How to Open a Shop

How to open a retail store
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You’ve probably heard countless times that opening an online store of your own is a highly convertible and lucrative enterprise. But how do the things go when it comes to brick-and-mortar stores? Though you may cast doubt on this business model since there’s a myriad of negative information, the reality seems quite positive nonetheless: Forrester estimated that almost 86% of all retail sales across the US happen in land-based stores.

But before we begin exploring this abundant region and learn how to open a retail store that sells, let’s outline what a retail store actually is. In general, a retail store is a place where various goods are sold to the public through different channels. And if you instantly visualize some big-time businesses like Walmart when you hear of ‘retailing’, you don’t see the whole picture: this small family grocery store two blocks from you or a local pharmacy down the road can all be applied to the term ‘retailer’. The difference is only that retailers don’t manufacture anything – they sell and that’s it.

Stay-at-home moms can open a retail store, an ambitious student can build up this business. You too, without any doubt, whoever you are. To help you navigate through the world of retailing and avoid stumbling blocks along the way, here’s an ultimate guide stuffed with multiple useful tools and advice needed to launch an affluent store. In this guide you’ll find a comprehensive frame of this business model to be able to set off in a few days.

1. Answer The Key Question

Before you start investing, brainstorming, establishing, collaborating, you should give yourself a pause and try to honestly answer the following question: why do I open a storeWhy do I need the business?

The answer to this question is a crucial milestone in your life because it determines the root of your future business. Anything all the way down to products, location, overall concept, marketing or advertising campaigns depends on it. There’re a plenty of reasons entrepreneurs tend to give, but usually it comes down to these:

  1. ‘I’ve got an opportunity to buy some products from distributors at attractive prices’. Some have direct connections in the business, some entrepreneurs are distributors or manufacturers in the first place. Usually this reason is given by local owners whose stores make a small yet good profit.
  2. ‘I want to become financially independent’. Some think of a retail business as of something that might help them become successful. In this case it doesn’t really matter what type of a store it is or what products will be on offer. Sometimes people just have a spare couple of a few thousands and they look for a fair option to invest.
  3. ‘I want to sell and I really like it’. For some people a retail business is a great chance to venture into things they have passion for.

Speaking of the first reason when the idea stems from products and their features, your aim is to draw an audience to these products. Speaking of the second one, the aim is to choose a niche that has not been heavily occupied yet so that you could solve some specific problem of your customers. Maybe your business could offer cheaper options or closer locations.

2. Do Research

To get out of the woods you need to find the right path. In terms of your retail business, you need to know how to gather accurate information on different aspects of the market to open a potentially thriving shop. And luckily for you there’re options.

Going Undercover – See What People Buy And Look For

This is arguably one of the simplest methods available to novices. The thing is you try to gain open insights into marketplaces and bestsellers there to evaluate demand, range products and define the best niche. Since around 50% of purchase decisions are influenced from the web, you should give attention to online marketplaces in the first row. Like Amazon’s Best Sellers or eBay’s popular listings. Even though it might seem illogically irrational to you, people go to the Net to buy products they cannot find in local retail stores. And you should be aware of this fact.

Of course, to get more thorough business insights, there’s another option to take research offline, but it’s rather an obligatory option. Why? According to Forbes, only about 28% of small businesses make sales through the Net, and it means your brick-and-mortar competitors would never pop up among Amazon’s best. No exposure, no data. So don’t feel afraid to take a step forward and approach retail stores owners. Visit local shops, especially those that carry the products you want to sell.

Going Advanced – Find Actual Figures

If you know a thing or two about numbers, then you need to get your hands on these numbers. Great news that to access industry data is actually quite easy. Whether you’re from US or Australia, you country’s census bureau would likely provide all necessary business information publicly. Just look it up. For instance, American retailers might want to go here, Australian retailers can visit this place. The UK’s national statistics can be found right there.

As an example, the US Census Bureau publishes retail trade reports (you can download the latest spreadsheet here), with various lists of estimated sales, trends, products. Let’s briefly look at the data in the February update so that you could grasp the gist of statistical analysis.

