BrainTrust Query: Why or Why Not Open a Retail Store Now
Through a special arrangement, presented here for discussion is a summary of a current article from the Retail Doc blog.
Maybe you’ve always wanted to be your own boss. You’ve always enjoyed shopping and think opening your own store will be fun. It can be fun, but make no mistake: succeeding in retail is about planning, change, and making yourself available.
How do you know if a retail store is for you? Answer these questions:
- What would you feel like if you had to work Christmas Eve until 8 pm? Like Roseanne Roseannadanna said on Saturday Night Live, "It’s always something."
- What would you do when a friend’s child broke one of your expensive baubles and did not offer to pay for it? You’ll need to be able to separate personal relations from your business.
- How would you handle your manager leaving early and going skiing over the weekend without telling you in advance? Would you be willing to reprimand them, especially a friend working for you?
- What would you do if your favorite item that you stocked heavily didn’t sell? You have to separate your personal favorites from what the marketplace desires.
- Have you ever had to fire someone? It’s part of doing business.
- What would you do if you caught a shoplifter? A forceful response leads to less of it happening in your store.
- Do you hate repeating yourself? Training takes a lot of time and repetition. Training takes a lot of time and repetition.
- Do you genuinely like talking to other people? Retail is connecting with people — from your crew, to your landlord, to your vendors, and to your customers — all in a positive manner.
- Do you get a thrill from making a sale? The sense of accomplishment and rush from a particularly large sale is necessary to balance the inevitable slow day or January doldrums.
- Have you visited other stores that carry similar products and know where they are weak? You should not be afraid of anyone selling anything in your category, nor should you look the same.
- Could you survive financially for eight — 18 months — without drawing a salary from the business? The greatest cause of retail businesses closing is due to having an unrealistic idea of break-even and profitability.
- Do you have a great location? You never want to be 100 feet from success, so visibility is key, not a cheap lease.
- Do you like to create a team atmosphere or do you want to be the "owner?" Retail is teamwork. Employees never go out of their way for the boss or the customer if they are afraid or disrespected.
- Do you have a great idea of how your retail business will stand out from the rest? A plan created early laying out how you are unique assures success. Who are your customers and why would they be willing to crawl over broken glass naked to come buy from you?
- Are you prepared to work long hours? The average retail store is open 70 hours a week, including weekends.
Discussion Questions
Discussion Questions: Which of Bob Phibbs’ questions are most important for prospective entrepreneurs to ask themselves before opening their first store? What others would you add to the list?
Poll
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Seems like most of these reasons are emotional and tend to discourage the typical new business owner. The original question reminds me more of the article herein from last week regarding non-retailers getting into retail and thinking it is easy…until they failed.
More obstacles exist in the marketing and promotion of the store, its value to shoppers and beginning to drive loyalty to the brand of the store, let alone the decisions around assortment and pricing, any services provided and employee culture to be built.
A laundry list of perhaps a thousand additional factors also needs to be considered to get a full picture of what it is like to run a store. This is as good a time as any to open a new store. You just can’t “build it and hope they will come,” as in decades past.
The question of differentiation and standing out from the rest is critical to retail today. Channel blurring has made it easy for consumers to find products in the most visited or most convenient place. A retailer today needs to give consumers reasons (plural) to come to their store instead of or in addition to others.
One other question to add to the list is willingness or ability to change. Most marketplaces are fast moving and leading change and responding quickly to trends and opportunities is essential to success.
Excellent questions. On the other hand, buying a “franchise,” not creating a business from scratch, would likely address and de-risk many of those. Independents are playing a rigged game and competing against stores with better training, better marketing, better systems and better support. In these difficult times, I would think long and hard before taking the jump and opening a non-franchise retail store.
It’s tough out there, as also described in NYT: Maybe It’s Time for Plan C. I think “Do you genuinely like talking to people?” is a gem, but am re-thinking based on J. Peter Deeb’s comment, as channel blurring and proliferation are huge considerations. Stand up if you know someone who has opened and closed a small retail business — all rise.
My father owned a single retail store. He worked weekends most months — I never understood the notion of Saturday as a day off. So that’s huge.
The other unmentioned subject is: “Don’t fall in love with your inventory.” The biggest challenge independent retailers seem to face is buying too much merchandise and waiting too long to mark it down. Buying discipline is really, really important.
An economy driven by ~70% consumer spending is over. The broad base of customers have played out their options: working mothers, OT and 2nd jobs, using home equity as a bank. Add the rise of eCommerce and social networking and bricks & mortar become a phenomena of a localized economy; real estate prices will have to deflate for that to become a reality. Peter’s comments on differentiation and providing a compelling experience are keys in a new economy in which living local and simpler, but better, will be the norm.
I would add to the list:
Do you have a long-term plan as well as an understanding of how to get from “here to there?”
Do you know what your own strengths are and what is best left to others (employees or professionals like accountants, lawyers, web designers, etc.)?
Do you have a supportive family or other social network?
Can you see yourself doing this forever?
Most of these – aside from simple competence/logistics questions – seem to focus on separating business from personal life. Most small business owners I’ve encountered never quite make it. That can be both good and bad if you’re a sole proprietor. It goes downhill fast once you begin to hire people.
When people ask me about owning a retail store I tell the that is not a job or a profession, it is a way of life that may look easy but is not. As has been pointed out, many of the questions are about the emotional aspects of it. One question I would ask if this fails, what are you going to do?
Working and talking to people I’d put at the top of the list. I’d also ask, do you really love serving others?