If you’re thinking of starting a retail outlet or looking for better ways to run the existing one(s), you’re thinking along the right lines. This comprehensive guide to retail store management will cover everything from choosing the right location to the product assortment, right down to sales and returns.
Are you ready to explore more? Read the article in its entirety for an in-depth perspective, or use the table below to scroll to sections that are relevant to you.
Establishing A Store
Have you picked out a name for your brand yet?
If you already have an online presence, will you be using the same name for your offline stores too? From a branding viewpoint, this is a great idea because it builds recall. However, a slight wordplay can help separate your channels, and their offering, in the mind of the customer.
For example, Amazon’s cashless, employee-less stores are named AmazonGo to help differentiate from the very different business model that is the online marketplace.
In any case, registering your store’s name and applying for an Employer Identification Number (EIN) are the very first steps in making your offline retail business a legal entity. Speaking of legalities, the laws of the land differ from one state to another, and also across national borders. Here’s a handy guide we found to help you with those aspects.
1. Picking The Ideal Location
Choosing the right store location can be the difference between unprecedented success and abject failure. Bigger brands often open stores in busy locales with low footfall just to gain visibility. On the other hand, while you’re opening your first store, footfalls are everything.
This applies both to stores and experience centers- you want to choose a location where people have the inclination to shop, the time to spend in your store and the means to buy your product.
As you can imagine, this is precisely why rents for commercial establishments are so high.
While choosing your store location, there are seven aspects you need to take into consideration- the type of store you’re setting up, target demographics, employee availability in the vicinity, competition, footfall, accessibility, and lease terms. Read more about evaluating these factors here.
2. Choosing Your Product Assortment
There are a few ways to almost ensure that you’ll sell more, and picking the right product assortment is one of them. Depending on which stage of research you are currently in, you may need to start with choosing the product categories, or the products themselves.
If you are agnostic to the product itself, it may be worth choosing the product based on the location you have zeroed in on. If apparel sells well there, that’s what you should choose, or accessories to complement the apparel.
However, most retailers often have a fairly good idea of what they want to sell. In that case, you can use local trends to determine what you need to do. For example, you are an apparel retailer. From this point on, you have the option of selling apparel similar to your competitors, or radically different from them.
The choice you make depends on the kind of people who shop in that location. Usually, buyers of high-end fashion would look for quality and experience over everything else, while the casual shopper may be more willing to explore options and make impulsive purchases. Your pricing and store experience must adapt to suit these needs.
3. Selecting Suppliers
Your vendors, or suppliers, affect your sales behind the scenes. Choose a supplier who does not deliver on time, and you run out of stock more often than you’d like. Choose one who has a rigid payment policy, and you may need to keep paying in full for inventory that you haven’t even sold yet.
Most significantly, choose someone who delivers a bad product, and you are risking consumer trust for all eternity.
When choosing a supplier, here are a few things to keep in mind:
- Past reviews from other retailers
- Promised Lead Time
- Payment policy for unsold goods, and items damaged in transit
- The country of origin and import duties on the product
- The bulk price of the product as compared to other potential vendors
Always sign clear agreements with your suppliers to ensure you are protected by a legal net in case of complaints.
Using Primaseller, you can automate your purchase orders and have them sent to vendors automatically. This way, you significantly reduce the risk of running out of stock due to a delayed purchase order.
4. Designing The Store Layout
Ever walked into a store and been absolutely mesmerized by the way it looks?
A good visual appeal and intuitive layout can get more people to walk in and make a purchase. You may have noticed how a store selling glassware has its products organized all around the store and not just on a shelf. Likewise, a retailer of furniture often sorts the furniture into different ‘rooms’ to display how the product would actually look.
Even in apparel, where the norm is to hang stuff up in a row or by sizes, some amount of experimentation can go a long way. Use lights behind the product or pair together products that should be bought together. Actually, do both.
Traditionally, most stores are U-shaped, starting at the entrance and ending at the billing counter to provide the most visibility for products. If you know that customers come to your store with a specific purpose in mind, highlight that aspect first with other objects thoughtfully scattered around to encourage more buying.
5. Picking A POS Software
A good POS system is the lifeline of your retail store’s operations. Picking the right software can be the first step in creating a great checkout experience. Primaseller’s POS software is designed to work with your other sales channels as well. It can help you manage inventory better and keep track of repeat customers with a customer notes feature.
