How do you open a retail business?

min read

11 steps for opening your own retail business

Starting a retail business is a thrilling, fast-paced journey where no two days are the same. With the right preparation and hard work, there’s no reason why you can’t have a successful enterprise to your name. Here are the key steps you need to take to launch your retail business and set yourself up for success.

Step 1: Think about your niche

The first step in starting your own retail business is deciding on your niche. What will make your business stand out from the crowd? A good place to start is pinpointing what you’re passionate about, that could become a potential focus for your business. Perhaps you’re interested in sustainability and could focus on eco-friendly goods or upcycled items for your retail business. Or maybe you’d prefer to focus on products that are popular right now or trending on social media. Your choice should align not just with your personal interests, but the needs of the retail market right now, your potential competitors and market demand.

Step 2: Conduct market research

Market search is how you get to know your target market and what makes your potential customers tick. Without it, you’ll be basing your marketing and product or service on assumptions, which we don’t recommend! Instead, you can explore who your ideal customer is, their preferences and shopping habits based on facts rather than guesswork.

Start by researching the competition in your local area - not just similar businesses, but any gaps in the market you could look to fill. Perhaps you live in a rural area, for example, where locals could benefit from a fruit and veg shop they can walk to? From there, you can research your potential customers’ preferences - perhaps they prefer to buy organic food, or are particularly eco-conscious and would appreciate you only offering paper bags for produce.

Next, analyse trends in your industry and consider any seasonal or local trends that may impact demand for your products. This insight can help you make informed decisions about what you sell, your pricing strategy and how you market your business to give you the best chance of success. The retail industry always benefits from the holiday season, with the UK’s retail sales made during November-December expected to reach 96 billion pounds in 2024. You may choose to increase your prices slightly over the festive period, for example, or adjust your marketing strategy to boost sales around Christmas time.

Step 3: Choose a business model

Deciding on the right business model is a key step in your business journey. Your business model will impact everything from how you connect with potential customers, to your startup budget. Different business models suit different types of businesses, so it’s important that you choose a model that suits not just your business goals but your startup budget.

You’ll need to consider several factors, including:

Physical or online store: You’ll need to decide where your business will operate - from a physical store, online, or both. Traditional brick-and-mortar shops can offer customers a more personal experience, giving them the opportunity to see your products physically which can help you build your brand’s presence in the local area. Whereas online stores offer flexibility, allowing your customers to shop whenever they like, from anywhere in the world. This can help you grow your customer base further afield. You may offer a hybrid model of both in-store and online, to benefit from both options.
Your location: If you decide to operate from a physical store, you’ll need to decide where you’ll be based. While busy city centres offer great visibility, they usually come with higher rental costs. A quieter location may suit your business if it’s designed to target locals, but you may have fewer customers coming through the door.
Scale of your business: Try and picture the scale of your business and how big you envision it becoming. Perhaps you’d prefer to start small with a boutique, or you have dreams of owning a larger store to really make your mark in the industry. A smaller scale may offer a more personalised customer experience where customers feel connected to your brand, whereas aiming for a larger store could increase your profitability, allowing you to sell a broader range of products.

Step 4: Write a business plan

As a new business owner, your retail business plan serves as your guidebook, there for you and others to refer to throughout your business journey. It’s a written document that explains your business plans and objectives, and how you plan to achieve them. Don’t worry, no one is expecting you to be a gifted poet - in fact, the more clear and concise you are, the better! Your business plan should clearly explain your objectives and purpose, so stakeholders understand your business goals.

If you’re planning on applying for a business loan from a bank, it’s likely that they will ask to see your business plan to understand what you’re planning to use the borrowed money for.

While your business plan can be useful for investors or other key stakeholders to understand your business’ goals, it’s not just there to benefit others. In fact, your business plan is a lot like your entrepreneurial diary, there to hold you accountable so you achieve your goals and offer you direction should you hit any obstacles on the way. It serves as a point of reference if you need to remind yourself how something works.

Our guide on how to write a business plan explains what you should include in your plan and how to get started.

Step 5: Choose a location

Next, you’ll need to decide where you’ll run your retail business from. The location of your business will ultimately depend on whether you will run a physical store, operate purely online or both.

If you’re setting up an eCommerce business, you’ll need to decide whether you’ll operate from home or a dedicated business location, such as renting an office space. While working from home can offer flexibility and reduce costs, you may need to rent a larger space to store your inventory. You may also want a professional workspace for packaging goods or hosting meetings.

If you decide to open a physical store, you’ll need to consider the following factors when choosing a location:

Foot traffic: Foot traffic is a metric used to measure the number of people who visit a location within a certain time frame. When it comes to retail, high foot traffic can boost visibility and brand awareness by bringing in casual shoppers who previously didn’t know of your business. Having your store in high-demand areas like city centres can increase foot traffic, but it’s important to note that high traffic often means high rental costs, so you’ll need to weigh up the pros and cons.
Costs: Consider the costs of where you’ll choose to run your business. You’ll need to budget for rent and utilities, and even if you choose to run your business from your home office, your utility bills are likely to increase as you spend more time at home.
Demographics: Be sure to factor in the demographics of the area you choose. Make sure your products will appeal to shoppers in that location.
Size: Make sure the size of your store meets the needs of your business. You’ll need enough space to display your products, store inventory and accommodate customers who walk through the door.

Step 6: Register your business and take care of the legal stuff

While registering your business and handling the legal side of things may sound complicated, it’s important that you take the time to get it right.

First, you’ll need to decide on your business structure and whether you’ll operate as a sole trader or limited company. A key difference between these two business structures is as a limited company, you’ll be protected should your business suffer financially, known as limited liability. This is because your limited company is seen as an ‘individual’ in the eyes of the law, so should your business face financial difficulties you won’t be personally liable.

