Unlocking Success: 3 Retail Growth Strategies for Expansion

Overview

Now that your retail store is running let’s focus on business growth. Growing a business comes in various forms, and there’s no one-size-fits-all solution.

To grow your retail business, consider the following strategies outlined in Dan Ramsey’s book, “The Everything Guide to Starting and Running a Retail Store“:

• Adding profitable product lines
• Selling online
• Expanding or adding another store

In this part of our retail guide, we’ll discuss signs indicating it’s time to expand your business and the three retail growth strategies to make it happen.

Signs to implement retail growth strategies

Customer overload

If your retail store is consistently crowded and customers complain about long wait times or items being out of stock, it may be time to expand your business. The constant crowd and complaints mean you’re hitting capacity, and expanding will help you meet the demand.

Consistent profitability

If your profits have been steadily increasing, it’s a strong indicator that your business is thriving. This financial stability suggests you have the resources to support and sustain retail growth.

Sustained customer loyalty

Satisfied and loyal customers often come back, indicating a healthy business. If a big part of your sales is from repeat customers, it’s a sign to consider expanding to keep up with the increasing demand.

Operational efficiency

If your day-to-day business operations are smooth and your systems are working well, you’re in an excellent position to grow. Efficient operations are a sign that your business can handle the challenges of expanding.

Beating the competition

Evaluate your competitors closely. If you’re consistently doing better or at least holding your own against them, that’s a green light to consider growing your business and securing your spot in the market.

Feedback from employees

Your employees are the face of your business, and their feedback is crucial. If they’re facing challenges in meeting customer needs or have ideas for improvement, it’s a clear signal that your business needs to expand to ensure better service for both customers and employees.

Adding profitable lines to your retail business

1. Market analysis

Understanding your market is crucial for business success. Instead of getting overwhelmed by complex analysis, focus on discovering your customers’ wants. Utilize simple statistics to make informed decisions and enhance your retail strategy.

Conducting a fundamental market analysis for your retail business can be simple and practical. Here’s how:

• Collect data: Gather valuable insights about your customers by observing and interviewing them directly.

• Analyze: Examine the data you’ve gathered for your retail business: understand its nature and how it relates to each other. Ask yourself, how does this data make sense in the context of your business?

• Interpret: Make sure you understand and use the data in a way that makes sense for your retail store. Explain the information clearly and in a practical way that benefits your business.

• Present: Present the data simply and practically, like outlining precise steps.

• Make decisions: Base your decisions on the data you collect, understand, and can act upon.

2. Get direct feedback from customers

To know what your customers want, ask them or observe their behavior. Collect transaction data from day one, noting what they buy, when, and the payment methods used.

Additionally, track store traffic details, such as the number of visitors, their initial department visits, and how long they spend there – all of which provide valuable insights.

3. Quantifying customer responses

If you’ve casually talked to customers about their habits, it might be hard to measure the results. To fix this, use clear and measurable questions by standardizing your approach using surveys. 

For example:

Instead of using a subjective question like, “What do you generally like about our product?” try asking, “How satisfied are you with our product on a scale of 1 to 10?” You’ll get a more specific and measurable response.

To get better results, talk to more customers. Spread your surveys throughout the day and week to get a well-rounded view of your customer base. Surveys provide valuable data that your retail store can use to add profitable product lines.

4. Keep records of your profit sources

Maintaining records for your retail store might feel like a hassle, but it’s crucial. Even though it costs time and money, the payoff comes when you need to understand where your store’s profits are coming from.

Look at which products don’t bring in much profit or sell at a loss. If space is limited, prioritize the more profitable items over the less profitable ones. Allocate your resources strategically, focusing on the most critical lines to your bottom line.

5. Diversify your product lines

Focus your independent retail store on a core product, but as your business expands, consider adding new components or complementary items for increased profitability. This strategy is known as diversification.

You can diversify your product line by doing the following:

• Repackaging 
• Renaming 
• Repricing
• Brand/product extension

When expanding your product range, understand your customers and their desired products. Identify trustworthy wholesalers, try out the products, and closely monitor sales to make sure they bring in profits.

Selling your products online

Nowadays, many retail businesses create online stores alongside their physical ones. This move can boost profits by attracting more customers and generating additional sales.

1. Find a niche

Creating an online store is like setting up a brick-and-mortar shop, with the key distinctions being your customer base and how you cater to them. 

