Before iconic clothing retailers dominated shopping malls and ecommerce shopping carts, they hung a shingle from a single storefront. If you’ve ever toyed with the idea of opening a clothing store, you might use this as inspiration. Starting a new business entity comes with its set of challenges, yet entrepreneurs start exciting new retail companies every single day.
Whether you wish to open an online clothing store, a brick-and-mortar store, or a hybrid of the two, it is absolutely possible to gain a foothold in the clothing business. Here’s a rundown of what it takes to open a new clothing store—from drafting a business plan to securing financing to claiming your special niche in the apparel industry.
How to open a clothing store
- Develop a business concept and mission statement
- Draft a business plan
- Secure financing
- Legally establish your business in your state
- Acquire applicable permits, licenses, and insurance
- Hire staff
- Open a physical retail location
- Build an online store
- Choose a point-of-sale (POS) system
- Set up administrative systems
- Develop a marketing plan
- Partner with clothing companies, or feature your own clothing brand
- Network with other local businesses
- Continue to market your business and refine operations
Much like launching any other retail store, launching a clothing store involves a mixture of legal compliance, financing, marketing, and operations. Here’s a breakdown of the process in 14 steps:
1. Develop a business concept and mission statement
All successful small businesses anchor themselves around a clear business concept, and most draft mission statements that explain their reason for being. Think about what business niche your clothing store will occupy—it can help to align your personal passion with the observed needs of your community. Starting a clothing store has some overlap with starting a clothing brand. You’ll need to track fashion trends and study the tactics of fashion industry pros.
Also consider what unique value proposition (UVP) your clothing store can bring to your target market. As an apparel store owner, this may mean offering a one-of-a-kind clothing line, selling eco-friendly products, or providing the best customer service in your sector. Real world examples of a clothing UVP include the vegan winter coat brand Vaute Couture and the plus-sized specialist Body By Love (formerly Pop Up Plus). This resource on how to write a value proposition is a great place to get started.
2. Draft a business plan
While your business concept describes what your business will be, your business plan describes how you will make it run. Among the sections to include are your:
- Intended target customers
- Retail location (whether that’s brick-and-mortar stores, an ecommerce store, or both)
- Staffing plan
- Anticipated fixed and variable costs, such as for real estate and labor
- Choices for kinds of clothes you plan to sell. You might choose to feature your own clothing brand or source from a variety of clothing designers and manufacturers.
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3. Secure financing
Your business plan, which may involve plans for hiring staff or renting a physical storefront, will give you a sense of how much it’ll cost to run your clothing store. To fund it, you’ll need a source of startup financing. You can get initial capital from sources including startup business loans or crowdfunding, or from seeking private investors including angel investors and equity partners.
Further reading: Check out resources on topics including business financing, small business bank loans, small business grants, SBA loans, merchant cash advances (MCA), and venture capital (VC) financing.
4. Legally establish your business in your state
As a small business owner, you must legally establish your business entity in the state where you primarily operate. You’ll likely choose among three business models for your clothing store:
You’ll have to obtain an employer identification number (EIN) from the IRS to use for tax reporting, and many banks require an EIN when setting up a business bank account. Shopify provides state-specific startup guides that acquaint you with business registration requirements in most of the US.
5. Acquire applicable permits, licenses, and insurance
Your legally established business may need a business license, a tax license, or industry-specific permits to operate in a state or local community. You may also need to carry business insurance, particularly if you operate a brick-and-mortar location. Consult your state and local laws for specific requirements in your region.
Further reading: These startup guides will help connect you to licensing and permitting resources in your area, while these business insurance resources for small businesses cover the needs of clothing stores. There are eight common types of business insurance, including general liability insurance, workers’ compensation insurance, and commercial property insurance.
6. Hire staff
Most clothing store owners will need a team of workers to staff their store. This is a must-have if you operate a physical location. Unless you’re a solo ecommerce merchant, you’ll also need workers for your online store. It helps to have staff lined up to work before you open your retail space. This lets you open your doors to the public as soon as possible and immediately start collecting revenue. If you have a particularly small retail store, you may not need a large team of workers. For instance, if you operate out of a micro-space in a larger retail complex, you may decide you can staff your store all on your own.
Further reading: Learn more about employee hiring and retention and how to create an employee value proposition (EVP), which is your business’s sales pitch to prospective hires (for instance, your clothing business could offer employees competitive salaries plus special discounts on the fashion brands you carry).
7. Open a physical retail location
If you plan to sell clothing from a physical location, you’ll want a retail space that provides the right combination of size, location, and affordability. It helps to have a store that gets natural foot traffic and has parking options on-site or nearby. You can save money on rent by choosing a store that’s farther afield, but consider whether your target customer would be willing to drive to an obscure location to shop with you. Landlords list commercial real estate rentals online, but many business owners enlist a commercial real estate broker to streamline their search.
