10 Things Online Brands Should Consider When Opening a Brick-and-Mortar Store

10 Things Online Brands Should Consider When Opening a Brick-and-Mortar Store

Multichannel retail | Shopify Retail blogYou hear it all the time — thanks to technology and ecommerce, brick-and-mortar stores are going to be obsolete. But the fact is that more stores opened in 2017 than closed in the same year. Not only that, but according to the International Council of Shopping Centers, around 78% of consumers prefer to shop in store and 94% of total retail sales are still generated in physical stores.

With retail industry sales projected to rise 3% annually through 2021, it’s safe to say that physical retail isn’t going anywhere. That’s because successful sellers aren’t switching from one form of commerce to the other — brick-and-mortar retailers are thriving right alongside online retailers, and those who offer a multi-channel shopping experience are coming out on top.

Even the largest online brands in the world are getting in on the retail action. Ecommerce giant Amazon accounted for about 44% of all U.S. ecommerce sales in 2017, or about 4% of the country's total retail sales. Not content to only sell online, they opened a huge 4,000-square-foot, data-curated bookstore in New York, with online ratings deciding where books are placed.

Then there’s Apple, which has perfected the online experience and transformed the way people communicate. Despite being able to customize products and get anything you want on their website, you never see an empty Apple store. In fact, lines are often out the door.

Why Online Retailers are Opening Brick-and-Mortar Stores

Sure, part of the reason customers visit is amazing marketing and branding that gets them through the door of an Amazon or Apple store. But there’s a bigger reason that online merchants are opening up brick-and-mortar stores: Their customers are demanding it. Or rather, they’re demanding a creative, entertaining shopping experience.

No matter how advanced an ecommerce site is, it’s impossible to recreate the real-world experience of talking to an expert salesperson face-to-face or trying out a product in person.

Customers want that personalized experience and the retailers that give that to them will not only win the sale, but also win the customer’s brand loyalty.

If you’re an online merchant who is considering a brick-and-mortar location, here are 10 things you should consider before you dive into physical retail.

Location, Location, Location

Multichannel retail location | Shopify Retail blogRegardless of what you’re selling, one of the most important decisions you’ll make is where you’re going to set up shop. It’s critical that you’re not just choosing a beautiful space in your favorite part of town because you fell in love with it. You need to be strategic and ask yourself a series of questions before making that decision.

Who Are Your Customers?

Research the area and find out the population demographics from the local chamber of commerce, the Census Bureau, or use companies like ESRI and Easy Analytic Software Inc. that can provide that information for you. Also consider what other businesses your ideal customer visits and narrow your search based on those locations as well.

Who and Where is Your Competition?

Many people think that opening a location near the competition is a bad thing, but it can actually be a mutually beneficial relationship if the types of businesses nearby are complementary to your store. These businesses are already attracting customers, so you can potentially save on advertising and marketing costs, and their existing foot traffic might help to increase your sales.

You’ll have to determine if your proximity to similar sellers will help or hurt your business. Conduct some market research to remove some of that guesswork and get a stronger grasp on your industry, your target customer, your competition, and your product.

How Much Space Do You Need?

Keep in mind that you’ll need space for selling your products, an office, a break room, and storage. While it depends on what you’re selling, a general rule is that you want to display a variety of products all the time. So, make sure the store’s floor space is big enough to accommodate many types of items.

A cramped sales floor is off-putting to customers, so it’s better to have more room than not enough.

Is it Accessible?

If people can’t easily get to your shop, that’s going to negatively affect sales. Determine whether or not the location has adequate parking, whether the parking is accessible from the road, and that both customers and suppliers can enter and exit with ease.

Negotiating Your Lease

Negotiating your lease is just as important as choosing the location of your business. The length of the tenancy is one of the first things to consider. If this is your first brick-and-mortar location, it’s a good idea to go with a shorter lease that offers more flexibility if the needs of your business change. Or you can test the waters of physical retail with a pop-up shop.

FURTHER READING: Learn more about hosting your own temporary retail activation with our ultimate guide to pop-up shops.

Securing Financing

Between rent, operating expenses, merchandise, and marketing, starting a brick-and-mortar store isn’t cheap — on average, it costs around $100,000 to get things going off the ground.

If you don’t already have access to funding, this means you’re going to need an investment. This could take the form of everything from a venture capital investment or a small business loan to bootstrapping and financing the venture yourself as you go.

FURTHER READING: Learn more about how to get a loan for your small retail business.

The first step is to craft a solid, realistic business plan with financial earnings/profit projections that will impress potential lenders or investors. It’s important to work out exactly how much you need to borrow and to create a schedule for repaying those loans.

Of course, borrowing money does carry numerous risks, so you’ll have to determine what level is acceptable to you.

