At RMS, we talk to many people looking to start retail businesses asking for advice. Becoming a retailer is a long journey with many factors so we thought it would be best to start a series covering each of the core aspects of becoming a retailer from product, location and marketing to hiring, legal and stock control.
The first aspect we’ll cover in this article is picking a product area.
While we’ve seen difficulties in the general retail outlook, with large brands such as House of Fraser, Toys R Us and Maplin facing closure we’ve also seen an uptake in smaller, artisan retailers emerge. These retailers often have a strong passion or perspective on what they’re selling or why and quite often offer a superior product. The artisan coffee boom is a prime example of this – where many baristas compete against one another in competitions to see who can make the best coffee.
If you’re thinking about starting a retail business, there are some key questions you have to ask yourself before you begin your journey. Here’s our guide:
Part 1: Do you know what you want to sell?
What are your motivations for becoming a retailer? Many smaller retailers come from families of retailers where retailing is a way of life. Some people spot an opportunity – an underserved market or a fantastic location and take the dive. Others still are hugely passionate about a particular product category and are driven to improve the market. People who have experience working in larger chains often see the opportunity for improvement.
Ultimately your business needs a unique selling point – unless you are the only person providing your product category in your area then you need a competitive advantage of some sort. Your product should be superior or your customer experience should be exquisite. Ideally, it should be both.
This is where knowledge and passion come in. Being passionate about your product is not essential but it certainly helps. Retailers often win on knowledge – knowing where to get the best suppliers, knowing how to get the best prices, knowing how to create the best experiences and knowing how to run a business properly with oversight.
Picking a product to sell isn’t easy and will involve a lot of research. This leads us on to the next question:
Do people want what you’re selling?
This is the big question. Ultimately, if the product you’re going to sell is new whether it’s a variation on something that already exists or is something radically different then the only way to test market demand is to get selling and get marketing.
However, the world is full of clues as to whether people want your product.
A great place to look is Google. As the dominant search engine (and the native search engine for both iOS and Android) Google is a key part of the buying process for many people – even when it comes to physical sales. Many customers perform their own research before buying a product and as Google is often the tool they use data from Google can be an invaluable source of demand information.
The Google Ads Keyword Planner will allow you to find average monthly searches for product names or types in the UK and abroad – the higher the number of searches, the higher the demand. Large e-commerce platforms such as Amazon and eBay are less transparent about how many searches are performed on product keywords but they do rank items by how much is sold.
In the UK, the Office for National Statistics produce some high-level statistics around the retail industry – showing which aspects of retail are growing and contracting.
High-level consulting firms like Deloitte often publish their findings on retail trends for example. We’ve written about retail trends ourselves and familiarising yourself with these resources can be essential to making a product decision.
Many research firms, such as YouGov, question the general population about their buying intentions, their perception of brands and their perception of the economy. Reading some of this research may serve as a source of information.
Perform your own research
Performing your own customer research can be invaluable. Taking a stand at fairs or car boot sales and questioning the general public about your product may be an invaluable way of gaining feedback for further product development. Creating online surveys with tools such as Typeform or trying to create anticipation for your shop with locally targeted advertising on Facebook can help you gauge consumer interest.
In many respects, picking a product to sell relies on you being able to identify and empathise with your key consumer. There is a lot of research you can perform but ultimately you can only validate a new product by trying to sell it.
Once you’ve gauged the demand in your desired product area you’ll have to look at suppliers, location, shop design, point-of-sale, customer experience, hiring, competitors and legal obligations.
It’s a long road to becoming a retailer and we will cover each aspect in the rest of this series.
At RMS, we’ve been helping retailers get the best EPOS solutions for their businesses for over 14 years. We’ve worked with retailers both large and small.