your site, goes elsewhere but sees an advert for your business. The other key channel is affiliates. This is where other publishers send traffic to your website and get a commission on any sales made. CUSTOMER RETENTION It’s cheaper to retain customers than acquire new ones, yet most retailers focus on the later. You should think about how you can build a lasting relationship with your customers so that you enjoy multiple purchases from them over the course of the year.

• Lifestyle, or brand related images • Product descriptions • Static, customer service related content including terms and conditions, frequently asked questions etc. • You will also need to think about how the content will influence your natural search engine ranking

ORDER FULFILLMENT You need to think about how you’ll fulfill customer’s orders. To begin with, you’re likely to fulfill from store stock. But as your web business scales, you may need to think about having stock in a warehouse. You can do this with a third party logistics provider. CUSTOMER SERVICE AND CUSTOMER EXPERIENCE Some web customers will want to call you before and after making a purchase. So you need to be prepared for the potential of getting a lot more calls into your business that will take time to deal with. You can outsource this to a call centre, but this is not a profitable route to go down in the early stages. CUSTOMER FIRST: The most important thing to think about is the customer. What can you do to optimize everything you do to meet customer needs? A key element is to ensure that the mobile experience is customer centric.

Click and collect allows you to convert more customers

Finally, you need to think about how you’re going to resource all of the above. You might want to consider outsourcing elements where you lack the appropriate skills in your business such as acquisition and retention marketing.

SELLING TO THE WORLD The internet has not only revolutionised all our lives, but for small, independent retail businesses, it offers the opportunity to sell to customers, literally, around the world. Peter Fitzgerald, Country Sales Director for Google sets out some of the key building blocks for retailers to make this happen. The internet has rewritten the rules of international business, making it quicker, simpler and more economical than ever to test new markets. By 2020 the eCommerce export market for the UK’s retail, travel, content and leisure sectors is set to be worth £45bn*. Businesses ranging from bedroom startups to traditional companies to established internet players can capitalise on this burgeoning ecommerce opportunity by tackling the common challenges, using the right online tools and applying smart digital marketing techniques. ADOPT DIGITAL-FIRST MODEL To begin, adapt your business to flourish in an international context. Even if you use a multi-channel retail strategy for your operations in the UK, for example, adopt a digital-first model for new markets. With a light ecommerce presence instead of a more intensive physical one, ecommerce players can internationalise much more quickly. Internally, consider setting up an agile team dedicated to international exports. If it can operate quickly and autonomously as a separate entity, more appropriate decisions can be made for new markets so projects can evolve faster and more fluidly. TAILOR YOUR OFFER TO LOCAL CONSUMERS From here, you’ll need to research your target markets. Analyse available data to prioritise the countries where your products or services will appeal most. Several online tools are

available for exploring potential markets. For example, the Google Global Market Finder uses worldwide internet search data to show country keyword searches, estimates for bids and competition for each keyword by market and language. Once you’ve identified markets, drill down to discover your target customers’ expectations and ways to exceed them. Make sure you understand how consumers use the internet in their path to purchase. Research data from free export tools will allow you to better understand different target markets. When it comes to customers abroad, don’t rely on hunches. Instead, employ data analytics tools and analyst research to localise your offer according to market suitability and performance. This will enable you to not only alter to your site, product, marketing and pricing appropriately, but also to keep your finger on the pulse of market changes. Localising your website for different languages and currencies was once seen as a hurdle, but a range of tools now makes this far easier. For example, the UK’s largest independent online beauty retailer Beautybay.com used Google’s free translator tool to translate its website into 80 languages for overseas consumers. USE MARKETPLACES AND MOVE FAST The web empowers brands to sell direct, but many businesses are reaping benefits of using existing marketplaces such as Amazon, eBay or Alibaba. Services such as these provide access to localised marketing, supply chain and payment options that can significantly improve the uptake of

your products. And because they hold information about consumer demand and supply, marketplaces can furnish valuable advice on gaps in the market. As you seek to expand internationally, marketplaces can provide a cost-effective first step into a market, providing the opportunity to test and learn with limited investment. If or when you later develop a website, your marketplace presence will have established valuable exposure among an extensive customer base. In this fluid and lucrative landscape, it’s essential that whatever you do, you act fast. First-mover advantage matters to business success, so don’t be afraid to test your offering in a number of different markets quickly. In ecommerce the cost of entry is marginal compared to traditional bricks-and-mortar businesses.

