Accounting

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1 Minute

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Marketing Strategy

Cat Page
19 Minutes

Once you’ve decided on the kind of store you’ll set up and what products you want to sell, you need to create a marketing plan. The purpose of this is to define a retail marketing strategy that shows how you will reach your target audience.

A marketing plan will help you fine-tune your objectives and create awareness for potential consumers.

As a successful retailer, it’s your responsibility to create the best shopping experience for your customers, whether you operate online or through a bricks-and-mortar store. Your marketing plan is the key to streamlining your promotional campaigns. Discover in this article the main steps to design your marketing strategy.

 

Summary : 

  • Develop your retail store brand
  • What is your USP (unique selling proposition)?
  • Understanding your target market
  • Select the right marketing channels for retail
  • Creating retail promotions
  • The importance of timing in retail stores
  • Costs and budgeting for a retail store
  • FAQ 

 

Develop your retail store brand

What is a retail brand?

A retail brand represents the overall look and feel of a business. It encompasses the visual representations, tone of voice, mission and objectives of a company. A retail brand has to stand out from the competition and reflect the message the store wants to portray. It tells your story and helps promote your key features.

It has to reflect:

  • the product range
  • quality
  • pricing
  • your expertise as a business

When developing the brand you should consider the logo, strapline, colours, fonts and imagery. All these components need to turn into a positive perception of the company to engage the customer. 

H3 How to define your retail brand

The whole range of products you stock will sit under the umbrella of your brand, so it has to represent the business as a whole. The brand needs to be simple, something people will remember, resonate with and trust.

Example: successful retail brands

There are thousands of retail strategy example brands that get it right including:

  • Apple
  • Starbucks
  • McDonald’s
  • Coca-Cola
  • Airbnb

Why are these brands successful? Because they all offer a positive, enhancing experience when you interact with them, rather than just the simple purchase of a product.

Creating your brand may take minutes, or weeks of brainstorming. Use the opinions of people who don´t have any interest in what you plan to sell as they may offer insightful, neutral opinions.

What is your USP (unique selling proposition)?

How your USP in retail attracts customers

Your USP (unique selling point/proposition) positions you as an expert in your field. It makes you stand out from the crowd and attracts customers. It can be something as simple as ice cream that doesn´t melt to early morning breakfast deliveries. When you define your USP, look at it from the eyes of your target market and ask ‘so what’?

Is your idea going to solve their problem and make a difference in their lives? If it is, then you have a USP.

Steps to writing a USP for a retail store

  1. Decide who your target audience are
  2. What problem will you solve for them?
  3. How will you do this?
  4. Do your competitors do anything similar?
  5. How is your retail business different?
  6. Get feedback on your USP

Once you have these ideas down on paper, write one clear, simple sentence. This should be something that inspires and promotes action.

Understanding your target market

Who do you intend to market your retail products to?

The purpose of understanding your target market is to know who to focus on and attract to your store. Devoted pet owners will be open to the idea of a pet bed that keeps their dog or cat cool in summer. Parents with young children will welcome the idea of a comforting toy that will help them sleep. The idea is to offer a product to people and solve a problem for them.

Conduct market research on the retail sector you intend to operate in

Researching a market is an essential tool for giving an insight into the competition and what people want and expect. You can either do your own independent market research or pay a company to do it. Small businesses are more likely to do their own research, especially if your retail store is local.

The Internet is a good place to undertake market research but can be a little overwhelming as there is so much information. Conducting interviews, surveys and polls, in-person or through emails is another way to carry out market research on any contacts you have. 

Select the right marketing channels for retail

Digital marketing

With so many ways to market both an online and physical store, the marketing plan should detail the methods to be used and timescales. Strategies for successful marketing should consider the main marketing channels and which are suitable for the audience. Digital marketing is a common way to increase your exposure through: 

  • Website – this can include special offers, new product ranges and anything else that will hook the audience and entice them to buy. However, before you can encourage a purchase, the potential customer needs to find your website. This means a memorable name and the use of keywords in blogs and articles to allow search engines to find you. 

You can either run a retail store just through a website or complement a physical store with a website to gain more sales.  

  • Social media – a common and indispensable tool, social media for retail has fast become an essential part of every marketing plan. Consider your target market and which social media channels they use, for example, older people are more likely to use Facebook than Instagram.
  • Google My Business – register free and be found locally. You can add your opening hours, type of business, website and where to find you on Google maps.
  • Email (newsletters) – capturing emails through ‘sign up to our newsletter’ is a powerful way to collate a database of potential customers. In order to comply with data protection policies make sure you allow the reader to unsubscribe if they wish.
  • Blogs – a blog is a way to keep people interested in what your retail business is doing. If you’re introducing sustainable products, reducing your carbon footprint or holding a charity event tell people about it in a blog. This is your free marketing tool to promote the business and make more sales.
  • Customer reviews – encourage your customers to leave a review each time they buy a product and are satisfied. Google and Trustpilot reviews are an essential marketing tool as people often check others’ opinions before they decide to buy. 

Traditional marketing

Whilst digital marketing has a strong position in any marketing campaign, there is still a place for traditional marketing such as:

  • Direct mail – addresses the potential customers who do not have access to internet marketing.
  • Prints – newspaper and magazine advertising still have a place, although they can be expensive compared to online. However, don’t dismiss it entirely as there are many other ways to produce printed ads besides featuring in glossy magazines. If your store is local, placing an ad in a village magazine could give you access to potential customers. This is an ideal marketing strategy for small retail stores to create awareness of their business.