When searching for commercial real estate, take note of whether an available space will suit your needs as a clothing retailer. For instance, a space that used to be a sporting goods store may work fine for your purposes, but a former restaurant space might require too many physical modifications. In many retail leases, the tenant must pay for plumbing and carpentry renovations, not the landlord. You can also consider purchasing a space outright, but few startups do this because buying real estate can saddle you with a lot of initial debt—more than many commercial lenders are willing to extend.
8. Build an online store
Whether or not you operate a brick-and-mortar store, you’ll want to make it easy to buy your store’s clothing online. This means creating an ecommerce store. Make sure your online store has simple, intuitive navigation, clear product pages, and a seamless checkout process. Shopify’s all-in-one ecommerce software makes it easy to build an online store for your clothing business, with site designs worthy of the fashion industry.
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9. Choose a point-of-sale (POS) system
Your point-of-sale (POS) system enables you to process customer payments, both within a physical store and an online store. When choosing a point-of-sale system, look for an option that accepts many different payment options and can handle both online sales and in-person transactions.
Shopify POS lets you process payments anywhere, whether accepting cash, running credit cards, using buy now, pay later (BNPL), or offering layaway programs. The system catalogs your inventory and lets you sell those items in a physical store, ecommerce store, and pop-up store, like at a farmers market.
10. Set up administrative systems
In addition to processing payments, you must handle administrative tasks like accounting, inventory management, customer relationship management (CRM), and sales tax remittance. Shopify POS handles all of these tasks and more, thanks to its robust features suite. For instance, when a customer makes a purchase, Shopify POS can automatically calculate the required sales tax, add the transaction to your sales ledger, update your inventory stock, and add the customer to your CRM database.
11. Develop a marketing plan
Start your marketing efforts by building a profile of your target customer, which is sometimes called a buyer persona. Another key marketing strategy is crafting a brand identity so that your business stands out in the world of clothing stores. Armed with a brand identity and a clear sense of your target audience, you can begin crafting marketing materials.
To drive customers to your brick-and-mortar store, build a local marketing strategy aimed at the potential customers that live or work in the vicinity of your store.
12. Partner with clothing companies, or feature your own clothing brand
As a clothing retailer, you can anchor your store around your own clothing brand or select the brands you wish to feature. You might buy these products from a wholesaler or directly from the actual clothing company.
Your choice of clothing brands will tie into pricing, as some designer brands sell for top dollar while other brands may be priced for budget-conscious consumers. As a small business owner, you can pursue many retail pricing strategies, such as psychological pricing, where you set a price designed to meet a customer’s psychological need for a product.
13. Network with other local businesses
You can gain market share and goodwill by partnering with local businesses in your area. This might mean sharing expenses, like two retail neighbors sharing an internet subscription. It could also mean referring customers to allied businesses with the expectation that those businesses would do the same. Having relationships with similar shops will keep you abreast of local trends, new laws, and other relevant business updates. If you spot a new business opening in your neighborhood, don’t be afraid to say hi and start up a business relationship.
14. Continue to market your business and refine operations
Even with your clothing store up and running, your work continues. As you monitor your sales and marketing results, take proactive steps to improve them. This might mean stocking new clothing brands, adjusting your pricing, or marketing to a new group of target customers. By continually assessing and adapting, you position your clothing business for sustained success, even as the economic climate changes.
How to open a clothing store FAQ
How much does it cost to start a clothing store?
The cost of starting a business varies, and launching a clothing store is no exception. If your store is entirely online, there are upfront website costs and marketing and advertising expenses, as well as initial inventory acquisition. If you have a physical location, you will have to factor in variable expenses like rent and utility costs, which can fluctuate greatly depending upon your municipality. Generally, it costs more to lease space in well-trafficked areas, but in return you may enjoy greater customer volume.
Do you need a degree to own a clothing store?
No, you do not need any sort of degree to own a clothing store. However, many entrepreneurs benefit from taking courses in business administration and accounting so they have an easier time running their clothing store.
How many pieces do you need to start a clothing business?
There is no fixed number of pieces you need to start a clothing business. However, you may choose to create a buyer persona for your target customer. Imagine how many clothing items that person might expect to see in a clothing store, and use that data to stock the right amount of items for your target audience.
How much does a small clothing business earn in profit?
A small clothing business’s profits can be found by subtracting expenses from gross revenue, and that number will depend on your product pricing, among other factors. You’ll make a greater profit if you can limit expenses like real estate, employees, and product acquisition. Other expenses, like marketing, may put a dent in your initial profits, but they can be an investment toward future revenue.