Insurance

Investing in business insurance coverage for your retail store is critical because it protects you from a variety of risks you’ll take on as a merchant. Common coverage includes business property, business income, general liability, and product insurance.

Some forms of insurance are required to receive financing, while others are just a good idea to have to make sure things run smoothly. It can be confusing, but a good place to start is with the Small Business Association.

FURTHER READING: Still confused about commercial insurance? Read up on what you’ll need to know when shopping for coverage.

Marketing and Promotion

While you already have customers online, the challenge now is to bring people into your brick-and-mortar location. The first few weeks are critical to spread the word about your opening and to give people a reason to come in.

There are a variety of ways to do this — print advertising, social media, in-store promotions — and some experts suggest you allocate a budget of 9% to 12% of estimated sales to your paid promotions. The key is to use your opening days to convince customers they need to come back with their friends and family in the weeks and months to come.

FURTHER READING: Build buzz for your retail store grand opening with social media.

Optimizing Store Layout

Retail store layout | Shopify Retail blogThe layout of your store will determine how successful you are. Research shows that 90% of people turn right when they walk into a store, so use that to your advantage and put the highest-profit products just to the right of the front door.

If you’re a store that sells staple items, place them as far from the door as possible. The more ground customers cover, the more items they see and the more time — and hopefully money — they spend in your store.

To increase the chances that the shopper will choose an item by an additional 35%, simply place your most profitable goods at eye level. However, avoid placing high-demand items within the first five to 15 feet of your store. Customers tend to take a sweeping look at the store, and they’ll likely not notice anything placed right in this area.

Visual Merchandising

When you step into the Amazon bookstore in New York City, one thing you’ll notice is that every single cover is on display — you won’t see any book spines, because they’re not trying to cram the entire inventory into the store at once.

While you might not have that luxury, your most effective salesperson is your physical retail space, and visual merchandising is the key to optimizing product displays for maximum revenue.

FURTHER READING: You don’t have to be a design guru to build displays that get people talking. Learn the basics of visual merchandising with our guide to industry best practices.

And don’t forget about your window displays — they draw people in from the street and into your store. Get creative and start with a theme, create a focal point, be bold, and take risks that will get people talking. Also keep it balanced and simple if the product calls for that. Trust your judgment and be clear with the emotion you want your display to evoke and take it from there.

Staffing

While you might have been able to run your ecommerce store by yourself, with a brick-and-mortar location you have to think about customer service, stocking, ordering, accounting, marketing, merchandising, and cleaning — which is difficult to manage as one person.

The key is to bring on employees that take the burden of many time-consuming daily tasks off your to-do list so you can focus on managing and growing your retail business. Make sure you have a clear job description that includes everything from daily duties, qualifications, and desired personality traits. Post your job listing on your social media accounts, ask friends and family for referrals, and post to Craigslist and other classified sites.

FURTHER READING: Not sure who to hire first to help you run your retail store? Learn more about the eight common retail positions and their responsibilities.

Selecting and Managing Suppliers

You already have a list of vendors you work with for your online store, but it can’t be overstated that supplier selection and management are important to the growth of your business.

It’s vital that your suppliers understand your specific business and the role that they play. Ensure that you communicate your inventory needs. Establish a supplier budget that includes not just the wholesale prices, but also shipping and delivery costs. And maintain open communication — keep them updated about what’s going on with your business, such as popular product lines or other trends you’ve seen.

Multichannel Cohesiveness

Once you have your brick-and-mortar store, it’s important that you communicate your brand positioning through every part of your business — both online and offline. That means your message is clear from how you train your employees; the online checkout process; marketing on your website and in-store; and posts on your social media channels. Customers need to know that when they shop with you either online or in person, they can expect a consistent experience no matter how they interact with your brand.

Consumers want to be able to browse in person and buy online, or shop in a brick-and-mortar store after checking things out on your website. By providing them with all that they need, you’ll be on the path to success.

FURTHER READING: Learn more about how to create a cohesive customer experience both online and offline.

Moving Forward With Brick-and-Mortar Sales

When it comes to starting your own storefront, you’ll have many factors to consider. Now that you understand many of the common elements needed to move forward with a physical store, you can make more informed decisions about the best direction for your business.

What was the most helpful advice you received when opening your storefront? Share your advice in the comments below.

Photo of Abby Heugel

About the Author

Abby has more than 15 years professional experience and her personal work has been featured multiple times in Reader's Digest, Huffington Post, The Today Show, Apartment Therapy, and BuzzFeed, among other places. She was the editor of two specialty retail trade publications for seven years before moving on to become the associate editor of a website that was ranked as one of the top 10 mobile websites in the world. She also has an award-winning blog and more than 60,000 social media followers.

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