 

The other form of printed promotion is leaflets and flyers for communication in-store and locally. Whilst not as common today as digital advertising, print gives people something to keep and stick on their fridge or desk. It’s easy to have flyers distributed in a local area to announce your shop. Postcards are a good way to advertise in print as they’re more substantial than paper and give a more sophisticated image.

  • Radio– local radio can boost awareness of your store. People listen to the radio in the car or in the background when working or at home, and a constant jingle is likely to stick in their heads. Talk to your local radio station and you may find they do an interview about your store, which will be free.
  • PR – publicity is probably the most powerful traditional marketing tool and it can often be free. This can range from press releases to local and targeted media to word-of-mouth publicity. There’s nothing better than a recommendation from a satisfied customer.

Creating retail promotions

Retail price promotions

The price of your products and how you promote them will depend on the kind of product you stock in your stores. If you’re offering luxury goods consumers will almost not expect to see discounted prices as it devalues the product. However, people like a bargain and a carefully planned series of price promotions throughout the year will promote sales.

For retailers, seasonal promotions can be essential to boost profits. For example, beachwear in the summer, chocolate at Easter or Christmas decorations in December.

Case study: the value of communication

Liz runs a small retail store selling flowers. Her marketing plan includes key times to promote. She has been undertaking a drip-feed marketing campaign on social media running up to Valentine’s Day. She has offered a ‘get 50% off a bouquet of red roses if you buy before noon’ hoping to gain sales from her competitors.

Unfortunately, Liz did not anticipate the success of the promotion and has run out of flowers by 11.00 a.m. Her supplier has no further stocks so she has to spend the rest of the day apologising to customers on what should have been one of her most profitable days of the year. 

Liz should have spoken to her supplier about the promotion and warned them she would need extra stock. She did not do this and assumed they would be able to deliver more to her if she needed it on the day. 

The moral of this case study? Communication in retail, especially with suppliers, is essential.

other retail promotions

Marketing is not just about reducing prices and hoping more products will sell. There are many other ways to promote a retail product, for example:

  • competitions – offering a key product as a prize
  • buy one get one free
  • free samples 
  • offering a referral campaign
  • attending and hosting events (at local hotels or your retail premises – this is the ideal way to grow your mailing list and show off your store to potential customers of the local community) 
  • in-store marketing – tastings, samples

The key to promotions is to run them regularly to remind people you are there. Consider how you can link the promotions and marketing methods above, so everything runs together seamlessly. Uniting your message and working across several different marketing channels gives a retail business consistency and sends out a key message. 

Tip: what to do after a promotion

It’s easy to let a promotion finish and move ahead with the next without devoting the time to review how it worked. Remember these key points after every promotion you run:

  • Analyse – was the promotion a success? How much profit did you make?
  • Plan – when and if you should run it again and if changes need to be made
  • Implement – set a date for the next promotion

The importance of timing in retail stores

How far should a marketing plan go?

Every marketing plan should have a time plan for the next 12 months. It should be reviewed regularly and adjusted as necessary. The success of every promotion and event should be reviewed so you can decide whether it should be repeated or how to improve. Of course, some ideas may not work, but you won´t know unless you trial them.

Creating awareness of your retail business

Included in the marketing plan should be a time plan of when promotions are to run. This means they have to be planned in advance. You may need to order more stock, buy accessories for window displays and get more help from staff. You should also think carefully about when you’ll advertise the promotion. If you inform people too early they’ll forget about it, while promoting too late means lost sales.

Costs and budgeting for a retail store

Set a budget for retailing marketing

Every marketing plan should have a budget, so you know how much you have to spend. You should take the time to analyse every cost and promotion and keep track of what you are spending.

The potential costs in a marketing plan

Marketing is a business expense that should be broken down into various areas such as:

  • using research 
  • price promotions, events, postcards, leaflets etc. 

Managing this budget is key as it will help you keep control of your finances for your retail store.

If you’re opening a retail store, we’d like to help. Join our Ankorstart support programme for free advice and guidance on marketing your store. 

FAQs on creating a marketing plan for a retail store

Do I need a brand or just a name?

You need more than just a name, you need a brand for a retail store as this reflects the identity of your business. Your brand summarises the values of your business, the market you are aiming for and your image.

How do I define my target audience?

You need to understand what your customers want and how to fulfil their needs. The secret is to solve a problem they have. Your target audience may be a certain age, fit a certain lifestyle profile and be in a particular income bracket – think about how these factors could determine different problems to solve.

What is a USP?

This is a unique selling point. It’s the thing that makes your product or service different from those of your competitors. You should market and promote your USP as often as possible.

What time schedule should a marketing plan cover?

A marketing plan should be a 12-month rolling programme that lists activities month by month. It should detail seasonal promotions, end of stock discounts and long-term marketing goals.

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Administration

Cat Page
16 Minutes

Opening a retail store is the goal of many entrepreneurs across the UK. The chance to create a successful, sustainable business that you control completely is a widely held goal. Small business owners can set their own hours, provide employment opportunities for others and hopefully end up making a good profit. Taking an initial concept and seeing it come to fruition as a successful retail store is an immensely satisfying experience. 

If you are considering opening a retail store, you need to know exactly what legal steps to take. Far too often, new business owners do not have a full understanding of their rights and obligations. Knowing what you need to do can help to simplify the sometimes-complicated process of opening a retail store

Good to know: Independent retail is making a comeback in the UK

Recent figures show that the number of new retail stores in the UK has hit a four-year high. Conversely, the number of large chain stores is dwindling. Good news for small retailers!

Summary

  • What legal steps do I need to take to open my retail store? 
  • Mistakes to avoid when opening a retail store
  • Are you on the right track to opening your store?

