In a Small Retail Business You Become What You Sell

Your decision to go into a small retail business in the end should be the desire to meet an unmet need.  As a small retail business owner your selection of merchandise will set you apart from other stores and make you unique.  If it doesn’t, the chances of success and/ or you volume and profitability will suffer.  Now that you are ready to open, don’t lose your focus now and undermine all the time and effort that went into getting your small retail business up and running to make it all for naught by buying any old thing.  You will find that merchandise to buy is plentiful.  The fun in the retail business is creating your own niche in your specific market with the merchandise that is “uniquely you” and merchandised in exciting manor.

Merchandise selection is all about positioning.  You shouldn’t try to stock every item in a category.  That doesn’t make you unique.  It’s quite another thing entirely to be selective when choosing the merchandise that will enhance your reputation and get “word of mouth” advertising to explode your small retail business.  Vendors in your market will always try to sell you what they have to sell, which is not necessarily what you need to buy.  Stay strong and be smart.  Learn to develop a good buying plan when you go to market so you will know what you need and stick with it.

I must add here a caution.  And this comes from my own experience as a former retailer.

You will make mistakes in the merchandise you select.  All small retail business owners do.  Learn to admit you have made a mistake and take a deep first mark down on the mistake.  A big lesson I had to learn early in my retail career is that the first markdown is the cheapest!

Another lesson I learned is the old retailer’s mantra – “you do 80% of your business on 20% of your inventory”.  The problem comes in knowing what merchandise is included in that 20%.  You will find that a fair assortment of merchandise is a part of the charm of your store.  Just don’t buy a dozen of everything in the market.  If you do, you don’t mean anything to any of your customers and your small retail business will surely fail.

It has been my experience that one can learn about 80% of what someone else knows about virtually any subject.  The other 20% comes to you in the form of experience – just getting out there and doing it!  You will make your fair share of the mistakes, but you can chalk that up to learning.  Inventory forecasting and management comes from simply being in the business.

Some people confuse quality with price.  Quality vs. price is a relative term. One retailer can sell a man’s shirt for $50 and it can be poor quality for the price.  Another retailer can sell another man’s shirt for $19.99 and it can be excellent quality relative to the price paid.  You must find the price points that fit your market area.  Then you must always try to select the highest quality merchandise for that price point.  What your customers see should be what they get, and what you promise must be what you deliver.  Remember, today’s consumers are smarter than ever before.  You can only “hoodwink” them once.

In running a small retail business you must learn to manage the level of your inventories.  The biggest problems I had when I was a buyer for a major department store chain happened when I became “overbought” or had inventory in excess of my merchandise operating plan.  Remember what I said about the first markdown is the cheapest?  Learn to recognize your buying mistakes quickly and take the markdown.  You’ll be glad you did.

For a small retail business inventory turnover is profit.  And if you intend to be a small retail business owner, profit it the name of the game, right?