Estimated Monthly Sales for Retail land Food Services

In a nutshell, food, merchandise, vehicles and gas show the largest monthly sales rate, where auto industry generates about 1.2 billion of dollars per month. Clothing, furniture, books, ‘hobby tools’, electronics are of not so much popularity compared to motor vehicles stores, but 274 million of dollars for clothing stores appears formidable in any case. Building materials and pharmacies are somewhere in the middle. The second table demonstrates change in monthly sales, and as you can see, everything aside from building materials fell by 0.3% to 5% roughly. So, if you were an entrepreneur without any specific idea in mind for your retail store, you might consider opening a building materials store due to steady growth and good sales.

Besides, industry data are collected by special trade organizations like the National Retail Federation, so if you want to get your hands on the ‘popular commerce’, there’s nothing better than researching their Retail Insight Center, but note that you have to join the organization in order to get access to consumer data.

3. Zero In On The Right Location For Your Retail Business

Again, the next step is to take your time and ponder options you have in front of you, but now it’s all about location. The place where your retail business will be located determines your everything, that’s why you shouldn’t overlook deep aspects – spend as much time as you need to set up a shop in the right place for the business.

When you’re looking for a business place, there’re a few crucial points to consider – your customers, your financial capacity and the type of your retail business. At least these three points should be covered, two out of three does not work when it comes to brick-and-mortar shops. If you fail anywhere, say goodbye to sales forever. Greg Kahn, the CEO of Kahn Research, once said that the best place to be is the closest one to your biggest competitors since your competition must have already done their research and chosen the optimal location for their place. In evolutionary biology it’s called parasitism. In real life it’s called business rationality.

If you don’t know where to start at all, here’re some broad tendencies for retail business locations:

  • Expensive brands, notable designers, boutiques usually prevail in the city center. Your customers are actually ready to commute for hours to get to your shop in that case.
  • The ‘near-center’ is perfect for those retail stores that cater to middle-class customers. Semi-uptowns are known for rich infrastructure, so you can easily find a good spot – beside a subway station, in a shopping mall, near large road junctions.
  • Finally, uptown with a few popular types of businesses. You definitely shouldn’t try to make cultural or marketing revolution there, but you can try offering something that people don’t have at their fingertips. Another idea is to cater for locals and sell everyday goods.

However, after narrowing down your choices, there could be far more available spaces for stores that suit your retail business. So right when you ‘synchronized’ general location and your store, it’s time to get specific. Here’re two further options and their advantages/disadvantages.

Location Pros Cons
Shopping mall
  • Lots of potential customers from the scratch.
  • Additional advertisement you get from the mall.
  • People stack in malls with one aim – to go shopping.
  • Direct competition.
  • Lease agreement and insurance cost a pretty penny.
  • Certain limitations and restrictions.
Separate building
  • You have a completely free hand to design, redesign your retail store.
  • Special-purpose buildings easily catch people’s attention.
  • Some customers prefer retail stores in separate buildings to those in shopping malls.
  • Too expensive to buy, build and get equipped.
  • Only a small percentage of separate buildings would be a perfect match.
  • ‘Neighbor’ businesses may spoil your reputation (some noisy bar, for example).

Finally, evaluate a rental space from the bottom to the top. Consider leasing, general location, surroundings, building and ask the following group of questions to each:

  1. General location. Is this shop location safe in terms of crime rates? How’s the traffic? Would my customers be able to easily find the store?
  2. Surroundings. What are competing businesses in the area? Is there ample parking lots? How much competition will my business and shop face?
  3. Building. How old is this building? Is it tech-wise? Would I have to do any plumbing work or re-wiring? Is this building suitable for my type of retail business?
  4. Leasing. How much is it? What’s the length of the lease? What services am I entitled to? What type of lease agreement should I choose?

! Once you’re set and done with the location for your retail store, it’s time to find vacant spaces for lease. Depending on your country, there are different tools you may use, like Craigslist (worldwide), Real Commercial (Australia), LoopNet (US). Contact with the owners, ask them all of these questions and make sure you get all the answers you’re looking forward to.

4. Find Suppliers For Your Store And Evaluate Them

How do you find suppliers? To tell the truth, it’s not that hard, but it’s actually hard to find reliable partners for a long-term perspective. You can start searching with the Net, scan through retail platforms where manufacturers and distributors offer their production to small businesses. The following list of platforms may give you a clear direction what to look for:

  • Alibaba. World’s largest platform based in China catering to eCommerce, but there’re lots of land-based businesses that source products from here. Alibaba hosts dozens of businesses and suppliers, so you can find partners in no time.
  • Zentrada. Great for independent retailers operating in European countries. This platform offers up to 500 importers ready to stock your retail store.
  • Warehouse115. Wholesale website in the US, has 20,000 products of various variety on offer.