What legal steps do I need to take to open my retail store? 

So, you have a fantastic idea for a retail store, developed a business plan and now you are thinking about opening. Before you rush ahead and sign a lease, there are a few initial legal steps to take. Go over the below list to find out the right way to open a retail store.

Good to know: There is government assistance for small retail stores

Some more good news for potential small retail store owners: the UK government has extended the Business Rates Retail Discount for retail properties. More information can be found here. ²

Decide on a unique name for your business

The first step is to spend some time deciding what to call your business. What name you choose for your business is important for your marketing, but it can also have legal ramifications. 

Choosing a name that is too similar to an existing business could land you in serious legal trouble. You may be perceived as being connected to an existing business when you are not. The existing business may take legal action against you for trademark infringement. You may be forced to change the name of your retail store, which will involve expensive rebranding. Additionally, you may also be liable for damages. Research the name you choose thoroughly and ensure that it is unique to your business. 

Choose the right legal structure for your retail store

The legal structure of your business is the next step to take and it’s a crucial one! The structure of your business will determine your tax rate, your liability and how you should keep your accounts. Depending on the type of structure you choose, you may have to register at Companies House or directly with HM Revenue and Customs (HMRC). 

The most common types of legal structures for retail stores are:

  • Sole proprietorships (sole traders) – This is when one person opens and runs a business on their own
  • Partnerships – Two or more people enter a legal contract as owners of a business.
  • Companies – A company is formed when it is registered as a legal entity.

Get your tax affairs sorted

Once you have registered your legal structure, you’ll need to make sure you are registered with HMRC for tax purposes. Businesses must be registered because they will need to pay tax on any profits. A retail store will also need to pay Class 2 and Class 4 national insurance (NI).  

You can register for tax online at the HMRC website. After you’ve signed up, you will be sent a Unique Taxpayer Reference (UTR). HMRC will also send you a letter within about two weeks with an activation code for your account. 

If your retail store is projected to make more than £85,000 per year, you will need to register for Value Added Tax (VAT). Again, this can be done online via HMRC. Since not all goods or services attract VAT, it is a good idea to go over VAT information carefully. 

Take out the right type of insurance

Small business owners need to protect themselves against unforeseen events. It’s a good idea to get adequate insurance right from the start. If you have staff in your retail store, then you will need to take out employers’ liability insurance. This is mandatory for any business that has employees. 

There are a few other insurance options that are not a legal requirement but are prudent for small retailers. Public liability insurance will pay for any legal fees or damages if a person is injured in your store. Professional indemnity insurance will cover legal costs if a product you have sold causes harm outside of your business premises. If you are concerned about protecting your stock or your premises, you may wish to take out commercial property insurance.

Look into your lease agreement

If you are not purchasing premises outright, then you will need to sign a lease agreement. A commercial business lease differs from a normal residential lease. Make sure you thoroughly go over the fine details in any lease you sign. 

In general, a lease for a commercial building should include:

  • The current rental cost and an estimate of any increases
  • The duration of the lease
  • Information on how to break the lease (get-out clauses)
  • If a guarantee is needed
  • Details on how the lease will be concluded 

Ready to open your store?

Know your obligations as an employer

If you are planning on employing staff, you’ll need to register with HMRC as an employer. This process has to be completed within 4 weeks after you have employed your first staff member. When interviewing staff, retailers need to ensure that any prospective employee is entitled to work in the UK. Some businesses may require employees to undergo a DBS check. 

As an employer, retail store owners will also have to ensure they are paying at least the national minimum wage. All employees must be enrolled in pension schemes and be issued statements of employment. 

Any retail store with over five employees is required to have a written health and safety policy. This policy will need to include measures taken to ensure that the building is safe for staff and customers. It should also detail how employees can go about their duties in safety and outline emergency procedures. 

Other documentation that a retail store with employees may need include a privacy policy and a code of conduct. Drafting these documents and requiring staff to sign them can provide legal protection against complaints.

Keep an eye on your opening hours

Just because you own your own retail store doesn’t necessarily mean you can open whenever you like. The UK government has strict rules surrounding legal opening hours. What regulations concerning business hours apply to your shop will depend on its size. 

A shop that has a floor size of up to 280 m2 is classified as a ‘small shop’. If this is the case, you will not have any trading restrictions. If your retail store is larger than this, you’ll have to restrict your opening hours. Large retail stores must stay closed on Easter Sunday and Christmas Day. They are only able to be open on Sundays between 6 am and 10 pm and only for a period of six hours.  

Good to know: Retail sales in the UK are on the rise

The volume of retail sales in the UK has increased in recent months. Figures show that retail sales are now higher than they were pre-Covid19. ³

Find out about any applicable legislation 

Retail store owners have a range of legal obligations to their staff, to the public and to the government. Getting a good overview of what regulations and legislation are applicable to your store will help you to avoid legal difficulties. 

In general, retailers have a responsibility to make sure their staff are legally employed and treated fairly. Retailers must also ensure that the retail prices of all goods are clearly displayed. Products should not have misleading descriptions and must be safe and fit for purpose.  