We’ve also recently launched the iPad POS solution which is now live on the App Store. Setting up an iPad POS makes for more fluid checkouts through the store, a clean system that does not occupy space and the option of sending receipts by email and reduce the use of paper.
6. Setting Up Payments
Choosing a payments solution is another aspect to consider. You don’t want to lose customers because you don’t accept certain modes of payment.
With the iPad POS, you have the option of integrating with Square for payments processing. You can also set up a traditional card reader, as well as contactless payments for your store. If you go omnichannel and offer a buy-now, pick-up-at-store facility, you need to think of online payment options as well. Read more about providing payment options here.
7. Hiring And Training Your Staff
When it comes to hiring employees, the love goes both ways. Your chances of hiring good employees are high when you know what you are offering to them, both in terms of the experience and the associated benefits. An engaged store representative is excellent at handling consumer interactions and is likely to cause you to sell more.
On the other hand, a disengaged employee who finds no joy in their work can cause fewer people to want to come and buy from you.
Sure, how the employee performs in a retail store is linked to how much they actually love selling. However, you can also contribute to their job satisfaction by ensuring that you train them well, give them facilities at work and keep informing them about new product additions well before they take place.
Here are a few things to consider while hiring your store employees. Asking for recommendations from a past employer doesn’t hurt, either.
Once they’re on board, there’s the chance that they see very few customers walk in in the first few days of opening. This can be very depressing when the job description itself is to sell more. Also, if you have linked their benefits to certain targets, they’re likely to panic about the lukewarm sales.
It is important to set the right expectations, for yourself and for them. Ensure that you visit often for pep talks, problem-solving and everything in between, at least until a steady pattern is established in your store.
Managing The Store
Now that you have the products, the store, the tech and the people to sell, it is time to turn a profit! In this section, we talk about effective marketing for your store, both passive and active, and how even the tiniest things can influence buying decisions.
We’ll also discuss expansion, both offline and online. Lastly, we’ll talk a bit about how sales and demand forecasting can help your business perform better as you grow.
1. Store Marketing Essentials
Just to get a perspective on marketing, we’d say that marketing in retail begins with the product choice, continues on to the store design and encompasses even the store experience. Wouldn’t you agree?
Advertising is all about flyers and posters and putting the word out there. Marketing, however, is about understanding your customer and communicating to them through a variety of media. The purpose of marketing is not just to sell once, but to build trust and loyalty so that the customers bring in lifetime value.
With that in mind, what aspects would store marketing involve?
- Identifying how your product impact’s your customers’ life, and communicating on those lines
- Using media that are most likely to result in store visits- hyperlocal ads work, but a great product showcased creatively on Instagram does the job too.
- Convert visits into money- a good store experience, the product that keeps its promise and a fast checkout, all help.
Suggested reading: 5 Retail Trends That Will Make A Splash In 2018
Today, you have the option of giving out coupons as rewards for online contests and getting people to redeem them in store. Always think through the small things- make the incentive big enough for people to want to visit.
Always operate under the assumption that your product, or a substitute, can be bought easily. What can you offer to a customer to shop from you?
It comes down to the details again- The World Of M&Ms isn’t selling anything that isn’t available at the supermarket, but they sort their M&M’s into colours, have in-store activities for purchase discounts and the general atmosphere of an amusement park. The World Of M&Ms isn’t a retail store as much as it is an advertising avenue.
2. Employee Incentives
Happy retail stores are made up of happy employees. A rewards program for your employees needs to be engaging, worth looking forward to and relatively easy to attain. No one’s going to be trying for aspirational goals straight away- instead, like levels in a game, you need to keep offering up goals that are harder over time, but not impossible.
For an employee, being able to buy from the store they sell at can be a huge incentive. In fact, this is a benefit you can offer to celebrate their special occasions, especially if your product is not in the category of goods that are bought every day.
The advantage of this approach is that it lets the employee experience the product for themselves, and thus make them more likely to advocate its benefits to the end customer.
Another, very important perk that you can offer in retail is extra, unplanned time off. The cost of doing so for your business will certainly be higher, but not as high as the cost of rehiring and training new employees every time the old ones leave. Stores are very demanding places to work it and the weekly day off may just not cut it, especially for people who have pressing commitments that need to be met.
Think about the nature of your business and the specific perks that can make working in your store that much more fun and meaningful.
3. Stock Management
Store inventory is far more susceptible to losses because of the sheer amount of moving around that happens on a shop floor. It is important that you have a dedicated area at the back of the store to mark and store your inventory. To manage your stock, don’t depend on spreadsheets that need to be updated manually.