“IN eCOMMERCE THE COST OF ENTRY IS MARGINAL COMPARED TO TRADITIONAL BRICKS-AND-MORTAR BUSINESSES”

Finally, use different digital marketing channels to target your audience. Don’t assume that if you build it people will come. Digital marketing built across search, display and video – optimised across desktop and mobile – is vital for scaling, testing and expanding globally.

*OC&C Research “International ecommerce The Future is Now”, 2014

Peter Fitzgerald, Country Sales Director for Google

BANKING ON SUCCESS A retailers’ relationship with their bank is without doubt one of the most important they have as a business. It is true whatever the size of the business. When first starting-up, the bank you choose to work with will need to be convinced of the business plan but can then provide invaluable support as Amanda Bell, Head of Business Banking at TSB explains. Ask any entrepreneur to explain where the inspiration for their business came from, and they may well describe a light-bulb moment stemming from an observation made as a customer. As consumers, we know what’s on offer in the market, and once in a while we notice something that could be done better, faster, easier, or offered in another format or at a different price-point. It is certainly true that a start-up business can sink or swim on the strength of that initial idea. Knowing how your business will stand out in a crowded retail market, and why customers will choose you over the competition, is crucial to assess the viability of your potential business. It is certainly amongst the first questions that the business banking team at TSB will ask on talking to an aspiring entrepreneur. The USP - unique selling point - you’re seeking need not revolutionise the market as sometimes a familiar service in a new location or better service, may give you the all the differentiation you need.

Having developed your idea and weighed up the likely competition, you might think that you are ready to quit the day job and commit to the venture. It’s easy to get caught up in the excitement but you also need to think about the practical side of running a new business. In this preparatory stage, it is crucial you understand what the business’s costs will be. Just as important is the timing of payments. Cash-flow insolvency, running out of money, is a frequent killer of new retail businesses, so cash is key. Those starting their own business all-too often underestimate their outgoings and can be too optimistic in assessing likely sales in the business’s infancy. Be realistic about the income and expenditure in the early life of your business. If you have previously worked for a large established business, make sure you have realistic expectations of what a much smaller business can deliver. The terms it can negotiate with suppliers, for example, will not be the same as those of a larger business. Sales do not immediately translate to cash; suppliers may not be as generous with credit and will quite possibly demand prompt or advance payment. You should also ensure your business can continue trading for a period of time in the event that income streams, however cautious your forecasts, do not materialise on cue. Be prepared in case this situation arises as if it does, you’ll need to be able to react quickly.

The first interaction the business will have with a bank is likely to be when opening a business bank account. There are a number of questions that a new business should ask before choosing a bank, and the importance of each will depend on the nature of venture. An introductory offer or period of free banking may be persuasive for a business anticipating a period of time with minimal cash coming in. The ability to bank online, to make cash deposits in branch, to provide card payment services and to access overdraft facilities are other services you will want to ask a potential bank about. Another question you should be thinking about when choosing a bank is how soon you will be able to access finance or growth capital. Once the crucial first year to 18 months of trading is behind you, you may require new funds to help you grow. More often than not a young business will seek this funding from the bank with which it already has its business bank account, and so it is sensible to think about your future credit needs upfront. However, there are other alternatives out there such as crowd funding. You may have had outside help in interrogating the business plan at an earlier stage but for many ventures, it is only when seeking new capital for growth that a detailed look at the assumptions, intentions and expectations for the business will be tested and evaluated. It is generally during this phase that a start-up business will grow its relationship with its bank. The lender’s business banking team will be useful here, as it will have previous lending experience with other businesses operating in the same space and will have seen what works in a particular location and market. Your business plan is a living document, and should never stay still. It is advisable to review the plan every six months, and challenge the assumptions built into it using the track-record gained since the last review as well as considering the ever-changing consumer trends. As your business grows, the challenges it faces will change. Frequently revisiting your plan to anticipate the early tests it will face will give your business its best chance of succeeding.