Legislation relating to employing staff includes:

  • Health and Safety at Work Act 1974
  • Equal Pay Act 1970
  • Sex Discrimination Act 1975
  • Race Relations Act 1976
  • Employment Protection Act 1978

Legislation concerning consumers includes:

  • Sale and Supply of Goods Act 
  • Trade Description Act 
  • Consumer Credit Act
  • Data Protection Act/GDPR

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Mistakes to avoid when opening a retail store

Starting a retail business of any kind is a complicated process and can be stressful. If you don’t take the right steps, you could face financial penalties, higher rates of tax or even wind up in court. Avoiding problems means taking the time to follow the right legal steps

Common mistakes that new retail store owners make include:

  • Not registering as the right legal entity
  • Not looking into your lease
  • Not getting insurance
  • Failing to register for tax
  • Failing to register as an employer
  • Not creating health and safety policies
  • Failing to correctly vet potential employees
  • Not having a good understanding of relevant legislation

Are you on the right track to opening your store?

How can you be sure that you are doing everything the right way when opening your retail store? There are many ways that new retailers can make certain they are following all the relevant legal steps.  

A good way to be sure you are on the right track is to speak with other retailers in your area. Local business owners can let you know important details such as if there are any applicable council taxes.

Another option is to get advice from a professional. You can check your tax and business structure details by speaking with an accountant who specialises in small retail businesses. Asking for advice directly from HMRC can also help you to make the right decisions. A lawyer who deals with small business legislation can assist you in staying on the right side of the law. 

FAQs on the legal steps to open a retail store

Will I need to register my retail store?

No matter how big or small your retail store is, you will need to register your business name and the legal structure. This can be done via HMRC or with Companies House. 

Does employer law apply to me?

UK laws surrounding the responsibilities of employers will apply if you have staff that are not direct family members. Retail stores with more than five staff members will need a formal health and safety policy.  

What hours can my retail store legally open?

This depends on the size of your premises. Small shops do not have to abide by trading restrictions. Larger retail stores must adhere to stricter trading hours. If the size of your floor space exceeds 280 m2, you will have restricted trading hours. 

Where can I find help with opening a retail store?

Speaking with local business owners or engaging the services of an accountant or lawyer can be beneficial. Assistance can also be obtained from HMRC. Anyone looking to open a small retail store in the UK can also get assistance from the team at Ankorstore. 


Business plan

Cat Page
13 Minutes

A retail store business plan is a formal document. It provides a snapshot of what your business is and how it can develop. Typically, a retail store business plan will forecast the next five years. Think of it as a map which shows you where you are going. And how to get there. A plan can help you anticipate potential pitfalls. A retail store business plan helps you think about what you will be doing months or years ahead. It is also something you can show to investors. Crafting a business plan is a creative experience.  Ankorstore can help you.

What’s a retail store business plan? 

What exactly is a business plan?

A business plan is a document which contains all your important business goals, the methods of attaining them and the resources and timescale needed for this. It is a summary of everything you want to achieve. All your strategy will need to be set out to enable you to get sales for your product or products.

It will also contain all your professional details. It is one of the most important documents you will ever create. . It is better to get it absolutely right through lots of in-depth research. So much depends on it, so…

  • Don’t rush it..
  • Take the time it needs.
  • Every word is important.
  • Think through every concept.

Why making a business plan helps the success of the retail project

Many new entrepreneurs are creative. They have things to sell that you won’t find elsewhere. But creativity needs a structure, a good business plan for your retail store. A good retail business plan is a necessary step to save you from making expensive mistakes. It will also help you look professional and is an absolute necessity if you are looking for investors.

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7 Steps of the business plan

Start by setting your goals

Do you have dreams of a high-street store or an e-commerce website? You need to plan every aspect from finances to marketing. As you do your research you will clarify your own ideas and understand your business better.

A plan should include both your short-term and long-term goals. There are also internal and external objectives. The internal ones might not be a public part of the plan. They might involve discussing goals with employees and offering incentives to them. In the external objectives you set goals for overall performance. Pricing and customer service are important here.

How to efficiently analyse the market

Entrepreneurs come from all sorts of backgrounds. Some have had a wealth of experience in the retail trade before deciding to go it alone. Others are straight out of school or university and have brilliant ideas they want to put into operation. Entrepreneurs are starting concept stores offering brands and authentic goods of the sort you cannot find on Amazon or in the average supermarket. Your specialty might be:

  • Cosmetics;
  • lingerie;
  • gourmet foods;
  • toy;
  • flowers;
  • coffee;
  • etc.

It can be almost anything that is a bit special. You can learn by looking at the business plans of other retail stores, particularly those who are offering similar lines of products.  If you have a high street store you can also check out similar businesses in your area.

A few tips to analyse customer behaviour

Who is your ideal customer? What is their age, background, education, financial status? Is this going to be a rare expensive purchase? Or is it something people will need to buy frequently? How do you get repeat custom? Word of mouth is one of the best recommendations. You have to inspire trust to get that.

How to set you retail strategies

Make a one-page summary to start with. You need to find an answer to the following questions:

  • Who is your target market?
  • Who are your competitors?
  • Will you need staff?
  • Who are your suppliers?
  • What is your market plan?
  • How will you run your business?
  • What is the supply chain?

Besides, you will need a merchandising plan to make sure you get the best return on your investment. And how will you record your sales, returns, purchases of materials, etcetera? And what is your positioning in the market? What makes your brand different?

The importance of making short-term plans

Not everything in your plan will be long-term. With a retail store some things will be seasonal. You could focus on the next sales period. Or do you have products suitable for Mother’s Day? Or for Christmas gifts? Do you want to run a Black Friday campaign, American style? Do you want to celebrate your store’s opening day with special offers for customers?

How to implement your plans

Make sure all the legalities are in place before you start. Who owns the company? Does it have a separate correspondence address? How can the public contact you?  Are there other directors involved? If so, what are their roles? Try to keep to your original goals within the times set. Stick to your aims. Try to meet specific targets.

