If you were Gap and about to design a store to open in London, how would you des

Question

If you were Gap and about to design a store to open in London, how would you design a study to verify Paco Underhill’s conclusions and left-hand dominance?

World retailers collect and subscribe to numerous data sources, but they need knowledge from the data to craft their merchandising, staffing, and pro- motion strategies, as well as their store designs. Retail giants (e.g., The Gap, Limited, Starbucks, Radio Shack, McDonald's) turn to consultant Paco Underhill when they want to know how consum- ers buy what they do and what barriers prevent or discourage buying. Underhill describes himself as a "commercial researcher, which means I am part scientist, part artist, and part entrepreneur." His company, Envirosell, has offices in the United States, Milan, Sidney, and São Paulo. Envirosell concentrates on the third segment of retail informa- tion, drawn from observation (segment 1 is register data, and segment 2 is communication studies). In an ABC News live e-chat, Underhill said, "The principal differences in 1st world shopping patterns are governed more by education and income than by ethnicity ... but the Brits and Aussies [do] tend to walk as they drive. This sets up some very pecu- liar retail [shopping] patterns, because their walking patterns set up a left-hand dominance, whereas in the U.S. and much of the rest of the world, our walking patterns set up a right-hand dominance." www.envirosell.com

Explanation / Answer

Steps to open a retail store in London:

Step 1: Decide what products you’re going to sell

Many factors come into play when you’re deciding what to sell, but the top three things you need to consider are knowledge/interest, demand, and margin.

Let’s start with the first factor:

1. Knowledge / Interest

While you don’t have to know every little detail about what you’re selling, you should have some knowledge or at least a genuine interest in it. Retail is already a challenging adventure as it is, so don’t make it harder on yourself by trying to sell something that you don’t like or that bores you to death.

On a more practical level, knowing your product well will help you make the right business decisions down the line. If you’re already familiar with your goods, you’ll find it easier to pick the right suppliers, find the best people, decide on pricing, etc.

2. Demand

Let’s get real here. Interest and passion by themselves won’t be enough to build a successful business. You may have found products that you love, but if there isn’t a real need or desire for them, the business probably isn’t something you should pursue.

That’s where product demand comes in. Validating whether or not people would actually purchase your products is something you should do early on. The last thing you want is to manufacture or purchase merchandise only to find out that customers don’t want it.

3. Margin

Once you’ve found a product you want to sell and you’ve determined that there is a demand for it, you should figure out how much it would cost to make or purchase it as well as how much you can sell it for.

The first step to doing this is to get in touch with potential suppliers. You can find a lot of prospects through trade associations and directories. Also check out ThomasNet.com, an online platform that lets buyers search for trusted suppliers. Additionally, if you know other retailers in the space, ask them if they can put you in touch with their contacts.

On top of that, you can find products and suppliers by attending events. Harriet of Chirpy mentioned that when she was figuring out what products to sell, she spent a lot of time at trade fairs and craft shows.

Step 2: Size up the market and your competition

You’ve already decided what products you’re going to sell and how much you can sell them for. The next step is to conduct market research and get insights into your industry, target audience, and competition. In other words, you have to see what’s out there. This will help you identify opportunities and risks and will let you see if your business idea is actually viable.

1. Market data

In this step, you’ll determine if there is a place in the market for the type of store you want to set up. Questions like “How big is the market?”, “How fast is it growing or shrinking?” and “What percentage of the market could you gain?” are just some of the matters you should address.

2. Target audience

If you completed your product research, you should have at least a general idea of who your customers will be. The next step is turning those general notions about your audience into something more concrete and specific.

Effectively starting a business requires that you get to know your customers at deeper level.

3. Competition

If your market is large enough (and it should be, if you’re starting a business), there should already be a fair amount of players that are doing something similar. Your job at this stage is to search for those businesses and find out what they’re about. This will enable you to identify their strengths and shortcomings so you can create a plan on how you’re going to differentiate your store.

Step 3: Zero in on the perfect location

Location—as you know—is critical to the success of your store (hence the common line “location, location, location”). That’s why you need to take your time and do your due diligence when figuring out where to set up shop.

Follow these steps when identifying potential locations for your store:

1. Narrow down your location choices

Start by making a list of ideal locations for your store. Based on the research you did above, you should already know which areas are most populated by your target customers, so you may want to set your sights on places where they live, work, and hangout.

2. Find spaces for lease

Once you have an idea of the best towns, cities, and neighborhoods for your store, it’s time to find vacant spaces you can move into. Fortunately, doing this is quite easy and there are plenty of tools you can use, such as:

Get in touch with the owners or leasing agents of potential spaces, then ask them about the rent and size of the property. Have them send you photos and a copy of the floorplan. If everything looks good, set up appointments to view the spaces you like.

3. Explore, take notes, ask questions

There are several factors to consider when evaluating a rental space. Below are some of the questions you should ask.

IS IT EASY TO FIND?

IS IT SAFE?

HOW’S THE TRAFFIC IN THE AREA?

IS THERE AMPLE PARKING?

HOW ARE SHOPPING CONDITIONS AT NIGHT?

DOES THE BUILDING MEET YOUR STORE REQUIREMENTS?

HOW OLD IS THE BUILDING?

WHAT TYPE OF LEASE AGREEMENT WILL YOU HAVE?

WHO’S RESPONSIBLE FOR INSURANCE?

Step 4: Figure out your finances

When starting a retail business, you really do have to spend money to make money. The key is optimizing your spending to ensure that you’re getting the most bang for your buck.

1. Determine how much money you need

First things first. Figure out how much capital you need by calculating your startup costs.

2. Obtaining funds

Filling out the fields above should’ve given you an idea of how much you’ll need to get your business up and running. The next step is finding ways to finance your venture.

3. Lowering costs

On a tight budget? You can lower costs by turning to daily deal sites for small businesses. Websites such as BizSaves and Rapidbuyr offer bargains on equipment and various services that startups may need.

When it comes to software, we highly recommend that you opt for cloud-based, SaaS solutions. These services usually come with flexible pricing options so you won’t end up paying for things you don’t need. And like we said in our POS Buyer’s Guide, SaaS solutions “can be upgraded, downgraded, or cancelled at any time, making it more ideal for businesses that are growing or constantly changing.”

Step 5: Comply with the laws, rules, and regulations in your area

Discussing business regulations, licenses, and taxation can be tricky because these things vary depending on your location and type of business. The laws for specialty retailers are quite different from those for food retailers. And a retail store in say, New York would face different regulations from the ones that a business in London would face.

Step 6: Hire superstars

Hiring people to help get your store up and running can put a significant dent on your budget, so if you can manage to take care of things on your own (or with the help of your family and friends), then by all means, do so.

1. Hiring people to help build your store

2. Hiring people to help man your store

3. Searching for prospects

4. Interviewing applicants

Step 7: Get real with the challenges of retailing

Retail, while rewarding, also comes with its fair share of tribulations. That’s why it’s important that you honestly evaluate your situation to determine if you’re up for the challenge.

For one thing, you’ll be investing a lot of money into the business, and you likely won’t see an immediate return. Some stores could take years before turning a profit, so you need to be prepared to lose your savings and/or lower your standard of living (temporarily) while you build your business.

And unlike a typical 9-to-5 job, running a retail business requires longer hours especially in the beginning. Store owners are hard at work even before the first customer walks into the shop, and they may continue working long after the last shopper leaves.

These are the steps which one needs to take into consideration while opening a store in London.

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