Develop a new retail concept
1:EVERY YEAR MANY EXPERIENCED AND NOT SO EXPERIENCED RETAILERS SET THEIR SIGHTS ON LAUNCHING A NEW RETAIL CONCEPT. MARTIN HAESE (
The planning of any new retail concept represents one of the most important steps in determining whether profits are likely to be made. Even if you have a very good idea, without a well thought out plan, your project may be destined for failure.
Retailers are generally an excitable bunch and sometimes their passion for their industry can override the need for a common sense approach to basic risk management. When planning any new retail concept, it is important to step back and look at the project as objectively as possible.
:Start with the Demographics
Before considering any new retail concept, it is critical to study the demographics. Why do small country towns have a general store that sells everything from groceries to fashion to petrol? Why do larger cities provide retailers with an opportunity to specialise in a particular market niche? The answer lies in the demographics. The demographics will unlock the depth of the potential market for your new product or service. Studying the demographics will also assist you to identify market segments that are emerging and those that are in decline. The Bureau of Statistics and industry associations that are particular to your market segment are often the best place to start.
What makes your business unique?
The retail industry is crowded and competitive. Before launching your new retail concept, it's important to clearly determine what factors make your retail offering unique. Are you able to source some products that are exclusive to your store? Will your store be known as a market leader, an innovator, for having the very best service or a flexible merchandising plan that delights clients every time they visit? Developing a retail strategy that ensures that your retail offer is unique and remains that way is critical to the short, medium and long term financial success of the business.
:Know your numbers
Before making the decision to proceed, it is also important to create a financial plan. This plan should contain forecast sales, margins, gross profit, expenses, net profit and cash flow. You should also consider the capital cost of establishing your new business as this will help you understand your opportunity cost and financing needs. If you are not financially minded, it's vital that you find someone to help you work through the various financial scenarios.
Choose your location wisely?
Now that you are confident that the demographics are in your favour, determined what makes your retail offer unique and thoroughly studied the numbers, it's time to investigate the best possible location for your store or the best possible method of distribution for your product. In doing so, it's useful to first research the most effective and profitable means of bringing your products to market. That may be via your own retail store, the internet, acting as a distributor or a combination of all of the above. If signing a lease, we advise that you always seek professional advice and also consider traffic flow, access, floor space, rent and outgoings, the neighbouring tenancy mix just to name a few. It is also important to ask yourself if your customers would reasonably expect to find your type of store in the particular location that you are considering.
Bringing it all together
Researching the viability of your new retail concept can be interesting and fun. It also makes good business sense as you will then be in the best position to make an informed decision whether or not to proceed. Your research may also assist you develop and fine tune your retail business strategy as well as providing you with the confidence to expand or validate your decision when to sell. Either way, research plays a pivotal role in developing any new retail concept.