Instead, invest in a good inventory management system to dynamically keep track of inventory by integrating with the POS system.
For retail inventory categories that keep changing completely with the season (such as apparel), find ways to dispose of last season’s stock well before the new stock comes in. Have a plan in place for restocking day, particularly if you choose not to shut shop while you stock up.
Ensure that in any store, no more than two people get to control stock movement and corrections. With a system in place, you can see who has made manual changes to the stock levels. Let your staff know that these numbers are being tracked, and that they are not to share their account login and password with other staff members.
4. Stock Audits And Preventing Stock Loss
A regular stock audit can help you reconcile book and actual stock values. Why is this important?
Sometimes, as the stock moves around from the back of the store to the front, or when a customer reports a damage which isn’t recorded in the system, your actual inventory levels begin to differ from the book numbers.
Regularly counting your stock and reconciling these numbers with the book numbers can help you
- write off losses
- find the source of stock loss (poor management, or something more serious like theft)
- make your staff aware of what practices are in place to protect the stock
- find ways to reduce losses due to theft, damages and other occurrences in your store
Theft is a major issue in retail inventory resulting in about 20% off all losses in a given time period. By following best practices like a stock audit, you can reduce these losses to a good extent. Read more about how you can conduct a stock audit in a physical location.
5. Visual Merchandising And Storefront Design
It is easy to get flustered by the idea of arranging store elements to make more sales. Sometimes, an ill-designed store can cause people to browse through, be confused and leave without making a purchase.
However, if you had to keep just five things in mind about visual merchandising, they are
- Use color wisely. Try contrasting colours together, to put everything of a similar shade together. A great visual appeal often begins with the right usage of colors.
- Create hotspots and put merchandise in these places. Even in the most attractive stores, the products must always take centerstage. Figure out where attention instantly goes in your store and curate your products there.
- Present stories around products. Even a strategically places styling image can give people ideas and can even prompt them to buy the whole ensemble.
- Ensure that customers have access to the maximum possible merchandise in your store. The more they see, the more they’re likely to buy.
- Use the ceiling space well. It doesn’t have to be graphics intense, but you can find ways to hang merchandise from the ceiling or create a lighting display that makes people look up, and into the first floor of your store.
The retail storefront is the first impression your shop makes on passers-by. Use it wisely not just to advertise but to bring people in.
6. Running A Sale Successfully
A sale period is a time for retail stores to truly shine!
A sale can mean one of two things- keeping up with the festive season, or clearing out excess inventory. Many retailers do not think of the second scenario as a good thing. However, it is always better to clear out your inventory than to hold on to it. Any unsold inventory takes up space in your storage, and leaves less working capital for you to invest in new inventory.
If you’re looking to prepare for a holiday sales season, this guide can help with everything from marketing and advertising to product bundling and more sales.
If you’re looking to get rid of excess inventory, hosting a deep-discount sale is one option. The success of such a sale depends on factors like
- the degree of discounting you can offer while still turning some profit
- smart bundling that clubs a fast-moving product with one that you have too much of
- bigger discounts on products that you have more inventory of
- how well you advertise the sale and how many people you bring in during the sale period
Any excess inventory that you don’t get rid of can quickly turn into dead stock that adds absolutely nothing to your business. It is better that you sell more at heavy discounts than hold on to products for very long.
7. Customer Satisfaction
For decades now, retail businesses have struggled to find ways of accurately measuring customer satisfaction. Most customers who have a less than pleasant experience simply don’t come back again. There’s also the issue of buyer’s regret- customers go home and then realize they spent too much, or that the product is not worth the money they spend.
In both cases, it is very unlikely that you will hear about the experience.
Systems such as feedback monitors at checkout get the feedback in, but you have no way of distinguishing a good experience from a great one. Yet, established brands like Apple have had success in the department. What do these brands do differently? They simply measure customer satisfaction as a result of the same customer coming back several times, or shopping for their products through several channels.
You can do the same with a good CRM system in place. By gathering data about customers from across your sales channels, gauging their response to product emailers and just measuring the number of times they visit you in a given time period, you can see what percentage of customers are truly happy with your brand.
The obvious pitfall to this method is we never know which customer is buying again out of compulsion and which one is coming back for new products. For example, it is a known fact that Apple phone chargers give up within a couple of years of use, so charger-buyers are often disgruntled customers whose care plan has expired.
