SETTING UP SHOP THE DO’S AND DON’TS TO HELP NEW RETAILERS SURVIVE AND SUCCEED
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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.
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Opening a shop is easy. You know your customers, you know what they want and you’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
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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” 4
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.
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