Retailing is probably one of the most attractive choices for a business venture.It offers great flexibility,
especially in terms of capital investment. You can start small as there is no minimum level of capital required.
Or you can start big and then later expand your venture into several branches.
A retail business carries relatively lower risk than most high-yield high-capital investments. It is generally stable and is not critically dependent on any sensitive and political or industry development (as in the case of
the stock market or commodity futures.)
Going into a Retail Business is definitely not for the one who fancies getting rich quick. It is rather more appropriate for a business minded individual who simply wishes to see his profits grow inch by inch,day by day.
There is a wide range of merchandise that you can select for retail - food, household products, clothing, toiletries, office and school supplies, toys, gifts and novelty items, medicine, sports equipment, auto parts, and accessories, etc., etc.
No matter which area you choose you will be faced with the following considerations which make up retail success.
1.) Location - This is definitely among the most important factors in making Retail Business profitable. Is your store conveniently located? What may appear as a fine for others business establishment may not at all be good for you. Will your target market immediately spot your shop? Is there a particular section of the town where your merchandise fits perfectly?
2.) Space management and lay-outing - When planning out the store space, bear in mind your convenience as well as that of your customers. A wide space that permits customers to look around and examine the products displayed is usually more appealing. This may not be possible if you have a small space and therefore must opt for a "counter" type layout. Position your merchandise so that the most attractive or the most saleable item cannot be missed at a brief glance.
3.) Purchasing - It is vital that you find the least expensive source if you wish to be competitive. Remember that your profit is determined by the difference between what you pay for the products and your final selling price. Give particular attention to purchase planning including when to replenish your stocks and how to select new items for sale.
4.) Pricing - Your mark-ups for the different items you carry will naturally differ. You must find out the ideal average margin which you have to maintain in order to realize sufficient profits. For instance, a supermarket carrying at least 4,000 items must have at least an average of 10 percent margin. Some of the items maybe priced with as low as 1 percent mark-up while other items may carry up to 15 percent profit. This average margin for supermarkets is considerably lower then what department stores must make, which should be anywhere from 25 percent to 60 percent. Not only do department entail bigger cost to maintain and promote. They also have a slower turn-over of 4 times a year compared to 12 times (at least) for the supermarkets. As a rule, the slower the turn-over the larger the average price margin should be. You may use this rule as well in determining pricing strategies for your ordinary buy-and-sell sidelines.