So, you’ve found a vendor for your retail business, but don’t get too excited right away because your supplier might turn out to be inconsistent, unreliable or even rouge. The only way to evaluate a vendor is to develop relationships and see what you’ve got there. Sometimes businesses receive a quality package for a trial, and then they rush into buying heaps of production only to find that the next ‘portion’ is out of quality at all. So consider the following things:

  • Luring prices shouldn’t be your business priority. Cheap will be cheap no matter what, so don’t fall into that trap. Don’t let affordable prices impair your judgment.
  • Your business suppliers must have been verified by a third party. Ask for document confirmation, copies of licenses or documentation. Ensure you’ve done your best to minimize all levels of risk.

Remember that any vendor may experience temporary difficulties, and if something goes wrong once, it doesn’t mean you should dump a supplier. The key is to stick around to a number of manufacturers and build loyalty in your partnerships. Get rid of troublesome suppliers, but give a chance to those who’ve already proved their reliability.

5. Size Up Competition

When it comes to customers…well, it’s like a crossfire in a warfare. New retail stores are being opened all the time, and some of them get it really successful. That’s why, above anything else, you need to analyze your competition to seize the best market opportunity for your business. There are three classic questions to start with:

  • How much competition is out there?
  • What context do customers take into account when purchasing products?
  • Is it likely that new direct competitors may pop up nearby in the nearest time?

If your retail business doesn’t know how its competitors look like, it’s like to enter the maze of wonders without a compass. Your key to success is to get to know the environment and the customers there. You can always contact providers of market research, but there’s a great deal of information you can find online without paying anything to anyone. Your competitors’ websites, shops and open source research can be extremely useful. If you make a real effort, you will be able to:

  • Size up competition in your area.
  • Compare these competitors to one another.
  • Look through assortments, products, offers.
  • Create a buyer persona.
  • Figure out pricing strategies.
  • Evaluate services, layouts.

And you will be able to do it yourself, at home, no fees attached.

! Example: you’re going to sell average priced plumber products in your store. You, as a seller, have to always be ready to answer the question: why those toilets across the road are 50 bucks cheaper? And your answer is: every product we offer is certified (make sure the customer can check your paperwork), and in addition to that we offer you to ship and install the piece. Demonstrate your strengths, mention them throughout advertising.

6. Come Up With A Catchy Business Name

A brand name is the thing that reflects your business’ identity and describes your retail store from A to Z.  Yet finding a good one may be a daunting task, especially in the world where there’re tons of creative entrepreneurs around you. Customers are oversaturated with the information, so your business name should be short, memorable, easily pronounced and spread some meaning.

If you have something particular in mind, you can ask your friends and relatives for an opinion. Show your retail store business name to them, but don’t provide any info on the background of your store, let them guess the following:

  • What this retail store offers.
  • What pricing it has.
  • What kinds of customers buy from this retail store.

It could help you understand which associations your name has with the retail store, and whether this business name in particular reflects products offered in your retail store, prices you have and the type of business you run. There’re lots of great name examples: Burger King makes you think of food, Ralf Lauren evokes something trusted, General Motors convey much of descriptive meaning. However, lots of sticky brands use an evocative category of business naming to make it easier to trademark. Like Nike, Kodak or Tesla.

Some businesses are more represented by business mascots rather than brand names. The actual purpose of a business mascot is to strengthen your business’ identity. Also, it’s a good way to reinforce awareness.

7. Get Real With Business Planning

Once you feel some definite amount of confidence that your retail business has good chances to become successful, you should flesh out ideas you have and start planning every little detail. Basically, a business plan is a roadmap outlining goals and methods how you’re going to achieve these goals. Why do you even need to bother to write some business plan? Well, it gives clear directions and helps you make great decisions. Besides, business plans serve as an instrument to secure investor funding. So, all the more reasons to write one.

