Opening a new retail business is an extremely rewarding yet challenging endeavour.
It involves plenty of preparation, dedication, and commitment for your business to take off and thrive in both the short and long term.
Keeping up with everything you need to check off your to-do list can be pretty overwhelming, especially for those opening a new business for the first time.
That’s why we’ve created this comprehensive guide to provide invaluable tips and advice to help you navigate the process successfully.
In this blog, we’ll share nine practical tips that cover various aspects of opening a retail business — including attracting new customers, choosing the right location, crafting an effective marketing strategy, and much more.
We’ll also take a look at how data, especially location intelligence, can help make these aspects less intimidating.
#1: Draw up a comprehensive business plan
First things first. A complete business plan is like a skeleton of every successful business. It serves as a roadmap, goals, strategies, and tactics, helping you stay focused and organised throughout the entire process.
And although it might seem like a long and arduous process, all the effort you put into this phase of your business lifecycle will pay off in the long term.
One of the top benefits of a business plan is that it, first and foremost, helps you critically evaluate your business concept.
Carrying out thorough market research and analysing your target audience and your competition will help you understand if your business idea can ultimately work.
You can do this by answering questions like:
- What service or product will my business sell?
- Who is my target audience?
- Where can I find this target audience?
- Are there any competitors doing this same business?
- Where are they located?
- What are the potential pitfalls of my business idea?
- What can give me a competitive advantage over my competitors?
- What is my marketing and sales strategy?
- What’s my budget?
- How will I measure my success?
- The more thorough your analysis, the better equipped you will be to jump on any opportunity or mitigate any risks or challenges in the future.
Naturally, you don’t need all the answers to all the questions at this stage, and you’ll need to adapt and adjust going forward.
#2: Find the right location
While working on your business plan, you’ve probably already identified any potential areas where you’d like to set up shop.
However, finding the right location within any given country, city, town, neighbourhood, or area is not as straightforward as it might sound.
Getting the location right from the start is fundamental to:
- Accessing, and attracting the right target market
- Facilitating your operations, such as importing or exporting any products
- Finding the right staff to join your team
- Gaining an extremely competitive advantage
- Contributing to the image and reputation of your business
- Improve your reputation, as customers often associate certain areas with quality and trust.
- Enhance visibility and increased foot traffic, and boosting spontaneous sales
Let’s take a boutique clothing business as an example, with its store situated in a trendy neighbourhood.
The store benefits from a steady stream of foot traffic and increased brand visibility by being in a popular area.
Proximity to other fashion boutiques and complementary businesses creates a shopping destination, further enhancing its appeal.
The chosen location allows the store to cater to the preferences and purchasing power of the local community, fostering customer loyalty. Moreover, being in a fashion-forward neighbourhood differentiates the store from competitors in less trendy areas, attracting customers seeking exclusive and on-trend fashion choices.
In conclusion, the strategic location of a retail store aligns with the target market, generates visibility, and creates a unique shopping experience, providing a competitive edge in the market.
This screenshot is from an interactive Location Intelligence map designed by Data Appeal, and our partner Carto, to help an international CPG brand (consumer packaged goods) find local activation sites in Istanbul, Turkey.
The following image shows the restaurants that were most frequented by people between the ages of 25 and 35 for happy hour, with the highest foot traffic and Sentiment Score from September to December 2021.
How to choose the right location
Choosing the right location isn’t easy — but using data lets you efficiently filter potential areas to pinpoint the ideal one for your business.
By analysing relevant location data, such as sentiment and popularity data, you can make informed decisions that align with your target audience, business idea, and your business’s success.
You’ll gain invaluable insight into the demographics and characteristics of an area, helping you get an idea of your potential customer base. As we’ve seen in the example above, this can make or break your business’s success, so investing in this phase is incredibly crucial, as you’ll reap the benefits throughout your entire business lifecycle.
Through location data (also called location intelligence) for site selection, you can:
- Analyse the places with the highest investment potential for effective site selection
- Understand the distributor/supplier landscape in the area
- Qualify leads by looking at the POI address and contact information
- Evaluate current product or service coverage compared to your competitors
- Take a deeper look at the most appreciated aspects of a business or a territory
- Understanding what can be improved or any gaps in the market, you can fill or address
- …and more.
#3: Get the legal work out of the way
Obtaining the correct licences and permits, picking a business structure and having all the essential paperwork in place is a necessity most business owners dread.
However, taking care of things as soon as possible is best to avoid being caught off guard when the need arises.
Making sure you have proper legal considerations in place is essential for a successful and compliant operation. Neglecting these considerations can lead to severe consequences in the future.
It is crucial to make the right decisions at this stage to ensure the success and longevity of your business. Your choices will impact various aspects, including tax payments, personal liability for debts, capital raised, number of shareholders, and more.
So what kind of legal work will you need to consider before the big opening day?
We recommend that you seek support from a legal professional during this stage. Their expertise will guide you through the intricate legal aspects of opening a new retail business, minimising risks and maximising compliance, and ensure a smooth and successful launch.