TOP TIPS FOR STARTING YOUR NEW BUSINESS: • Think about what will make your business stand out from the crowd. • Understand your costs and cash flow – both incoming and outgoing. • When choosing a bank, think about the services and support you’ll need both now and in the long term. .

“REGULARLY REVIEW YOUR BUSINESS PLAN AS NOT ONLY WILL THIS HELP YOU STAY ON TRACK, IT’S ALSO A USEFUL FOUNDATION WHEN THINKING ABOUT DEVELOPING YOUR BUSINESS”

Starting your own business is hugely exciting and with the right preparation, extremely rewarding. A little time spent on ensuring all the i’s are dotted and the t’s are crossed at the outset will pay dividends as your business grows and flourishes.

HOW PR AND SOCIAL MEDIA CAN WORK FOR YOU

Kevin Read, Executive Chairman of Bell Pottinger

For any new business, even before the digital age, spreading the word is absolutely crucial. Start-up retailers are unlikely to be blessed with large marketing budgets, but PR and social media can provide powerful tools. We asked one of the UK’s leading PR experts, Kevin Read, Executive Chairman of Bell Pottinger (Corporate, brand, digital & design) for his top tips.

LET’S GET STARTED Taking the plunge and starting a new business is never easy. Securing the finance, finding the premises, negotiating the lease and refining the product all loom large. So much so that sometimes the important tasks of getting noticed, encouraging initial trial and being recommended fall into a secondary ‘must get around to’ list. Given every new business has a unique template the ‘must get around to’ lists are always different. Different pressure points mean there is no single answer to how to ensure, you, your business and your products and services become better known, trialled and trusted. But, there are a number of core PR and social media approaches that can be adopted on a modest basis and pursued with enthusiasm and focus. You don’t need to be an award winning writer or an expert social media coder to get started. FIRST STEPS Before devising your plan of action you must be very clear about your market. You need to understand the profiles of the customers you want to appeal to, and ideally the media they consume and the social media they use. This approach

means you communicate in the right language and avoid generic messages that fail to attract interest from those you want to appeal to. When starting a business it can be easy to underestimate all the people you know and how via them you can reach out to wider network of prospects. Social network theory tells us that some people are more important than others – the so called influencers. Often it is the people with whom we have weak connections that we are most likely to do business with. This means it is vital to explore social routes to reach out to our networks, and communicating via LinkedIn, Facebook and Twitter can become very important. WEB PRESENCE Many start-up advisors would today recommend the need for a web site. They would be right but the key point is that it doesn’t need to be all singing all dancing from day one. For many small businesses – a small site – built using a simple platform with easy to edit pages will suffice. Naturally, careful attention needs to be paid to the look and feel. External design input can be very helpful. This is an area where most SMEs will need expert advice.

YOUR STORY Talking to the media, bloggers or social media contacts about your new business will be vital. But before you pick–up the phone, post an article or send a tweet you need to think very carefully about your story.

THE GOLDEN RULES: • Tailor your plan to your market • Leverage your networks

The essence of your first story will focus on why you have started your business. There are many approaches – but one of the most straightforward involves answering three central questions.

• Create a modest web presence

What problem does your business solve

• Approach local and trade media

What is your unique solution What benefits will you bring to your customers Alongside your answers you will need to decide who the face for the business is. You might consider working with a specialist to finalise your story and to package it for the media and the social media world. TRIAL Kick-starting a business will always involve trial. You need to find ways for influencers, critics and followers of fashion to try your products. The digital world is perfectly suited to devising ways to make unique start-up offers. Picking-out key individuals, including bloggers, for either free or discounted trails will be important. Sending them personalised messages via an array of social channels should be high on your ‘let’s try’ list. Securing local or trade media coverage can also provide a perfect platform for encouraging people to discover more about your business, possibly through your website where you might host a time limited offer.