In your retail store, you have the benefit of the human touch. Your employees can gauge customer reactions at every purchase and give you valuable information on customer satisfaction.
Retail Chains And Expansion
Expansion can come in several different forms. Even choosing to expand to other sales channels is expansion, as is opening up more stores in new locations.
As you’d probably imagine, expansion is not just about replicating a successful business model. It is about using the standard components of your business as they are, and tweaking the others to suit local preferences.
For example, your first store in a shopping neighborhood could be a hit due to the presence of several eateries nearby, but for the next one, you may need to find a way to increase footfall by yourself.
For every new store you open, you need a location-specific sales strategy. A keen understanding of the community around your store can help you design a successful one.
At the same time, standardizing some processes and the technology you use in the store can lead to better collaboration between stores, and an easier learning curve for your employees. These become the basis of your new operations, and you can easily troubleshoot problems when you’ve already faced them elsewhere.
1. Omnichannel Retail
As we discussed above, expanding to other sales channels is a great way to find success across geographies without investing in a physical store everywhere. If you sign up on marketplaces like Amazon and eBay, you instantly have access to all of the customers that visit these platforms. Likewise, opening up a web store can help you reach people in other states/ countries who like your product.
Omnichannel retail is a tad bit more than just expanding to other channels. It is about making every customer touchpoint (social media, inbound marketing and sales channels) saleable. It is also about integrating the customer’s experience across all of these channels.
For example, your products may be featured in a fashion catalog post which some people visit you on Instagram. Here, you share styling tips for different products, or shots of people actually wearing them to different places. Now, someone who likes this idea and product would head to your web store.
Once there, they either complete the purchase or they decide to pay a visit to your store. At this point, they may come with a picture of the outfit they’re looking for, and a savvy store employee can lead them directly there while also suggesting some other products to go along.
As a business owner, you need to be able to track all of these interactions not only to provide similar experiences to customers in the future, but also to figure out the best way to sell. This is just one example of omnichannel retail. You can read more about how a traditional business did it successfully, here.
2. Franchising: How Can It Help Expand?
Some retailers find that they have neither the resources nor the inclination to expand and manage multiple stores. In such cases, a franchise option brings in both the money and the hands required to handle business in new locations.
Franchising is also a good option when you are unaware of the nuances of a new location. You can pitch franchising to a local business person and ensure that you get good insights on how to do business there. Did you know that both Basic Robbins and 7-Eleven run on the franchise model?
Franchising has helped several brands expand much faster than they could have if they opened stores with their own infrastructure, manpower and utilities. However, not all is golden in this model. A bad franchise operation can give your business a bad name, making it hard to recover from. Franchise agreements are also often rigid, and offer little scope for adjusting to local needs, thus inadvertently contributing to a failed business.
3. Creating Your Own Private Label
Expansion does not just come in the form of more stores or retail chains. Some retailers choose to strengthen their backend even further and improve their margins by selling through their own private label.
In fact, many multi brand retailers make this switch. An apparel seller can expand into brands for casual wear, formal clothing and even plus size clothing depending on who shops most with them.
When is a good time to create your own private label? Read more here.
Analytics And Forecasting
Forecasting, in its simplest form, is using past data to predict future business. Retail businesses always use past sales as a metric for predicting future inventory needs.
However, the richer the data is and the better it is processed, the more accurate forecasting can be. This is where analytics come in. There is no dearth of data available today. From sales trends reports and industry-specific trends to company sales data, consumer surveys and demand across each time period, we have access to everything we need.
Analytics can help us sift through this data to identify those aspects that are likely to impact our future sales. Once we separate the grain from the chaff, we have a better chance of forecasting better and selling better.
A good forecasting method can help you manage inventory more efficiently over time, price your product just right and achieve high levels of customer satisfaction.
What’s more, a good analytics system can also tell you how well your business is doing and which areas need work.
Store management is an ever-evolving field. New tools and technology in the domain give you better access to understanding your business and finding scope for improvement. Once you open one store and begin to run it successfully, you would surely want to expand further and make room for more success.
New developments and opportunities in several aspects of your business can help you find the success you’re looking for. We discuss some of those opportunities here.
A few decades ago, billing was a manual process of writing down the bill manually and accepting payments in cash. Over time, barcode scanners came in and made billing much faster. This was closely followed by the advent of cashless payments, card readers and the like. Today, people pay through NFC or by simply scanning a QR code.