To give you an idea, here are some of the key considerations to keep in mind:
- Choose the appropriate legal structure for your business (e.g., sole proprietorship, partnership, LLC), as this will affect liability, taxes, and governance.
- Obtain necessary permits and licences to comply with local, state, and federal regulations.
- Establish legally sound contracts for leases, suppliers, employees, and customers to manage expectations and minimise the risk of any future disputes.
- Protect your intellectual property, such as brand identity, trademarks, patents, and copyrights, to safeguard your unique assets.
- Understand and comply with employment laws to create a fair and compliant work environment.
- Fulfil tax obligations such as reporting and payment by adhering to tax laws and implementing effective tax planning.
- Comply with health and safety regulations to keep a safe environment for employees and customers.
- Implement data protection measures for customer data, and ensure you comply with data privacy laws to prevent breaches and maintain trust.
Addressing these essential aspects will lay the groundwork for a successful business while mitigating risks and ensuring compliance. In this way, you can focus on the remaining elements of your business, knowing the necessary legal steps are now sorted.
#4: Carry out competitor/market analysis
Conducting competitor and market research is crucial for any business aspiring to thrive in a competitive landscape.
This step includes gathering and evaluating data on industry rivals, target customers, and market trends to gain a competitive comprehension in your industry, identify any market gaps, develop new products or services, and support strategic decision-making.
To conduct a thorough competitor analysis, you’ll need to, among others:
- Understand who your competitors are
- What your competitors offer
- Your competitors’ sales strategy, results, and prices
- SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis
- Your competitors’ market positioning
- Customer feedback and reviews
- Competitors’ marketing and advertising strategies
- Distribution channels
- Market share and growth
How can you access information for competitor and market analysis efficiently?
As you can imagine, a wealth of information is required for a comprehensive analysis of your market and competitors. The question is: how can you efficiently and accurately obtain the data needed to make informed decisions?
The answer is, once again, location intelligence.
Through data such as sentiment and footfall, you’ll start filling in the blanks for the following pieces of information:
- Demographic analysis: Location intelligence provides demographic data through which you can understand a specific area’s characteristics. By mapping and analysing this demographic data, you can gain insights into both your target market and that of your competitors to identify potential opportunities or gaps.
- Competitor mapping: Through location intelligence, you can map the locations of your competitors’ stores, offices, or distribution centres. By visualising their spatial distribution, you can identify patterns and concentrations of competitors in certain areas. This information can help you understand their market presence, potential customer base, and strategic decisions related to their locations.
- Trade area analysis: Location intelligence helps define and analyse trade areas by examining where your competitors are, so you can evaluate the level of competition within specific regions and identify potential areas for expansion or market penetration.
- Footfall analysis: With insights into footfall or customer traffic patterns, you can determine high-traffic areas, famous shopping districts, or places with high customer density. This information can help you understand the best locations to open new stores and adjust your marketing strategies while assessing the potential and performance of your competitors’ sites.
- Site selection: By analysing factors such as competitors in a potential area, customer demographics, traffic patterns, and local amenities, location intelligence helps you identify the optimal spots that are likely to offer your business a competitive advantage and potential market growth.
- Geospatial analysis: Using appropriate tools and technologies, you can overlay multiple datasets on maps, enabling geospatial analysis. By integrating different data sources like customer, competitor, and market data, you can spot any potential links, patterns, and trends that might be otherwise difficult to uncover. This way, you can gain deeper insights into market dynamics and help you make strategic decisions.
- Market visualisation: Data visual representations through maps, heat maps, and charts make understanding and communicating market analysis findings easier. By visually representing data, you can identify spatial relationships and trends and present your analysis in an understandable and user-friendly manner.
That being said, competitor and market analysis is an ongoing process — and in no way stops at the planning phase of your business. By staying informed about industry trends, changes, and evolving customer needs and preferences throughout your business’ lifespan you can adapt your strategies, products, and services to meet the evolving demands of your target market.
For a comprehensive analysis, consider using primary and secondary research methods alongside data analysis, such as surveys, interviews, market reports, industry publications, and online resources, to gather accurate, up-to-date information.
To show you how you can pinpoint the competitors in your favourite areas, have a look at this visualisation map of the main POIs in Stockholm sourced by The Data Appeal, with the support of CleverMaps.
In the following map, we are visualising only restaurants with sentiment over 80.
#5: Create your marketing strategy
Marketing is half the battle when launching a new product or service. After all, being the best in your industry doesn’t count for much if you can’t communicate it well to your audience — making a well-crafted marketing strategy a must to lay the foundation for success.
So what does an effective marketing strategy look like?
First, you’ll need to outline your objectives, target audience, and positioning. This will help you define your unique value proposition and understand how to differentiate yourself from your competitors, develop a compelling brand identity, and tailor your offering and marketing message to resonate with your intended audience.
You’ll also need to understand how you’ll evaluate and measure the effectiveness of your strategy. By setting specific goals and KPIs, you’ll know what’s working and what isn’t and eventually understand what you need to do to optimise your strategy to drive further growth.