There’s no strict structure for a business plan, but recommends to include the following:

  • Title page, with a table of contents, your business name, contact information.
  • Executive summary, where you give a brief overview of the info you’ve managed to lay out in your business plan. Render a comprehensive description of your business there.
  • Market analysis, the section where you present research on your industry, competition and market.
  • Products and services what you’re going to provide. Address points like ‘the anticipated demand’, ‘qualifications’, ‘differentiation from competition’, ‘luxury or necessity’.
  • Organization, where you thoroughly outline your business and its structure on the whole.
  • Financial projections, the most challenging section of any business plan since you’ll have to cover every aspect of financial planning for your business.
  • Funding request, informs about how much funding you’ll need for next couple of years based on your projections.

Unfortunately, only few entrepreneurs are able to create an accurate business plan because it requires fundamental knowledge across multiple subjects. But at least you can start educating yourself with some books, even if you’re going to find an expert to write a plan. We’d highly recommend to drill William Sahlman’s ‘How to Write a Great Business Plan’.

8. Comply With The Regulations In Your Country

When it comes to retail store licenses, taxation or specific business regulations, things can get really tricky because your retail store location matters a lot, as well as the type of business. For instance, the laws applied to specialty retailers differ a lot from those applied to clothing retailers. Besides, a retail store somewhere in Los Angeles would certainly face different regulations from businesses in, say, Rome. So, look it up pals.

Anyway, for US retailers, there’re some common licenses and permits to keep a store operating legally:

  1. Business license. The way you register your retail business depends on your state’s laws, so you should start from visiting your state’s official website. As a rule, it’s ‘www + state’s name + gov’. For example, Alabama’s official website domain is
  2. Federal Tax ID. This is also known as Employer Identification Number – it identifies your business entity. Fortunately, you can apply for an EIN for free, even online.
  3. Resale certificate. If you want legally to buy production from retailers and not pay sales taxes, you’ll need to obtain a resale certificate which allows you to purchase products tax exempt from your distributors.
  4. DBA certificate. You need to file DBA (‘doing business as’) to run business under a brand name. In other words, if you’re name is Dave Mitchell and you don’t use your personal name ‘Dave Mitchell’ to name your retail store, then DBA is one for you. Always check your state’s laws to get more details.
  5. Other permits. Some of the most common permits businesses may need are signage, alarm system, alcohol or tobacco permit. It’s highly recommended to consult with a business lawyer on this matter since every state has its own permits.

9. Negotiate A Retail Lease

Here’s where things might go stressful, but with a little patience you can get started in a week or so.

Essentially, you’ll need to lease a storefront (or maybe a really large warehouse). And it’s high time to decide whether you want to deal with an individual owner, who usually tend to offer more flexible conditions, or with a REIT. Whichever business option you consider to act on, you’ll definitely want to work with an attorney to make the process easier for your business.

Speaking of a contract and what’s generally included in a standard business lease, there are at least six essential items that have to be covered in a retail lease. Look out for the following:

  • Rental rate. You’re obliged to pay for some premises for some specific period of time, which is usually from three to five years, even though your retail store might not survive this long. In any case, negotiate a rental rate that can be calculated as some percentage of gross sales (very convenient option) or per square foot – it’s up to you. Typically, you pay either 6-10% of gross sales or $1-$5 per square foot a month.
  • Prepaid rent. Some lessors request tenants to pay a rent in advance of the rental period, and typically prepaid rents cover one to six months. At the end of the contract, the sum of this rent is returned to the tenant.
  • Water and sewer. Don’t raise your eyebrow – yep, water and stuff are usually included in the rental lease rate, but you’ll have to pay a little bit of extra for utilizing electricity or gas. If, for some reason, your retail store needs to consume too much water, expect to pay some extra, too.
  • ‘Triple net’. Triple net is a monthly charge consisting of three elements – area maintenance, taxes and insurance. Usually, triple nets add extra 15-40% to your rental rate because lessors want to pass their costs to you.
  • Maintenance responsibility. Most premises come along with basic equipment or even machinery that you, as a lessee, are responsible for. The rental lease sets assignment of maintenance responsibility, so you’ll have to ‘protect’ all the equipment serving the space. In case of accidents, get ready to pay your dues.
  • Finish-out allowance. Your retail business may require you to finish out the building according to some specifications, but fortunately, lessors can provide you an allowance for that in return. Though the sum won’t be whooping, up to $20 per square foot, it’s more than enough to set up basic air conditioning, lightning and heating.