These are developments just in the payments space for a retail store. Using technology effectively can help automate several business processes. For example, automated purchase order management can help you remove the concern of reorder cycles from your mind almost entirely.
Likewise, a traditional POS system has given way to a cloud-based POS that protects your data, offers access only to a select few people and can be accessed from anywhere in the world for real-time reports.
Today, such a system can also work on an iPad, changing the definition of POS entirely. You can bill from anywhere in the store, making checkouts faster than every, virtually eliminating the need for standing in a queue to bill items.
Put technology to good use and you’re likely to see tremendous growth.
Choosing a product assortment is not a one-time process, as many retailers already know. Instead, your product assortment must reflect changing consumer preferences.
You have the option of being a thought-leader in your space and introducing new products that people love to use. Why wait for trends to take over when you can set them in the first place?
Only a retailer who has a keen understanding of their customer can achieve such success. As an example, consider the shopper of today. What are they looking for? Very often, shopping is not so much for a product as it is for the specific need it fulfils.
Apparel fulfils the need for social acceptance. Luxury apparel adds in the need for power and domination. Even an FMCG product like shampoo can fulfill the needs for cleanliness, standing out (as in the case of Lush cosmetics), eco-friendly and natural living, fighting stigma by fighting dandruff and so much more.
Choosing your product assortment involves fulfilling the specific needs of your usual customers. And you have the power to create these needs today with the judicious use of social media. Are you ready to begin setting trends and catering to them yet?
3. Channels Of Sale
Every time you think you’ve seen all the sales channels there are to see, a new one pops up! Case in point- the Instagram shop feature from a while ago. Going multichannel today is more a matter of making the choice than it is of figuring out the finer details.
Selling through a physical outlet is one of the hardest exercises there is today. By choosing to go online, you are already prepared for many uncertainties such as stock management issues and customer retention.
What you need to build expertise in is order fulfillment. Since you’ll be packaging, shipping and delivering your online orders, you need to find a way to make the process effective and reflective of your core principles.
Before the, however, you need to choose the sales channels that are most likely to help you succeed. As an example, someone looking for detergent in the middle of the month is very unlikely to order it online and wait for it to come. However, someone looking for a specific brand of shampoo probably knows that it needs time, and is therefore likely to purchase online.
Depending on the products you sell, you need to choose the channels that will guarantee most returns for your effort.
It isn’t enough to be on several channels. Your customers also need to know that you are present there, and that they can choose a means of their choice to buy your products. Innovation in marketing ties back to how well you manage your customer interactions. These can become a mine of information from which you can figure out where to invest your marketing budgets.
For example, if most of your customers interact with you on Instagram, putting out paid ads there can help you get even more visibility.
Not all marketing has to be online, however. Companies like Ikea and Starbucks have shown time and time again that an offline launch campaign in a new city can get results that even they aren’t quite prepared for, sometimes. Offline campaigns often cost a bomb, but they get results in the form of direct interactions with, and even purchases from, your retail outlet.
An offline pop-up of an exclusively online collection can help you get people into the habit of ordering online. Special discount coupons that are channel-specific can also drive more people to the channel you want them to go to. When it comes to marketing, your imagination is the only thing that can limit you.
Suggested reading: 6 Tips To Strengthen your Retail Business
Today, every package shipped to a customer, or to you from a vendor, comes with quite a bit of packaging. Most of it cannot be reused. Add to these the invoices that need to be printed by the hundreds each day, and retail begins to contribute its fair share to the landfills.
A decade ago, this may have been okay but today, the consequence of too many people and their choices is upon us. Conscious consumerism is on the rise. As a retailer, not keeping up may even result in a loss of sales in the near future. Hence, start now to make your business greener. Here are some ways to try.
Summing It All Up – Ready To Begin?
That brings us to the end of everything you ever wanted to know about opening and operating a retail store (or many, we’re happy to dream big dreams!) From choosing the location to marketing right in today’s times, we’ve discussed quite a few aspects.
One last aspect we’d like to discuss is the store launch. The reason we’ve moved it to the very end is because we believe that all of the other aspects need to be sorted and planned for before you prepare for the big launch.
Be sure to advertise well in advance, offering neighborhood discounts, special offers in week one, and the likes to keep people coming and build a sense of familiarity. On the day of launch, prepare of bigger crowds than you initially anticipate- it is better to be ready than to be surprised!
Most importantly, don’t forget to celebrate the big new milestone.