• Devise stories for your business • Engineer ways to encourage trial • Monitor how it is going • Keep going

HOW TO TELL YOUR BUSINESS STORY • Work out what challenge your business addresses • Be clear about the solution your product or service provides (the point of difference)

MONITOR AND ADAPT Whatever programme you put together it is important to watch carefully reactions. If the media take your story in a certain direction seek to build on it. If one product line out performs another be prepared to adapt. Analyse your web and social media statistics regularly.

• Highlight the benefits that flow from your offer

LOOK FOR PATTERNS. Use the data to help plan future products or services. If all goes well enter an award or two.

• Devise the headline for your businesses launch

KEEP-GOING Very few brands are overnight successes. Carefully planned communications – in classic or digital form - will be a vital ingredient for your business to get noticed and be trusted. Along the way you will face criticism. But my advice is listen, learn, adapt and be persistent.

• Identify a face for the business, product or service

• Prepare content for distribution in print and digital forms • Consider working with a specialist to get your story out 19

ON SETTING UP SHOP INDEPENDENTLY John Ryan draws on his years of experience and understanding of retail to set out what he believes to be the building blocks for establishing a successful store.

Opening a shop is easy. You know your customers, you know what they want and youâ&#x20AC;&#x2122;re the person to bring the two parts of this equation together. All of this is probably the case for the great majority of wannabe independent retailers, so why do things go awry? There are any number of reasons, but from the outset the single most important element is location. Common sense perhaps, but it is surprising how frequently independent retailers overlook the basics. A familiar failing when looking at where to rent a unit is making assumptions about the local demographic. Putting cans of car engine oil on the shelves of a store in an area with very low per capita car ownership, a documented retail case, is unlikely to reap ready rewards. Equally, when it comes to fashion, towns and districts that have a more mature population are

not going to favour teenwear, for example. And don’t forget to check out the local competition. If there are three other shops like the one you are proposing, think again.

THE ESSENTIALS:

And research about an area can be as simple as having a coffee at different times of day in a local café a couple of times a week for several weeks. Do this and the chances are good that you’ll understand the shoppers in an area and whether they’ll want what you intend to offer.

LOCATION – are the ‘right’ shoppers in the area?

There is also the tension between rental cost and footfall to be considered. It’s an inconvenient truth that shops with the highest number of people passing in front of them will be the most costly from which to operate. Yet sometimes, and particularly if a retailer operates at the lower end of the price scale, it may be worth paying more in order to enjoy the shopper volume that will be required for the business to flourish. The ‘cost of doing (retail) business’ is a frequently cited factor in insolvency cases. Time and again, rents and business rates are given as the reasons for retailers going under, but sometimes the right stock is the fundamental that is missing. If sufficient numbers of the right kind of shoppers are on hand, it’s more likely that a merchandise range hasn’t been well thought through. The other element that has to be given very close attention is the size of unit. A large shop needs a certain minimum stock level if it is not to feel like a ballroom. Space in a store generally carries connotations of luxury, but too much space and it can feel as if a shop is under-stocked.

LOCATION – cost v footfall

LOCATION – can you achieve standout, or will you be one of many? SHOP SIZE – can you afford to have a meaningful offer in your chosen unit? FIT-OUT – a good idea will always trump expensive shop equipment. Think of an in-store theme and run with it. NAME YOUR SHOP - this is your brand. Your own name may not be enough...

Supposing, however, that all of the location boxes are ticked and that the stock can be afforded, what else is vital? The answer is ‘fit-out’. Just buying a few fixtures and some second-hand mannequins may seem like the right thing, but unless all of the parts equate to a themed whole, then this is a dog that won’t bark. And sometimes rough and ready, when set against carefully crafted stock can make for an interesting juxtaposition. There’s more to store design and layout than just ensuring everything has a place – shoppers need to feel a sense of difference and that they are welcome – and don’t forget that lighting can be the difference between very good and less so. Finally, time spent thinking about what your new venture might be called is essential. The name above a shop door is part of your brand and if this isn’t instantly recognisable, retail oblivion may await.

John Ryan, Stores Editor, Retail Week

I learnt very quickly that you are at the sharp end because it’s your own money. You have to make all the decisions that matter.

