“I’m thinking of setting up my own grocery store.”
I can’t remember how many times I’ve heard this from friends thinking of entering the world of retailing. Many would-be entrepreneurs set their sights on the retail business because they think that the industry is very easy to run.
They think that simply having a novel idea, a cheaper price point, or even a catchy brand will guarantee them success in the world of retailing. It is not as easy as it appears.
Market Potential. Entrepreneurs must first assess the market potential of their endeavor. Who is their target market? What is the size of the market? Who are the key players? What are their customer value propositions? What percentage of the market do you aim to grab? This is important to be able to assess what the size of the goal is—and if it will be worth all the effort.
Retail Branding. Many entrepreneurs don’t realize that their retail brand is as integral to the mix as the retail establishment itself.
The retail brand is the handle that will be used to communicate the entire retail experience. It can, therefore, make or break the business. Many entrepreneurs don’t put as much effort into developing the retail brand as they put in choosing their cars. The analysis, testing, and development of the retail brand is crucial in determining its probability of success.
What does the brand promise? Is it focused? Is it differentiated enough? Does the brand have soul? Can it be translated into a complete retail experience?
In the US, the success of the Target chain as a leading discount retailer can be attributed to the professional management of its brand, the consistent delivery of its 'Expect More Pay Less' value proposition, and the ubiquitous association of its bullseye logo with great value finds.
Merchandise & Pricing. Deciding on what to sell is an integral element in the entire retail mix. The assortment of merchandise in the store must be relevant to the market it targets. The assortment must also reflect the overall essence of the store’s brand.
Furthermore, the store must have enough merchandise where a balance between inventory investment and visual appeal must be made. Aside from this, operational details such as supply reliability, pricing structure, and margins are critical.
US-based Whole Foods Market, America's foremost natural and organic grocer, delivers its value proposition by an extensive selection of natural and organic food as well as health and wellness products.
Location. In the world of retailing, the choice of location is a key determinant on whether a store succeeds or fails.
It is not just the physical location of the store, but also other location related details such as safety and security, which side of the road, consumer traffic access, footfall count, what floor, adjacent establishments, etc. All these factors must be aligned to deliver the value proposition to the right people at the right place at the right time.
As an example, some Walgreens drugstores try to ensure that they are located on the side of the road with homebound traffic, from offices to local communities, as this is their focused target market.
In-store Experience. The store’s overall visual appeal as well as the total experience inside the store must be deliberately planned. The store layout, fixtures, lighting, shop fittings, etc. are elements of the entire experience that must not be left to chance.
These elements must all reinforce the essence of the retail brand and deliver the customer value proposition in a way that is most appropriate.
Looking at Whole Foods Market again, its use of terracotta hues in the flooring, natural wood on display modules, and shop fittings all reinforce the look and feel of its natural and organic promise.
People. A retail brand can be positively as well as negatively affected by the way that its staff engages with customers. Rude store personnel can negatively impact even the best of stores.
It is imperative that entrepreneurs consider its people as living ambassadors of the brand. Inculcation of the spirit of the brand during staff selection, training, and day-to-day management are all absolutely necessary in order to ensure that the essence of the brand is lived out by its people.
Advertising & Promotions. Establishing a new store requires that people are made aware of the store’s existence. So activities are necessary in communicating this with the target market. This accelerates the process as opposed to merely waiting for word of mouth to take effect.
More than having an activity it is really important to have one that reinforces the brand’s message. After all, this will be the first interaction with the new brand customers will have aside from seeing the store itself.
Processes. The not-so-glamorous areas of retailing are really the back-end operations, which make the store run smoothly. These include the replenishment of stocks, inventory management, price control, and facilities and equipment maintenance. Cash and stock control are also essential in ensuring that theft and losses are mitigated and profits are protected.
The retailing industry is very exacting and demanding. Entrepreneurs who wish to enter into the world of retailing must have more than a preference for it. They must have a passion for serving customers. It is this passion that ensures that they provide an excellent experience to every single customer each and every day.
Print ed: 11/10