We’ve all been told that retail is on death row and Amazon is the executioner. More than that, we watched the big names like Kmart, Sears, JCPenney, Ann Taylor, Gap, Banana Republic, Gymboree, Teavana, Michael Kors, Bebe, Perfumania, The Limited, Staples and more close stores. In fact, 2017 set the all-time-record for store closings, with more than 6,700 stores saying, “no mas.” That beat out the 6,163 closings in the financial disaster of 2008.
So, I think we can all agree that running a successful retail store can’t be done, and it would be foolish to engage in such an entrepreneurial enterprise. Right?
Well, I don’t agree at all.
When I opened my New Jersey-based camera superstore in 2008, just months before the financial meltdown of that same year, people laughed at me. They thought me a fool and a sure failure. The number of camera stores in the U.S. had gone from over 10,000 to a few thousand to a few hundred. Furthermore, the camera business was being killed by smartphones and the largest electronics and camera store in the world (B&H) was just a few miles away across the Hudson River in New York City.
However, with a little imagination and some luck, within a few years we were one of the largest single-location camera stores in the country. I had reinvented the camera store business model and, as a result, we found big success.
Here are a few of the retail store do’s and don’ts that I learned along the way that made my store successful even during the most difficult of times in a highly competitive and declining industry.
Don’t sign a long-term store lease, even if it seems like a great deal, until you are 100 percent sure your location and space are great and adequate for growth. A bad rental deal is the number one killer of retail stores.
Do carefully calculate the ability of your store to make enough profit to easily cover the rent expense. This requires a careful calculation of sales (profit) per square foot of retail space, the number of salespeople that you can utilize (including labor cost) in that space and how much of your inventory you can display (and inventory).
Don’t pick a store location just because you “like” it or because you get a great rent deal. As an example, if you are a high-end product or service store located in a mall or location where all of the nearby stores are of the discount type, you are likely in the wrong location.
Do analyze carefully the amount and kind of traffic that will go by your store. A few years back, I considered a big mall location for a satellite camera store and spent several days and evenings just watching the traffic. I had the mall’s traffic stats, which were good, but the particular location of this store showed it got very little flow.
Don’t think that running a retail store is a five-day-a-week, 9 to 5 job.
Do prepare to work seven days a week and long hours, especially when you first open, since you need to learn every inch and ounce of your business. It’s the only way you can know how to modify your business model if necessary, manage the store and hire people to manage it in the future.
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Don’t just put up a store sign, place merchandise on the shelves, run some ads and some sales promotions and expect to succeed. In today’s world, it’s most likely that anything you are selling (even a service) can be bought online or from another retailer who is already established.
Do create a great experience for the customer. This includes how merchandise is displayed, store smell (yes, smell!) and cleanliness, attitude and knowledge of staff. The point is to provide customers with something they can’t get online. In my camera store, we ran photography classes, only professional photographers worked the sales counters, we had a gourmet coffee bar (great for scent) and I hired a trendy interior designer to help me make everything look amazing.
Don’t think that because you have a great looking store, in a great location, with great prices you are assured of success. Bad customer service will get you an indelible scarlet letter on your internet reviews, and your reputation will be ruined. Five satisfied customers will tell one new one about your store. One dissatisfied customer will tell five others that you suck.
Do train your sales staff on how you expect customers to be treated and the owner or manager of the store needs to set the example of how to do it. There are many great articles on how to do customer service right. Read some of them and make them the habit of your store.
Don’t price merchandise in your store too low. Yes, I wrote, “too low.” If you follow all of the tips I listed above, you should be able to price your goods and services in a way that you can make money. Don’t price too high either. While this may be obvious, it needs to be said. Unfair pricing will get you a reputation that will surely doom your store.
Do research the internet price and local price for your goods and services. Carefully plan a pricing strategy that maximizes your profit while balancing sales and customer satisfaction. If you do the right things, customers will “gladly” pay you more than the price they find on the internet. Smart pricing is something that will require daily planning, observation and experience to maximize success.
Retail can be a successful and rewarding experience, both financially and emotionally. But, you do have to be smart, clever and imaginative in today’s challenging business environment. I have only listed some of the best practices here that I have learned in my retail experience, so please feel free to reach out to me if you have thoughts or comments or would like some additional suggestions. I am glad to help any retailer trying to make it big.