In-depth analysis of your performance

The analysis of performance will be an ongoing process as your business progresses. Choose intervals at which you want to reassess this analysis. This will help you improve on several aspects:

  • Are you reaching the goals you set out at the start?
  • Is anything getting in your way?
  • Has a new competitor appeared?
  • What do you need to do to improve profits?
  • Who is responsible for keeping all the pages on social media and your website up to date?

And you will also need to do a thorough financial analysis. Have you started to make a profit after the start-up costs?

Ready to open your store?

What are the essential elements of a retail business plan?

Project presentation

Explain your products. This part can be great fun. Let the world know what you are selling and why you are so enthusiastic about your goods. How do your products differ from those of your competitors? Make sure you have professional photographs to enhance the image of your products online.

Publicity is another thing to consider. Where do you want to advertise online and offline? What is your budget? Does your shop have a website? Can you make additional use of Facebook, Instagram and all the other host of places in social media to promote your goods online? Consider the four Ps otherwise known as the marketing mix:

  • Product
  • Price
  • Place
  • Promotion.

Products and restocking

Products can be dispatched on your behalf from warehouses or distribution centres. Some entrepreneurs prefer this. Others like a more hands-on approach which could involve anything from a bricks-and-mortar store to a thriving regular market stall. The choice is yours. Online or offline or better still both.

Make sure you are always well-stocked with the most popular products. Customers can be fickle. If they can’t buy what they want when the mood takes them, they may take their cash elsewhere. It is more important to keep successful lines well-stocked than to attempt to stock everything. But also look at new products. Keep up with the competition.

Market research

Find your target market. Who are they and why should they buy from you? Is your product something basic everyone needs like foods, beauty products, clothes? Or are you targeting a specific luxury market?

It is useful to gather information on your competitors as well as possible clients. If you are working from a shop rather than solely online by e-commerce, location will be an important aspect. Is there a similar business nearby? What can you do better than them?

Look at general trends in retail. What is selling? And what isn’t? How can you boost sales?

Who to present the business plan to

Presenting to investors

Investors may be family or friends you have known all your life. Or they may be people who have a particular interest in the products you are selling. Or they could be those who think that you and your business look like a promising investment.

Presenting to banks

Banks are cautious investors, and you will need the best of business plans to get a loan these days. But they have financial acumen and will know a good business proposition when they see one.

Be complete and precise in your retail store business plan. Have it proofread for feedback. Include all the essential information and practical details. Write about goals, ideas, strategy, innovation, marketing, and performance. But remember – it is not fixed in stone. As your business grows you may want to adjust your original ideas. The market is always changing, and you will want to stay ahead of the competitors to maximise your profits.  Ankorstore helps you to get all the details right.


FAQ 

Difference between business model and business plan?

A business model is a one-size-fits all statement. It is useful up to a point but not as essential as a business plan. A business plan is specific to you, your business and its location.

When to write a business plan?

A business plans needs to be written right at the start of any business. It is essential as a tool to clarify your own ideas. It is also important as a mark of professionalism to secure cash investors.

What elements should be included

Whether your store is going to be offline or online you will need to begin your business plan with a good company description. What is the company’s name? Where are you located? Is it online or offline? Or both? Let the world know what product or products you are selling and why your products are better than everybody else’s. The rest is aims, finances and a general picture of the sales market for your product


Finance & Costs

Cat Page
20 Minutes

The cost to open a retail store is a major investment. To achieve your goals and succeed, it’s important to accurately understand the expenses involved before you start

No matter what the sector, whether you’re planning to open a fashion, electronics or food store start-up, the cost analysis is essential.

The average cost to open a retail store is in excess of £150,000. This is a large financial investment, so it makes sense to be clear on the breakdown of the budget and get it right from the beginning.

Whilst you won´t need this amount at the offset, it is important to be aware that this is approximately what it will cost to open a retail store

This article gives the factors to consider and demonstrates how to calculate the cost to open a retail store in the UK.

Summary

  • Select the right premises for your type of business
  • Manage the cost of utilities
  • Register the business
  • Understand the importance of insurance
  • Buy stock and arrange transport
  • Budget for shopfitting and equipment costs to open a retail store
  • Market your new business
  • Budget for the cost of employees
  • Establish the finance requirements

Ready to open your store?

Selecting the right premises

Costs to rent or buy

Whether you intend to buy the premises or rent, a large portion of the costs will be required on rent or mortgage payments. A security deposit for rentals of one or two months’ rent in advance will be required, or a down payment towards the mortgage if you’re buying.

You’ll also need to consider the cost of storage space for the products and office space if you plan to have a team to run the retail store.

Tip: negotiate the rental price

Many retail premises have been vacant since the COVID-19 pandemic. This presents the opportunity for negotiation on the rent. If possible, offer to pay 6 months’ rent upfront for a substantial discount.

Selecting a location

A Statistica report on major UK city retail rental prices published in June 2022 shows London’s Bond Street as being the most expensive place in the UK while Bristol is one of the cheapest. This demonstrates the importance of choosing an affordable location.

City Annual GBP per square foot
London – Bond Street 2,150
London – Oxford Street 675
London – City 240
Manchester 220
Birmingham 180
Cardiff 140
Leeds 140
Bristol 95

Source: https://www.statista.com/statistics/321066/annual-rental-cost-of-prime-retail-rents-in-the-united-kingdom-uk/

The cost of utilities

Accounting for utility costs

A retail store should be a warm, light and pleasant environment for customers. Running a physical store encompasses utility costs including 

    • electricity 
    • gas 
    • internet connection 
    • business rates Consider the size of the premises

The above figures may differ depending on whether the store is in a prime location and its size. However, it is important to consider that if a cheaper location is in a place where there is no passing traffic you are not likely to achieve your projected sales.