Start by pinpointing a target market for your products based on your skills, interests, and what customers might need. Investigate competitors in that niche to grasp the market demand and identify any opportunities.

2. Choose the online marketplace

Choose to sell only on your website or popular marketplaces like Amazon, Tokopedia, and Shopee. Compare fees, rules, and target audiences to pick the best platform for your products.

Ensure your product listings on these platforms are well-optimized with the right keywords and images. Utilizing multiple platforms helps you reach more customers and expand your sales channels effectively.

3. Compete with your physical store

After launching your online store, it’s crucial to balance it with your brick-and-mortar presence and stay competitive effectively. To make this work seamlessly, try these practical tips to harmonize your online and physical stores:

• Online and Offline Integration: Using a centralized inventory system, ensure your physical and online stores stay in sync. This helps prevent overselling and keeps your stock levels up-to-date in real time.

• Price Consistency: Keep your prices the same online and in-store to gain customer trust. Clarifying your prices prevents confusion and ensures everyone gets a fair shopping experience.

• Click-and-Collect Services: Set up a system where customers can order items online and grab them at your retail store. This strategy gets people to visit your physical shop and gives them the ease of online shopping.

• Cross-channel Promotions: Offer online-exclusive discounts, promote in-store events through online channels, and implement loyalty programs that reward customers no matter where they shop.

• In-Store Return Option: Enable customers to return items bought online at your store. This approach makes it easy for them and boosts foot traffic to your physical store.

Making expansions to your retail store

Check if your organized store is reaching its full potential before making big changes. Look for signs showing your customers are ready for a larger retail store.

If you want to expand your retail store, you have choices. You can shrink the back room, relocate it, add a mezzanine, or take over a nearby space. Alternatively, you can move to a larger store or open a second one.

1. Reduce the backroom

To make more space in your store, shrink the back room. As your store grows, move everything you need to the sales floor, leaving the back room less crowded or cluttered. 

Focus on ways to make the back room more diminutive and more efficient. Here are some ideas:

• Put replacement stock under, above, or behind sales floor fixtures.
• Restock the sales floor more often to reduce backroom stock.
• Create better shelves for stock not yet on the sales floor.
• Make returns faster with a more efficient shipping area.
• Remove trash and recycling from the back room promptly.
• Quickly return unwanted items instead of storing them in the back room.

2. Move the backroom

Consider skipping the backroom in your retail store altogether. Look for nearby spaces in your mall or retail center for storage and shipping. 

If that’s not an option, find a secure storage unit nearby or rent a portable one near the back door for extra stock.

3. Add a mezzanine

A mezzanine is a middle floor between two main floors or between the main floor and a high ceiling. Alternatively, it can be a low platform with stairs, creating extra sales space with storage below.

The advantage of a low mezzanine is that it’s visible from anywhere in your store. If you’re interested, hire a retail architect to design one. Ensure you obtain the necessary permissions and a long-term lease from your landlord.

4. Take over a neighboring space

Around 20% of small businesses don’t make it past their first year, which climbs to 30% by the second year’s end, as the Bureau of Labor Statistics reports.

Consider seizing the chance to grow your store — maybe by knocking down a wall or adding a doorway to a nearby store. While the right conditions and timing are crucial, getting to know your neighbors can prepare you to expand without relocating.

5. Opening a second retail store

Opening a second retail store can bring advantages but can also be costly, especially if you have to divide your focus between the two. Here are some things to think about as you consider opening another store:

• Ensure your market research confirms the profitability of a second store. Opening another store allows you to improve.
• Hire a reliable manager, especially if your stores are far apart.
• Standardize employee training and daily tasks; you must do these more often.
• Think about how you’ll make each store unique.
• Set up a recordkeeping system that separates the two entities but can be combined for financial reports.
• Ensure you have the resources and energy to run two stores before starting.

Summary

As your retail business grows, watch for signs indicating it’s time to expand. Whether adding new products, going online, or opening more retail stores, each decision comes with its challenges and rewards.

Successful retailers use technology such as an ERP system to automate tasks and streamline processes to handle the increased workload of business growth. In the next chapter of our retail guide, we’ll discuss ways to enjoy your business and explore the following steps, including selling it.

References

Ramsey, D., & Ramsey, J. (2010). The Everything Guide to starting and running a retail store: All you need to get started and succeed in your own retail adventure. Adams Media.