Often, start-up entrepreneurs who want to open a clothing store, make a number of classic mistakes that lead to significant financial losses and even the closure of a business that has just begun. There are many nuances in the retail trade in clothing and one article is indispensable. Therefore, we highlight in our opinion the most common rules:
How much money is needed to open a clothing store
Often, novice businessmen when planning investments in a clothing store, consider buying equipment, repairs, room design and rent as the main cost item. At the same time, they forget about the cost of the product, hoping to take it under implementation. This is a serious mistake, putting a fat cross on the success of the entire business. After all, clothes for sale often surrender in cases where it is low in quality or does not correspond to the current season. Consequently, such a product will not be in demand, and the store will remain without profit.
When planning investments in a clothing store, be sure to consider the cost of purchasing goods. In some cases, the share of starting costs for the creation of a range of goods can reach up to 50-80% of all costs for opening a clothing store.
Set a margin on the product 100% and above
The second important rule implies that you should establish the highest possible trade margin. Naturally starting from the current market price. However, many aspiring entrepreneurs mistakenly believe that by making a minimum trading margin, they can earn on a large turnover of goods. But in order to earn as much at a lower trading margin, turnover must increase exponentially.
Plan the cost of creating a range of products
This rule was partially addressed in the first paragraph. The experience of successful store owners testifies to an indisputable fact: planning to purchase goods on an advance payment, you get the lowest possible purchase price and a higher trade margin. The cost of the formation of inventory can reach up to 80% of the total cost of opening a clothing store. Ignoring by businessmen of this simple truth translates a new project into the category of stillborn. No wonder one classic said: “In the morning, money – in the evening chairs.” If you want to sell the product profitably – try to buy it first. And if you do not have enough funds for this main expense item, it is better not to open the store at all.
Consider the need for the formation of inventory
Let’s say you found money to buy goods in a new store. And then another question arises: “How much clothing should I buy?”.
The law of the genre of clothing stores – the presence of sufficient balances. This is a trivial truth, and many current store owners, after reading it, will say: “Yes, this is a no-brainer!” – and they will skip this point. But do not rush – not so simple. For example, the optimum capacity of the sales area is 100 units. clothes. What a start up entrepreneur will do – he will purchase 100 units. goods from the supplier and promises to come in a week for a new batch of goods. Filled with optimism, he cuts the red ribbon of his shop – trading is open. On the first day, buyers are buying 10 units. the most interesting products, on the second – 5 units, on the third 3 more units. and trade ceases. Why? Because here comes the Pareto law, according to which 20% of goods give 80% of revenue (profit). And our entrepreneur did not have time to replenish the exhausted assortment of popular products, and now buyers are forced to choose the best of what’s left. At the same time, 20% of the area is simply idle. It would be better to do this: purchase 150 or even 200 units. clothes, depending on how often you can pick up the goods from the supplier. Thus, you could maintain a daily range of sold out items. And, if you do not have a separate warehouse, it is better to fence off part of the trading floor, but never reduce the exposure. Daily deliver and lay out new clothes in place sold out. After all, nothing prevents you from offering a client something special right from the warehouse – often this psychologically encourages the client to purchase.
Systematically update the collection of goods.
Your customers will visit the store as often as you update the product collection. If the client comes again and sees nothing new, he will be disappointed and leave. If visitors find out that you have new models every Tuesday, then visiting your store will be a habit for them. Your new delivery in this case will be guaranteed sold out. How often do I need to update a collection of goods? The answer: the more often the better, preferably weekly. Replenishment of new goods may cause additional demand for the old collection of clothes. This is because, due to the new models, the location of the old models is changing and the potential buyer sees them as if in a “new light”.