Tuesday, April 16, 2013

Common Pitfalls of Starting a Retail Store

Running a successful and profitable retail store is no easy task. Unless you are willing to put forth the effort and constantly make the necessary adjustments, you simply won't make it in this cutthroat industry. Inexperienced newcomers are especially at risk for failure, as they don't understand the principles of what's required in the world of retail sales. To help you get started on the right foot, keep reading and we'll take a look at some of the most common pitfalls of launching a retail store.

Too Much "Shrink"

In the retail industry, shrink is defined as product that's either stolen, expired or otherwise destroyed. Whether you run a liquor store, grocery store or even a convenience store, you must keep your shrink to a minimum. However, this doesn't mean you can turn a blind eye to the fact that your shrink is high. Always keep it tallied make a note each time something falls under this category. Doing so will allow you to better plan for the future by making adjustments and improvement to your business model. So, how are you supposed to lower your store's shrink? The best approach is to educate your employees on the correct practices for handling product. As long you've documented past shrink items, you can then go back and see what was causing the problem.

Too Much Competition

Our capitalist society with an open and free market encourages competition; however, trying to force your retail store into an area with too much competition is a poor decision that will likely lead to your downfall. Before choosing a location and signing a lease, take the time to scout out the surrounding competition. There's nothing wrong with a competing store or two, but they should be spaced out far enough from your store so they don't leach your business. Always keep the competition in mind when you are deciding on a place for your retail store. This alone will place you miles ahead of the rest when it comes to location.

Poor Marketing and Advertising

It should come as no surprise that marketing and advertising are the backbone of most retail stores. Unfortunately, this is also an area where many retail stores fall short. The bottom line is that you can't expect to have a successful retail store if you aren't willing to invest in marketing. Stick with marketing and advertising outlets with a proven track record for your industry. If you need help finding such outlets, see what your competitors are doing.

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