Registration of the business

What kind of business?

The registration will depend on whether you intend to be a sole trader, limited company or partnership. 

  • limited company incorporation £12
  • trademark application  £2002

Permits and licences

You may also need special permits, for example, to sell food. If you plan to import goods from abroad there are specific rules to follow for a UK retail business. This government page on setting up a business in the UK can guide you.

The importance of insurance

Why you need insurance

Every retail store must have insurance cover in place in case of damage or accidents. There is a certain degree of risk both to employees and the public as stock and shelving can cause injuries. 

No matter how carefully the store is set up, the unexpected can happen, and as the owner of the retail store, you will be liable to pay out, which is why insurance is crucial.

What insurance should cover

The key insurance policies are:

  • professional indemnity (protection against loss or damage made by third parties) 
  • product liability
  • public liability (to protect your customers) 
  • contents insurance (anything that is not fixed e.g. stock) 
  • employers liability (to protect your employees) 

Good to know: buildings insurance should be paid by the landlord, not the tenant

Depending on the type of retail store, other insurance may be required such as 

  • business interruption – perhaps due to flooding or fire
  • legal cover – if help with a claim from a third party is required
  • glass cover – also known as shop front insurance, which can be claimed in the event of the store window being broken
  • freezer stock – if you sell frozen food and the freezer breaks down or the electricity is cut off

Stock and transport

Stock costs

Stock costs will depend on the type of retail business and volume of stock the store will hold, both on display and in storage. 

According to Shopify, business owners allow 31.6% of their first year’s spend on merchandise and product development. 

Tip: negotiate on inventory costs

When discussing orders with suppliers always push for their best terms. Ask if they offer a discount if you order a large quantity and if they will take stock on a sale or return basis.

Transport costs of a small business

Transport costs for stock must also be budgeted for, particularly if stock is ordered from abroad. You’ll need to consider any import duties (in light of Brexit) and the delivery lead times, especially if stock is coming from the Far East.

If stock is to be delivered to customers (for example from a furniture retail store) the cost of leasing or buying a van should be in the budget. 

  • van lease average 
  • van purchase second-hand 
  • van purchase new 

The transport will also need to be insured, under a company insurance policy. This will depend on the size of the vehicle, whether the insurer considers the business to be risky (high-value items) and if items such as tools or stock are kept in the van overnight. The average price for van insurance in the UK is £2,000 per year.

Shopfitting and equipment costs to open a retail store

Shopfitting costs

From display equipment to computers and a coffee machine, a retail store needs certain items to set it up effectively. The most important is the display equipment. The store needs to look immaculate and well-planned out. 

You may wish to employ the services of a shopfitting company if the store is undergoing a complete transformation. This will also give it a unique look and set the theme of the store. For example, if you’re selling cosmetics and perfume you’ll want a light, clean look, while a flower shop needs a fresh, natural feel.

The shopfitting costs will depend on:

  • store size
  • number and quality of fixtures and fittings (shelves, rails, racks, mannequins, cabinets, flooring, and lighting)
  • design and layout
  • point of sale (POS) material (signs, banners, posters) 
  • plumbing or electrical work
  • labour costs

The average cost for a medium spec retail store fit is £90 per square foot3

Tip: how to save on shopfittings

If you want to save the cost of employing a full shopfitting service, consider friends or family who may do the services for free or at a reduced cost. Do you know any painters, carpenters or designers? This could make a real difference to the retail store set-up costs. 

Equipment costs

In terms of other equipment, the basics you will need are:

  • till £1,000
  • computer/laptop £500
  • phone £200
  • office furniture (per person) £550
  • kitchen facilities (kettle, coffee machine, microwave, kitchenware, tea and coffee, water dispenser) £400

Marketing is important

Why you need a marketing plan

Opening a retail store needs a focussed marketing plan. This will ensure that people know about the business and products and are excited to visit. 

Your brand is one of your strongest tools and building it through marketing will increase awareness of your retail store. A solid, memorable brand keeps businesses ahead of the competition. Use the services of a designer to create a logo that can be used on all your marketing material including:

  • signage
  • price labels
  • publicity material
  • bags and packaging

It’s also important to understand the target market and who will visit the retail store. This links with the location. A designer clothing store is more likely to achieve success in an affluent area, while a gift store could benefit from being located in a tourist region.

Part of the marketing strategy should be to research the need for a retail store in a particular area. This identifies what potential customers want and like. This can be done locally by setting up surveys or through a professional research panel.

Marketing costs

Expect to pay the minimum UK wage of £9.50 an hour for people over 23 for temporary survey staff and at least £1,000 for an organised focus group.

These figures are based on an average size retail store with a website. 

  • logo design £50
  • website domain name £50
  • website hosting £100
  • website design £500
  • PR and advertising £3,000

Tip: search for free publicity

The best PR is word of mouth. Ask customers to put reviews on the website and social media, organise regular events and competitions to promote the store and keep the local press informed of marketing activity. 

Marketing the brand is an essential part of raising awareness of a retail store. If you want positive publicity you have to deliver an excellent service. 

The cost of employees

Do you need staff?

Whether full or part-time, freelance or contracted, even a small retail store needs some employees. Doing everything on your own will be impossible. You don’t need to employ a big team of people to start with, but you will need some assistance, depending on the size of the store. 

Let’s assume that you set up a jewellery retail store in a wealthy location and decide to employ one full-time employee to help you.