But don’t forget that each property represents a unique space, so you’d rather get in touch with a lawyer in any case. For instance, your retail business entails working late. You shouldn’t get straight into negotiation with a landlord, but instead consult an attorney on these specific needs first.

10. Get Down To Store Layout

If you’re already thinking of beautiful arrangements next to your cashier’s or ways to organize showcase windows in your store to stand out and show your brand’s voice, stop for a minute. Your store layout and interior in terms of designing are almost the last things you worry about. First you need to make sure your retail business is a safe space to work and buy from. What’s more, many entrepreneurs neglect ADA requirements, and this violation leads to noisy lawsuits costing thousands of dollars. You don’t want to go there.


OSHA (Occupational Safety and Health Administration) requires retail businesses to follow a number of recommendations for workplaces where a great variety of factors should be kept in mind. OSHA standards, laws and regulations can be found here, but for now we’re going to look at some of the most important aspects demanded by the Administration.

  • Lighting. No trick – keep good lighting. In stock rooms, throughout the store’s front end. Poor lighting may result in serious problems, all the way down to shoplifting. How would you catch a shady customer if you don’t even see what’s happening right in front of your nose? But it’s not only about shoplifters. Care about your customers: some may have problems seeing products on the selves.
  • Air quality. Retail businesses are often located within other buildings – shopping malls, business centers, for example – and barely there would be enough windows to open if you need to let some air in. If you fail at maintaining proper ventilation, the air inside your store might start ‘gathering’ bacteria and fungus. RWDSU recommends every retail store located inside a building installing a system cycling fresh air and circulating it throughout the space in your store.
  • Fire hazards. To make sure your retail store is prepared for any ‘fire unexpectancies’, don’t forget to install a decent number of fire extinguishers and train your stuff to utilize them correctly. Another good ideas is to schedule inspections to ensure extinguishers function properly.
  • Ergonomics. OSHA states that ‘ergonomics’ is the method to match employees’ capabilities to your workplace ‘features’. For instance, your business supplier sends you heavy packages with stuff, and your cashier is way too petite for lifting such boxes. Prolonged awkward postures count, too.

ADA Requirements

The American with Disabilities Act’s Title III states that businesses providing products or services to the public are not to discriminate against handicapped customers. In other words, make your business accessible to people with disabilities. The highest number of violations can be seen at parking lots, restrooms, doors at entrances, stairways, checkouts. Do make sure you don’t fall into this list.

11. Purchase Equipment

When opening a retail store, you have to make sure it makes a professional impression on your customers. So it’s quite predictable that you might be wondering what your store checklist for must-have equipments should look like. Here’s an answer.

STOCK ROOMS. Start with basic store equipment such as labelers, trash bins, pricing guns, tagging guns. Also, you might need some signage suppliers, brooms, mops, you name it. Don’t forget about ‘wet floor’ signs. That would such a pity if your customers began falling down on the first day at the grand opening.

OFFICE. Your retail business office should have a variety of items – fax machines, voicemail system if you want to get in touch with customers via phone, printers and scanners, a few good computers and landline telephones. Basic office supplies like paper clips and pens are necessary, too.

SALES FLOOR. That’s where you get generous. Start with banners and flags to be able to catch people’s attention, chairs near the shop entrance, shopping carts, specialty displays, security systems, cash registers,  hangers and maybe a TV system, if you need one.

BREAK ROOMS. Finally, you have people working for you, so don’t let workers use stock premises as break rooms for a cup of coffee. You might want to provide a refrigerator, a microwave, a coffee pot, some cozy chairs and tables.

12. Hire Superstars For Your Store

To begin with, if you have any chance to take care of the business yourself (say, you’ve got a few friends happy to help you out, or, say, your mom’s quite willing to help), go for it. Hiring personnel might put a formidable dent on your business budget, so, by all means, try to avoid this. However, you’ll most likely need to hire a worker or two. How would you do that to squeeze the maximum out of the minimum? Check out these tips.


Aside for managers, merchandizers, janitor workers or administrators, there’s only one person that can actually make a difference to your retail business – a salesperson. And, to be dead honest, it’s 150% easier to find a great manager than a good salesperson for a store.