A well-constructed marketing strategy offers numerous benefits, including helping you wisely allocate your resources by planning your promotional plans.
You can, for instance, choose the most effective marketing channels and methods to reach your target audiences, such as through digital channels, out-of-home advertising, traditional ads, or a mix of all. By understanding where your audience is and how to reach them, you can optimise both your budgets and your efforts — and maximise your return on investment.
#6: Find the right suppliers and vendors
The success and longevity of your business hinge on the quality of the products and services you provide, and that all starts with your suppliers.
It’s essential to find suppliers who understand your needs and can offer the right products and services that meet them. By doing so, you can ensure that you’re providing the best possible experience for your customers and laying a solid foundation for your business’s future.
Partnering with reputable vendors and suppliers ensures that you can provide high-quality products or services to your customers.
The quality of your offerings directly impacts customer satisfaction and loyalty. So by thoroughly researching and selecting vendors known for their quality standards, you can deliver exceptional value to your customers and build a positive reputation for your business.
Secondly, finding reliable suppliers and vendors is crucial for maintaining a steady supply chain and avoiding disruptions.
After all, you don’t want to lose sales solely because your supplier can’t keep up with demand. Establishing relationships with vendors with a track record of reliability and promptness helps minimise the risk of stockouts, delays, or other logistical issues that could negatively impact your business.
Finally, partnering with vendors with similar business values and sustainability goals will boost your brand image and customer perception.
In today’s business world, customers highly value sustainability. So, partnering with suppliers prioritising ethical practices, environmental sustainability, and social responsibility can attract customers who share these values with your business and resonate with your target market to build a loyal customer base.
How can location intelligence help you identify the best vendors and suppliers?
When entering a new market, location intelligence is a valuable tool for retailers. With location data, you can quickly identify the most suitable vendors and suppliers by gaining insights into their proximity to your business. For instance, you can find geographically conveniently located vendors to reduce transportation costs and optimise delivery times.
On the other hand, sentiment scores can give you an insight into the level of customer satisfaction and brand reputation of a chosen vendor or supplier.
By analysing sentiment data from customer reviews, social media mentions, and other sources, you’ll understand how fellow retailers and customers feel about vendors and the services they offer.
By using sentiment scores, you can make better decisions when choosing vendors. Look for vendors with positive sentiment scores to ensure customer satisfaction and maintain a positive brand image.
#7: Plan your launch strategy
Planning your launch strategy is like preparing for a grand adventure.
Just as a well-prepared adventurer packs the essential tools, supplies, and a detailed plan, a thoughtfully crafted launch strategy will equip your business with the right marketing tactics, target audience insights, and competitive edge.
This is where you need to make the most of channels such as social media, local events, press releases, and partnerships to build anticipation among your target audience.
Creating this early momentum can drive initial footfall, attract customers, and generate positive word-of-mouth. Besides that, you’ll generate excitement, hype, and curiosity — all of which help to draw more people to your product launch and establish valuable connections that can help drive growth and exposure.
#8: Prioritise ongoing maintenance beyond opening your doors
Your launch day is an important milestone. However, it’s not the ultimate destination.
Your business’s success and longevity will depend on how you sustain, maintain, and improve your operations.
This is why maintenance beyond your launch day is crucial.
Ensuring consistently high customer satisfaction and engagement is essential for long-term success.
You might not get it right from the start; however, learning from customer experiences and their feedback will help you realign your strategy while adapting to the changing needs of your customers.
Similarly, you’ll need to prioritise the smooth functioning of your physical store or online platform. Ensure you’re scheduling regular upkeep, cleanliness, and visual merchandising to create an inviting and attractive environment that resonates with your customers.
Finally, if you’re employing any staff members, go above and beyond to maintain their motivation and skills through training, performance evaluations, and growth opportunities.
After all, a business is only as strong as its people, making having engaged and knowledgeable employees vital to a positive customer experience and a healthy business.
#9: Keep up with the times (and optimise your processes)
Retail businesses have been around for centuries. And while the basis of retail remains the same, tech advancements such as innovative data-driven solutions have and continue to transform the industry.
Embracing the latest technology, such as harnessing the power of data, allows business owners to revolutionise their processes, such as decision-making processes, to make them more efficient and streamlined.
However, the benefits of tech, particularly data, don’t stop at that.
Data-driven analytics can help you as a retailer to gain insights into customer behaviour and preferences — insights that are hard to access with more traditional methods. You can analyse purchase patterns, demographics, and other relevant data to eliminate the guesswork from strategies across your business while providing a tailored customer experience.
Similarly, through e-commerce platforms, mobile apps, and personalised online experiences, businesses can engage their customers better and use customer data to deliver personalised recommendations, targeted promos, and seamless omnichannel experiences.
For businesses to stay competitive, it’s essential to use data-driven strategies. Companies incorporating these strategies have a significant advantage over their competitors, leading to substantial growth and achievements. And at the same time, those who fail to implement data-driven approaches may struggle to keep up and maintain their competitiveness in the market.