If you don´t have anyone in mind, you’ll need to advertise the position. This can be done in the local press or online, which will cost approximately £50 per ad. 

Once you’ve found your ideal team member to work in your retail store, as an employer you’ll have to pay their tax and national insurance which you must deduct from their salary at source.

National Insurance and Tax

The percentage to deduct will depend on the category the employee is in. As a guideline, if the employee earns £758.01-£2,083 per month and is in category A, 15.05% of their salary has to be deducted.

An employee in the UK is allowed to earn £1,048 per month before they have to pay tax. 

More information on tax and National Insurance can be found on the government website.

Working out employee deductions can be complicated as there are so many options and scenarios, so it is advisable to use the services of a bookkeeper or accountant to do this. They can also manage the business’s accounts and keep the books in order.

If you’re running a large retail store or a chain of stores you may wish to offer employees benefits such as private pension payments, healthcare, free lunches or gym membership, which can all be motivational. This all depends on the size of the store and what you can afford to offer.

You’ll also want to pay yourself a salary. This works in reverse. You can´t decide you want to earn 50k a year and take that amount from the business. How much you earn is dependent on how much profit the retail store makes after all other expenses are paid. 

Establishing the finance requirements

The total costs of running a retail store

Keeping the finances in check will contribute to the success of a retail store. The income and outgoings should be constantly reviewed, and any financial issues addressed. 

Some of these figures are not set in concrete which is why sales projections are important. As the store grows and you become more successful each year, you’ll learn which inventory items make the most profit.

The cost of promotions

One of the financial costs is how much you can afford to run promotions and special offers. For example, the range of handbags you thought would sell well is still on the shelves. Can you afford to discount them to make way for other stock you know will sell? Or do you want to run a seasonal promotion during Halloween – buy one accessory and get one free – will the profits allow for this?

Running a retail store requires dedication and careful financial management for it to succeed. Using the above figures should help you manage the costs and make sure you’re aware of the investment required.

For help and guidance, Ankorstart gives you the support you need to set up a retail store. Try the free programme and make your retail store a success.

FAQs on the cost of opening a retail store

How can I fund my retail store?

If you don´t have the budget you need to talk to a bank, or an investor could give you the funds you require.

Do I have to pay for market research?

This isn´t essential as you could ask a diverse group of friends, family and other acquaintances for their thoughts on your ideas. Ensure they don´t give biased opinions because they know you.

Do I have to buy all my stock at once?

No. You will need to look at what sells fast and slowly and manage the supplies once you open the store. If you run a larger store you may wish to employ a supply manager to do this.

Can I just use free marketing such as social media?

This is an excellent way to promote your business, but you also need to raise awareness through other forms of advertising such as press ads, Google ads and attending industry events.s

 

NB unless otherwise stated, all figures are annual averages and from the quotemyenergy.co.uk business calculator.

2UK Government website figure

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Starting my business

Cat Page
16 Minutes

If your dream is to open a retail store, this article gives you the information you need to do it step by step. 

The key to success, if you want to open a retail store, is in the planning and organisation. Following a structured business model will help to maximise your chances to succeed in opening your retail business activity. Discover here which are the main steps to consider while thinking and starting your business.

Summary: 

  • Validate your store creation idea
  • Write a business plan to open a retail store
  • Secure the finance
  • Consider the budget
  • Organise your administration and legalities
  • Decide on the location
  • Prepare your stock and range
  • Create a marketing plan
  • FAQ

 

Validate your store creation idea

Come up with a unique idea

You may have the most fantastic idea in the world, but it will only work if there is a demand for your products in the area you plan to set up in. Just because you like something doesn’t mean there’s a need for it. Whether you want to sell food, gifts, toiletries, toys, or homeware… the list is endless, you have to find out if there is market demand for what you plan to sell. 

Start with aiming for a niche market that offers something other stores don’t. 

 

     Case study example

Susan has an autistic child and can´t find anywhere to buy toys to calm them. She talks to a number of parents at her child’s school and joins online forums to find out if people would buy her products. 

She decides to set up an online store to address this need, and within 6 months she’s making £500 profit a month as she saw a gap in the market. She’s not only selling in her local area, but online too.

Research

Market research is essential. The quickest and cheapest way is to ask friends and family if they would buy your product. But this will only give a limited idea of whether your idea will be successful. Other research ideas include:

  • going door to door in your local area
  • handing out questionnaires in shopping centres or at local events
  • gathering data via email if you already have a customer base from another business
  • paying for professional market research

Write a business plan to open a retail store

Why do you need a business plan?

All businesses should have a plan. Once you’re clear about what your product offering is going to be it´s time to write a detailed business plan. This will give you a structure to follow and may be necessary to present to potential investors.

H3 What to include in the business plan

The business plan should include:

  • Business goals  – what you aim to achieve
  • Target market – potential customers using your market research
  • Your USP (Unique Selling Point)what makes you different from the competition
  • Product category – broken into sub-categories e.g. Clothing > adults/children/men/women/accessories/footwear/seasonal
  • Location – whether you intend to set up a physical (and in which area) or online store
  • Supply – where you will source your products
  • Marketing – how you will attract customers (this doesn´t need to be detailed as a marketing plan will highlight the specifics)
  • Finance – how much capital you have, whether you need to ask for investment, projected profitability over 1-5 years, additional costs such as staff, overheads, rental, marketing
  • Staffwho will run the business, whether you need to employ full-time or part-time staff, the cost of an accountant, administrator marketing manager etc. You should consider whether you can outsource some of the staff costs (such as admin) to save the expense of contracted employees.