The first tip is not to stick with part-time employees. In case you need more people, try to work out longer shifts, larger salaries rather than hiring tons of workforce. You look for people who can submerge into the culture of your store, but not some passerby with five jobs on the docket.

The second tip is to outline specific job duties that you want for your retail salesperson. Start with qualifications. Your salesperson should have skills such as selling to customer needs, verbal communication, product knowledge, meeting sales goals, and, the last but not the least, is dependability. Your salesperson is a wise tour guide able to conceal the worst and reveal the best to store’s clients.

Looking For Prospects

There’re several platforms with excellent recruitment tools where you can review and contact potential candidates. Among the best are LinkedIn generating thousands of lists matching your search keywords. In addition, you can always turn to job boards like Monster (really good interface), CraigslistCareerBuilder and NRF.

Interviewing Your Cadres

After you reviewed profiles of your candidates, write a shortlist of workers who appear to be a good match for your retail business. And then schedule interviews with each of them to determine whether these candidates as impressive in person as they were on paper. Interviewing can be difficult if you don’t know HR basics, so you can print out a classic applicant evaluation form to use during interviews. Here’s a brilliant one.

13. Start An Advertising Campaign

An advertising campaign for your business and store is a means to increase traffic, though this adventure could be very costly. It goes without saying, your customers should be aware of your existence, but when you narrow down advertising funnels, do take into consideration what results and figures you aim at for the campaign in order not to waste money.

There’re three common types of advertising:

  • Information on opening/raising awareness. You can run such a campaign though social media, TV, Internet ads, magazines, billboards. These types of ads tend to mention products, new arrivals, discounts, promotions and they always specify the address of the location.
  • Image advertising. Here you make an attempt to form a favorable picture of your retail store. You convert achieved awareness into familiarity and influence buying behavior. So subway ads, booklets, flyers and leaflets are usually used within image advertising.
  • Promos. Either giveaways or discounts along with contests, feasts and lotteries allow you to wrap advertising up and draw more customers through ‘word-of-mouth’. Or some freeloaders potentially converting into customers.

In order to pick the right marketing channel, you have to get acquainted with actual customers. Students likely to surf the Net, housewives watch TV, drivers listen to radio. The gist is to wisely allocate bits and pieces of your store budget for good.

Don’t exclude the Net from the narrative. Tools like Google My Business let you appear next to a relevant search on both Google Search and Maps. It’s 100% free, and it’s ultimately essential for local SEO. Completing correct listings on GMB can boost your sales up to 40%.

14. Brainstorm Grand Opening Ideas

So, after all these efforts and diligent work, you’re finally prepared for a big jump into a business pool, and it’s right the time to introduce your retail store to the world.

In fact, you want your shop’s grand opening to complete a few crucial goals – you want to generate customer buzz, build new relationships and raise brand awareness. There’s much preparation associating with grand openings, but you, again, need three important things done: set a budget, apply for permits in case you plan to make some noise or attract lots of people, and create a schedule.

Get social. Advertise the event properly. Attract influential people. Make your retail store the news of the words, even if it’s just for a day. You add special festivities, invite dance teams, raffle a giveaway, offer limited prizes for free, extreme discounts. There’s much you can do and it’s to your own creativity limits.

What Should I Do Next?

So, you’ve opened a retail business. What’s next?

Of course, an operating store is just the first step to launching a genuinely successful enterprise. You must always stay in touch with the store, control numbers, improve figures in order not to become an outsider in a couple of years. Work on your:

  • Customer figures. Count sales per capita, the number of clients per day, the number of visitors per day, create spreadsheet to structure these data.
  • Gross sales. Know your numbers, know how much you can sell, know how much your customers are able to buy from the store. It helps choose the right development region for the future.
  • Popular products. Watch bestselling items and sort out what’s not in high demand to keep your store assortment balanced. You can use a simple method ‘100 bestselling items per week/month/year’.
  • Employee’s productivity. Conduct surveys, contact your loyal customers, ask for reviews to make sure your employees do their store job properly.


If you’ve made it this far, congratulations – you have enough info to open a land-based retail store that sells, attracts and impresses. Now put all this knowledge into use by standing up and going out there in the business to take some action to open a place.

Good luck!

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