Opening new retail stores represents a significant investment, as well as a risk of failure, for a business. Thus for retailers, it is important to make such a decision after taking these five steps:
1. Determine Store Location
A store’s location is a complex formulation that takes into account both the on-the-ground realities of that location and the requirements of the company, which must be able to effectively manage that location from its headquarters. A company should partner with real estate brokers who specialize in retail frontage, as they will have access to “back door” information about a location and its neighborhood.
2. Investigate Local Demand
Retailers must carefully weigh a new store’s profit potential by comparing that location’s costs to the customer demand. Retailers should work with their brokers and other knowledgeable local authorities to ensure the retail location can provide the level of interest and spending necessary to meet profit targets.
3. Assess Software Requirements
More than 93 percent of total U.S. retail volume occurred as point of sale (POS) transactions through 2014, so retailers should always view a store expansion as an opportunity to ensure they are using the best software available. Even the smallest increase in efficiency or functional capabilities can have a big impact on the bottom line, and a store, using outdated retail POS systems, is likely missing out on significant profit potential.
4. Plan for Increased Use of Inventory Forecasting
High-speed connectivity has started to reach saturation in the U.S., with nearly 100 million high-speed land connections and an additional 235 million high-speed wireless connections in use as of 2015. That makes it easier than ever for online retailers to rival the brick-and-mortar sector and so requires physical store retailers to be able to compete with the more nimble inventory capabilities of online behemoths.
Only inventory forecasting can help retailers ensure they’re not over- or under-buying on products whose buzz is increasingly determined online. When inventory levels are kept lean and flexible with the help of POS inventory management, store retailers can adjust their inventories fast enough to keep up with online competitors.
5. Determine Personnel and Employee Requirements
Nearly 99 percent of U.S. retailers employ fewer than 50 people, so each employee has a big impact on the performance of a store. Hiring decisions must be made with careful analysis about a location’s characteristics and each employee’s skill level to ensure money is not wasted on unnecessary head counts.
By carefully considering all relevant factors in these five key areas, retailers can grow intelligently and safeguard future success.