 

Secure the finance

Be aware of the cost

You probably have some idea of how much funding is available, but you must go into detail and ensure you have enough money to open a retail store. The initial outlay could be large if you have to rent or buy premises, fit out the store, and buy stock and materials such as cash registers and payment machines. This is all before you achieve any sales.

Working out the costs

List the costs on a spreadsheet and compare them to the money you have available. You should also allow a sum for backup funding for unexpected costs.

There are a number of ways for businesses to get funding. If the cost is more than you expected, you may need to secure finance from a third party. The cheapest way is to ask for a loan from friends or family, but if this is not possible you could visit your bank for a small business loan or use a credit card if the amount is not too high.

Ready to open your store?

Consider the budget

The budget is important

Once you have the finance you need it’s important to set a budget to manage your finances. This is an essential part of running a profitable retail store and must be continually managed. You need to have an idea of your estimated sales.

Sample profit and loss sheet

This is a very basic profit and loss sheet you could use and develop as your business grows.

                            RETAIL STORE PROJECTED PROFIT & LOSS YEAR 1                        
TARGET ACTUAL DIFFERENCE +/-%
Income
Profit
Stock 
Marketing 
Tax/accounting expenses
Furniture
Equipment
Other expenses

Of course, you want to see the last column as a positive number, which means your business is making a profit. 

Organise your administration and legalities 

Set up admin procedures

Whether you decide to create an online or a physical store you’ll need a number of efficient admin procedures in place right from the beginning. Not being able to find a price list, file or important document when you’re under pressure can be very frustrating. 

These are the basic documents you’ll need to run your retail store. As the business grows you can add to this list, e.g. seasonal marketing plans, staff data, stock records etc. 

  • inventory and pricing lists
  • supplier data
  • customer data (can be gathered once you set up)
  • quality control sheets
  • an efficient invoicing system

The secret to good administration is to automate a number of tasks. There are lots of software packages for businesses available to help you manage your admin, from finance tools to hand-held stock readers.

Arrange the legalities

When you open a retail store, particularly a bricks and mortar premises, you need to ensure that you comply with the relevant regulations. These include:

  • registering the business with HMRC (the tax office) to ensure you pay the correct VAT rate on everything you sell
  • employment law, depending on the number of employees you hire and their contracts
  • insuring the stock, premises, employees and customers
  • compliance with data protection
  • any relevant health and safety regulations

You can find more information on retail business legalities on the UK government website and in our article the cost to open a retail store (add link when published).

Decide on the location of your retail store

Where will you open your retail store?

The area you choose to open a retail store is key to its success. You need to be in a prominent position where customers will find you so you make plenty of sales. 

Useful tip

High-street rental premises for businesses can be expensive. Research the area you plan to open in at different times of the day and see if there are other options available, e.g. a courtyard where people meet for coffee, in a small shopping centre, near places where people wait such as bus stops or schools.

Should you also have an online retail store?

If you’re opening a retail store online, you’ll save money paying rent on premises, but you’ll have to market your store, so it stands out from the thousands of other online businesses (remember the USP we mentioned above?)

Prepare your stock and range

Ordering the stock

This is the exciting part of creating a retail store. You’ve got your business plan and plenty of ideas so now it’s time to order your stock and create sales. 

Make sure you place your orders early, so you have a full range on the launch date. If you’re ordering from abroad, you could find that lead times are longer than you expect. 

Store planning

Design a store layout to maximise space and entice customers. Your stop window is crucial to attract potential buyers, whether you have a physical store or a website (the home page of which is your shop window). Use clear POS (point of sale) material to highlight special offers and USPs (e.g. organically sourced products).

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Create a marketing plan for your retail store

Write a detailed marketing plan

When your store is almost ready to launch you need a marketing plan to raise the profile. Don’t do this too late as you’ll miss out on potential sales. Set out a plan for the next 12 months. 

Network and spread the word wherever you can, from the school playground to the supermarket, and make sure everyone knows about your business.

What to include in the marketing plan & Marketing plan ideas

  • Invite people to a launch party (including the local press via a press release)
  • Research data
  • Send out flyers and put up posters
  • Announce your retail store on social media
  • Give discounts and special offers during the first month of trading
  • Arrange competitions and prize draws with local businesses
  • Set up a website and gather email addresses by adding a newsletter button
  • Write a blog once a month and publish it online to keep people interested in your store

Useful tip

Always have several business cards with you. You never know when you may meet potential customers.

When you open a retail store you have to keep everything moving. Set time aside each week and month to follow up on your marketing plan, your business plan and the finances. This will ensure your retail store grows and is a success. 

If you’re opening a retail store we’d like to help. Join our Ankorstart support programme for free advice and guidance on setting up your store. 

FAQ

Where can I get financial help to open a retail store?

If you don´t have a large amount of savings, you could talk to your bank about a small business loan. However, the bank will charge you interest so if you have any friends or family willing to give you a loan this will be much cheaper.

What’s the best way to market a retail store?

An ongoing marketing plan is the best way to market a retail store. Organise regular promotions, competitions and special offers to keep people interested. Changing your stock regularly is another way to lure customers as they will always want to know what’s coming next.

How can I make my retail store look different from others?

If you have the budget, it’s advisable to hire the service of an interior designer to create a store people will love to visit. This will only be a one-off cost and is worth the investment to create a stunning environment.

Do I need to state my income to the tax authorities?

Yes – this is essential and if you have a good accountant, they will be able to offset your expenses against your tax payments.

Do only experienced retailers open stores?

No, anyone can do it. If you have the drive and motivation to run your own business and follow the steps above, you can open a retail store with no experience.