“Young Ideas was a long-established womenswear shop which I had known for a long time. The owner had been running it since the late 60’s so it wasn’t as if I was starting up a business from scratch. It had a small but loyal customer base and great staff. But it had run out of steam and it wasn’t winning new, younger customers to replace the older ones. For me though, it definitely felt like starting a completely new business because I had come from the food industry which although it meant I was dealing with retailers all the time and understood the importance of new product, it is very different from running a small business.

I bought Young Ideas in 2008. Unfortunately, the recession began at the end of that year! Like all retailers at that time, business just melted away. Customers couldn’t or wouldn’t spend. As I look back I do think that it forced us to look even harder at the business and to understand it better. It meant we had to work very, very hard but the business today is very different and much stronger. The key lesson is that you have to completely immerse yourself in the business to be able to understand it. This is absolutely essential for a fashion business such as this which depends on forward ordering. I needed to be involved in everything for at least 18 months so that I could understand what customers wanted, how they were buying and who they were. It is absolutely essential to know your customers if you are going to survive as an independent retailer. The recession also brought with it opportunities. In 2011, we opened in Derby city centre in a new

CASE STUDY

YOUNG IDEAS Anne Wright was a latecomer to retailing having spent nearly 25 years in the food industry. Fashion was always one of her passions though and when the opportunity came along to buy an existing business in her home town, she decided to take the plunge. It proved to be tough but the business came through and is now winning awards for top independent premium and womenswear retailer. Here Anne talks about the lessons others can learn as they set up a retail business.

“ I THINK ABOUT THE DIFFERENT GROUPS OF CUSTOMERS WE HAVE AND TRY TO CATEGORISE THEM WHICH MAKES ME FOCUS MY BUYING” 22

ANNE’S KEY LESSONS:

store. It was a good location, with a low overhead and we were beginning to feel confident about the brand portfolio. This was definitely when I felt I was starting up a business because this was a new store for Young Ideas in a different town. Our next big move was forced on us when we tried and failed buy the freehold for the original shop in Ashbourne. We knew the lease was near the end of its life when we bought the business in 2008. When the landlord wouldn’t negotiate we then started looking at other options. The big leap of faith was when my husband and I decided that the empty but iconic coaching inn at the heart of Ashbourne offered a great opportunity to refurbish and redevelop. Young Ideas relocated in 2013 to a bigger shop and we have been redeveloping the site in different phases. We added menswear to our portfolio and we now have smaller units in the courtyard and we will be adding a restaurant in time. The business is now doing very well, has tripled since 2008 and it has been great to win Drapers and Pure awards as recognition for all the hard work by everyone in the business.”

KNOW YOUR CUSTOMERS. Capture data on your customers all the time. When I bought the business, we had around 500 names of customers but the list hadn’t been refreshed for some time. Everyone at Young Ideas knows that they have to add new customers to our mailing lists. We now have over 7,000 names and many of them are regular customers. IMMERSE YOURSELF IN THE BUSINESS. If you are responsible for the buying, then this is even more essential. It is the only way you get to understand who you are buying for. YOU HAVE TO TAKE ONLINE SERIOUSLY. Your customers may not always buy from your site, but they will go to it for information and to see what products are new in store. BUY FOR YOUR CUSTOMERS AND NOT YOURSELF. I think about the different groups of customers we have and try to categorise them which makes me focus my buying. INVEST IN A GOOD RETAIL MANAGEMENT SYSTEM. It is essential to know what you have in stock and what you have sold. Cash flow and understanding cash flow is probably the biggest single lesson that every small retailer has to learn. CREATE EXCITEMENT We have always run events to get closer to our customers. Running events such as fashion shows is a big investment but was a powerful way of getting customers into the shop.

CASE STUDY

ARIA CRAFTS Aria Crafts expanded from a local hand crafts and toys supplier to focus on household products from ethically-sourced Balinese suppliers. This product category growth was driven by demand and the company now services its customers from market stalls, via the internet and, unexpectedly, has developed a niche market in the USA.

