Want to open a brick and mortar store? Heres what you need to know makers workshop

Even in the current trend of cyberspace, 77% of the population* would rather make their purchases in a real store. With content and ads being thrown at them literally every minute from every which way, people are ready to be seduced. Customers are showing up for all the touching points of sound, smell, and even taste. The trends of the retail store are shifting and even the lines of online and irl are blurring. You can now relax with a cup of coffee while you shop or virtually test makeup from home before you even step foot in a store. Big or small, customers are showing up for the experience and it's creating a buzz that in a *snap* goes from real life to a virtual one. #shared

If you're reading this, congratulations because chances are it means you've got the urge to just mayyyyybe take the leap and open your own store. There are a lot of factors to consider so we spoke with Paul Claxton, business coach and owner of Southern Collaborative, to find out what you need to know before opening your doors.

The Space: Leasing space

First things first, do not commit to a long term lease. Do try and secure a temporary space or pop-up.

Here are some things you should know:

  • The leasing agent does not have to maintain a standard lease agreement that is comparable to your (more established) neighbors.
  • Lease terms are generally a flat rate (negotiable) and a percentage of sales (again, negotiable).
  • Some pop-up agreements will agree to either just a flat rate (dollars) or percentage rate with a minimum monthly payment.
  • Be sure to negotiate a ‘kick out’ time or how much ‘heads up’ you need to give them before you can vacate the space (the difference between 30 days vs. 3 months in operating cost is paramount). Have an exit strategy!
  • There is a leasing agent at nearly every property that is constantly moving retailers around within their own space. A temporary fill-in activates a space and is lagniappe (note: lagniappe [lan’yap] is a Louisiana term for ‘something extra' or given as a 'bonus’).

Aesthetic

At first glance: We all have an idea of our perfect dream space but sometimes it takes baby steps. Find functionally-like second generation spaces - Think former stationary store to a Candle Shop, good. Former gyro shop to a designer dress store, bad.  Remember that note about having an ‘exit strategy’ that I mentioned earlier? Part of the strategy is noting things you will do or look for in your next space you move into. It helps you look past the imperfections of the space and keep you thinking forward.

We'll circle back to the evolution and experience of your space in another post later on.

Business

Once you are serious about selecting a space, you will gain insight to what other retailers are doing in annual sales.  Boom! Let that sink in for moment.

The two numbers you will be looking for are: Size & Sales.

Now build a spread sheet or grab your favorite pocket Field Notes with graph paper and pencil and note the following:

  • Name of retailer
  • Category (apparel, home accessories, etc.)
  • Size in square feet
  • Sales per Square Foot (SpF)
    • If you’re looking in a space that includes an Apple Store and the leasing agent will only give you sales per square foot average of the entire complex, be sure to ask for SpF minus Apple. They tent to inflate those numbers. Drastically. Also be mindful of cosmetics retailers. Their SpF tend to be very high as well.

Retailer

Annual Sales

Square Footage

SpF

Doe’s Dresses

$1,000,000

1,500

$667/ SqFt

Ray’s Hardware

$2,000,000

2,000

$1,000/SqFt

Mee’s Menswear

$500,000

3,000

$167/SqFt


If you are unsure of what your sales potential is, gather this info from multiple properties - even in multiple cities if you can. Develop an industry standard for your products. Your leasing agent, if you have one, can also share these trends. Always be mindful of your product mix compared to like-retailers. That can play a big factor in your store’s performance.

The Build Out

Set a timeline, a budget, and hire a general contractor.

  • Timeline: It always takes longer than you think. Try to avoid making any electrical or structural changes as this requires permits. Each market and space is different but figure 14- 30 additional days for permits and 30-45 additional days for construction docs.
  • Budget: Materials likely have a percentage added on to them from the GC. A quick estimate I use is taking how many workers on the job times $200. Then take this rate and multiply it by the number of days the job will take.
  • How to pick a contractor that's right: Ask the leasing office for trusted contractors for the property. Sure, get two or three bids but always start there. They often know the space, they know the restrictions, and can save valuable time in the build-out process.

Keeping it real: I’ve adapted a 40% rule with build outs. You’ll be 40% over budget and timeline. Give yourself wiggle room.

Grand Opening

“If you built it, they will come,” sadly does not apply to retail. Unless there is a steady stream of foot traffic passing your doors each day, you’ll need a launch strategy to the word out and the customers in. The modified version of that classic Field of Dreams quote that I use is “If you built it, will they get of the couch, potentially load up the kids and fight traffic to come? If so - how do you plan on thanking them?”

As far as how to get them there, you know your customers best. I would encourage you to invest in experiences versus give-aways.

TIP: Have some way to collect the data of those that came into your store or space, and follow up with them shortly after the Grand Opening. That is when you can reach into your pocket for some promotions or incentives to visit the store again. Most people will be amazed that you called, emailed, or texted them.

And remember, if you are here you should be so proud of what you have done as a business so far! 

*Forbes: Forbes Business Development Council, Sean Mao

January 21, 2019 by Paul Claxton

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