For independent retail outlets, the first 18 months of business can be difficult to forecast. Without the correct advice, both bricks-and-mortar and online stores can make very basic errors in their operation, which can lead to losses and ultimately the failure of the business.
I believe that following these fundamental principles will set your new retail business on track for a successful and financially stable infancy period.
Whatever funding you think you will need, in reality, you will probably need this amount again at one point in the first 18 months. Surprise expenses have a way of appearing out of nowhere. Remember that your sales figures are only projections and you most likely won’t reach these. Some brands will not reach 60% sell-through: they will sit at 15% or 20% and this is when you will need extra funding. Always keep a pot set aside for such an eventuality.
Clearing out old stock
Old stock will put you out of business — get rid of it. Don't ever box it up and put it into storage, as you will never go back to it. At the end of every season, start with 25% off, then 50%, then 70%. Yes, you are giving it away, but if you couldn't sell it at 25% or 50% off, then it’s obviously not the most desirable of stock anyway, so get whatever you can for it and invest that money into something that sells.
Before you invest thousands of pounds and man-hours into your own website, consider selling your items on Amazon and eBay. Although you may wish to establish your own marketplace in time, these are easily the most efficient platforms to sell items online; you can be experiencing sales within 30 minutes. You can then combine these with your EPoS system and connect up to your website when you launch it.
This field is very crowded. It will take 18 months, at least, before you start to see any return on this investment, but in the meantime you can sell on multi-channels and make money. You will come across brands that will never sell for you online. Brands like Nike or Adidas are sold by hundreds of online outlets, so the chance of consumers visiting your website to buy these brands is very slim.
Collecting customer details is very beneficial for marketing, and you should do this from day one. Find a good software solution to house these details and start communicating in a professional manner with your customers, either by text, email or social media.
Pay more to get the right staff. Make sure you get the best people out there and offer them what they’re worth to your business — don’t scrimp and try to save 50p an hour. Make sure your staff properly represent your brand, and at all times exhibit your brand values. When you have the best staff, do not settle for poor performance: manage the poor performance out of the business.
Apply the basics and stay true to your brand ethics, and the profits will come. Starting an independent retail outlet is a labour of love, and by no means easy. Success stories are an example of how independent retail can still flourish in the modern economy.
By Leslie Docherty, founder, Fat Buddha