Registering as a limited company may sound complicated, but it doesn’t need to be. With SUAZ, we can register your business with Companies House on your behalf, completely free of charge. We’ll also support you every step of your business journey, so you have one less thing to worry about.

Other legal considerations include making sure you have any permits or licences that apply to your business. You can check if you need a specific licence for your business by using the government’s licence, permit or certification checker.

Step 7: Set up your business

So, you’ve chosen where you’re going to operate your business. Now for the fun part - bringing your business vision to life! Whether you’re opening a physical store or operating purely online, you’ll need to consider how you’re going to attract customers and retain them for the long haul.

Physical store

If you’re opening a physical shop, you’ll need to consider the layout of the store so it’s easy for customers to navigate. How will you display your products to encourage customers to make a purchase? Try and position high-demand items at the back of the shop, to encourage customers to walk through other displays first. Speaking of displays, how you showcase your products is crucial. Choose shelving units that display your products well and are easily accessible to customers.

Your decor should reflect your brand’s image and personality. Try and stick to a consistent colour palette throughout the store so your potential customers become familiar with your brand and remember you. From paint colours to lighting and furniture, every detail of the store should appeal to your customers and represent your brand image.

Online store

When it comes to your website, accessibility and ease of use are your top priorities. Make sure your website has a clear structure that is easy to navigate. Your product pages should be split into categories and customers should find it easy to search for what they’re looking for. In the same way you’d choose paint colours for a physical store, your website should match your brand identity with colours, fonts and design elements that represent your brand. This consistency helps build brand recognition and trust.

As mentioned, accessibility is key to keeping your customers on site and encouraging them to convert. User Experience (UX) should make it easy for your customers to find what they’re looking for and check out. Make sure your website is optimised for different devices such as mobiles and tablets, and that you offer easy access to customer support should they need it, to reduce cart abandonment rates.

Step 8: Build relationships with suppliers

The better your supplier relationships are, the more steady and reliable your supply chain will be.

Here are our top tips for building relationships with your suppliers:

Research well: Make sure your potential suppliers align with your product needs and budget. Read their reviews and make sure they have a good reputation and are known for their reliability.
Clear communication: Try to establish clear and honest communication from the get-go. Make sure suppliers know your expectations - from delivery times to product specifications. Check in with them regularly to build trust and make it easier to seek support when you need it.
Order in advance: Try to plan and place orders well in advance so your suppliers have the time to deliver the best service. Placing last-minute requests could put a strain on your relationship, so give them plenty of notice.
Pay on time: This may sound like an obvious one, but always pay your suppliers on time - or even early where you can! Doing so shows your business is dependable and that you appreciate your relationship with them, which could work well for you in the future if you have any special requests.

Step 9: Think about marketing

Marketing is essential for getting your business’ name on the map. Without it, your customers won’t know who you are or what your business stands for. An effective marketing strategy will shout about the benefits of your business and why customers should choose you over your competitors. As a new retail business, marketing is a powerful tool to establish your brand and build your customer base.

First, you’ll need to build your brand. You can think of your brand as your business’ personality. Your brand includes everything from your logo to the tone of voice you use on your website. Above all, it’s the experience you create for your customers and what they remember you for. Make sure your branding is consistent across your retail business, both in store and online, to encourage brand recognition and loyalty.

Make sure you use a balance of both traditional and digital marketing. While often overlooked nowadays, traditional marketing can be effective, especially if you’re looking to target the local area. It includes flyers, posters and adverts to catch the eye of those local to you. You could even partner with local businesses or sponsor local events to get your name out there. Digital marketing is all about your online presence. Make sure you create social media profiles across all the platforms you use, such as Instagram and Facebook, to promote your brand and products. You can also use digital marketing to advertise your business through paid ads, and make sure your website is optimised for search engines through SEO to increase your visibility.

Step 10: Hire and train staff

Chances are you’ll need a team of reliable and friendly customer service experts to make your retail business a success. You’ll need to decide on the roles and responsibilities you need to hire for. These could include sales associates, assistant managers or cashiers and how many people you need to hire will depend on the size of your business. Make sure you have clear job descriptions for each of the roles you’re hiring for, so you know what you’re looking for. Make sure individuals have not just relevant experience, but that they align with your brand’s values.

Once you’ve hired the right people for the job, make sure you invest in their training so they can deliver the best job possible. They should have great customer service skills, thorough product knowledge and confidence in handling transactions accurately. Remember, learning and development is continuous. Make sure you offer new training opportunities and recognise your staff’s achievements to keep them feeling motivated.

Step 11: Open your new retail business

You made it! You’ve ticked everything off the list and you’re finally ready to open for business. Opening day is a celebration of all your hard work, but before you welcome customers through the door you’ll want to make sure everything runs smoothly.

Here is our final checklist for you to make sure everything is taken care of:

Make sure your displays are set up and fully stocked. If you’re operating online, make sure your website is fully functional and optimised for mobile. Test everything, from the checkout process to your customer service number, to make sure everything works smoothly.
Make sure your point of sale (POS) system and security systems are all working effectively. You could even run through some mock transactions to make sure payments are being processed and that staff are comfortable using these systems.
Check and check again that your inventory is fully stocked and that everything is priced and displayed correctly.

Open your shop with help from Start Up A-Z

Starting your own business is a one-of-a-kind journey where no two days are the same. We hope our guide has given you the confidence to chase your dreams and start your own retail business - we believe you have what it takes to succeed.

If you’re looking to start your own retail business, we’d love to be a part of your journey. With SUAZ, you can register your business as a limited company for free, and you’ll have our support at every stage of your journey.