Aria Crafts was founded in 1989 with the intention to supply traditional toys and local hand-made crafts from Wales. The company’s customers soon indicated that they would like other unique and unusual products and as a result the range was expanded to include crafts from all over the world. Concentrating on providing ethically-sourced products that range from Bali including hand crafted soaps to candles, aromatherapy oils and traditional children’s toys, the company says that due to growing demand it decided to provide a website where these products can be ordered. And while Aria Crafts may have started small, the company’s aim is to become a major supplier of ethical and unusual gifts at reasonable prices to suit everyone’s pocket and to deliver with the utmost expediency.

The company then chose to take a physical presence in order to put its product ranges directly in front of its audience and this has grown, through market stalls on the south coast of England. “Aria Crafts was formed in June 2014 when we spotted a gap in the product range available at Wimborne Indoor Market, namely hand-crafted soaps, candles and aromatherapy,” says Aria Crafts managing director Chris Kettle. “We initially started with one table and we are now trading on ten stalls, all contained under one canopy.” The company also trades on the internet via its website www.ariacrafts.com The company is now about top open its second outlet at The Emporium in Christchurch specialising in Asian crafts, incense and aromatherapy.

CHRIS’S KEY LESSONS: FINDING SUPPLIERS As a ‘market trader’ one of our biggest problems was finding suppliers who were happy to supply us since we were not a traditional bricks and mortar retailer. With perseverance we did eventually manage to source some of the best suppliers by providing pictures of our stands and showing our marketing skills for their products. PRODUCT CHOICE One of the realities most retailers come to face at some point is the fact that some products that you personally like may not be what your customer wants (who is always right!)

“ PRODUCTS THAT YOU LIKE MAY NOT BE WHAT YOUR CUSTOMER WANTS” MOVING STOCK ON When we find a certain line does not sell, we get rid of it. Full shelves of non-selling product is futile, selling space is valuable. Once you find your product mix always make sure you have enough stock (not excessive) to cover demand. FINANCING THE BUSINESS Finally do not overextend yourself financially. There are always hidden costs. Start small, reinvest, grow the business and profit will look after itself.

CASE STUDY

AUBETERRE BLUE Founded early 2014, and named after the founders’ favourite French town - where both sets of founding partners were married - Aubeterre Blue was created with a vision to provide everything for successful home entertaining from a perfectly laid table, a well-dressed room or a garden party “We have chosen a carefully considered range of products to suit all your entertaining needs, ensuring you are able to turn the simplest of occasions into a memorable magical moment,” says the company of its offer. “We are fortunate that our two founders have solid experience in creating and establishing websites in a variety of industries,” says partner Piers Johnson. “So we were very much aligned with our vision of ‘Bringing the Magic into Entertaining’ and how to best achieve it.” He recalls: “First we set out our wish list of criteria for what we wanted from our website. Then looked for an existing platform provider that best met this. We chose Big Commerce. We called in favours and help from our networks to create our brand identity and actually put the website together. “The big challenges were making the right choices with third party providers, such as payment processing systems, banking partners and then managing the set up processes for each. We had to change our payment processing partners just before launch due to misinterpretation of service and processes. In addition, setting up all the product lines in the back end was another mammoth job to complete.”

PIERS’S KEY LESSONS: PLAN AND ANALYSE Plan and analyse everything before you even start. Then create a clear project plan with roles and responsibilities. WORK WITH PARTNERS Wherever possible work with partners and experts, calling in favours and advice, as going it alone will be a daunting experience.

The fact that Aubeterre Blue is named after the location where the founding partners got married stresses the personal nature of start-up companies. But as Piers Johnson explains, the ambitions go well beyond British borders.

will need to seek investment. We have a clear understanding of where we want to be and the step changes that will deliver this. We’re looking at marketing, infrastructure, product suppliers, international expansion and production.” He also stresses the importance of cash flow in these early days. “We are always honest and upfront with new and existing suppliers”

GET EXPERTISE Also, join the FSB – Their affiliate programme of partners ensured we saved a lot of money on fees and charges which would have otherwise put a big dent in our start up finances. CASH FLOW IS KING Managing this is key. We are lucky to have some really supportive suppliers with whom we have a range of agreements to help us during our start-up phase.

Johnson says “We will look at organic growth during our start-up phase but ultimately we know we

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