Opening a new store is a big decision. For direct-to-consumer (DTC) brands, the stakes are even bigger. There are a lot of factors to consider before taking the plunge to open your first retail store location. These include defining your target customer, researching your competition, finding the right location, considering the build-out, creating a realistic budget, and hiring a team of experts. If you take your time and do your research, you can ensure that you’re opening in the right location. Below are seven tips for DTC brands who are considering opening up a retail location:
1. Define Your Target Customer
Before you can decide on a location for your DTC business, you need to know who you’re targeting. This can help you narrow down your list of potential locations. Consider the demographics and locations of your target customers when selecting a location. If young adults are largely your target market, you should concentrate your efforts on those areas that have products or services that target the same customer. If you’re targeting more of a family audience, then you’ll want to focus on more family-friendly locations. If you sell gifts and souvenirs, you may want to position yourself in tourist areas, travel hubs and near or in hotels. Knowing who you’re targeting can help you make a more informed decision about a location.
2. Research Your Competition
After determining your target market, it’s important to study your rivals. It’s critical to be aware of your local competition. Look at what other store or brands are in the same vicinity and how successful they are. Often, new DTC brands who are looking to open their first retail location think it’s best to open a location far away from competitors, but that is not necessary true.
For example if you’re a beauty brand, it may be a smarter move to open near a beauty supply store or nail salon, where people who are interested in beauty and cosmetics already visit. For a fashion brand, it may be best to open in a shopping centre, where people often visit and have more shopping time to browse, try on clothing in store. In this case, you will want to make sure the fashion stores attract the same target customers that you are after, for example a mall that has a Neiman Marcus or Louis Vuitton will attract a more affluent shopper than a mall with a Gap and Claires.
3. Find the Right Location
Now that you’ve done your research, it’s time to find the right location. When looking for a location, look for areas that have high foot traffic, easy access, and plenty of parking. Also, you might wish to search for areas close to public transportation. Make sure the location fits your budget and isn’t too far from similar stores or you will pay the price with low traffic. It’s important to find a location that works for both you, your customers and has a steady flow of traffic.
For example, you may want to be near anchor stores, which are stores that people regularly visit weekly, such as a large grocery store or department store such as Walmart, other types of businesses that can bring regular traffic to an area are banks, gas stations and gyms. You want to see your store location not only as a place customers can shop, but also as a marketing tactic acting as a billboard, the more people who see it, the more likely they will stop in.
4. Consider the Build-Out
Once you’ve selected a location, it’s time to start thinking about the build-out. Building out a retail space can be costly and time-consuming. Make sure to factor in the cost of any construction, permits, or any other renovations you may need to do. Consider what type of layout you want and how you want to display your products. Doing research on different layout options can help you determine the best layout for your space.
5. Create a Realistic Budget
Before you start construction, you need to create a budget. A budget is necessary when it comes to building out a location. Make sure to account for all costs, including any potential unforeseen expenses. You’ll also want to factor in any ongoing expenses associated with the location, such as rent, utilities, and staffing. Creating a realistic budget is essential when it comes to opening a new store.
6. Hire a Team of Experts
Once you’ve created a budget, it’s time to hire a team of experts. Make sure to hire experts that are experienced in the industry who have experience in taking DTC brands into retail. An experienced team of experts can help you navigate any legal or logistical issues that come up. They can also analyze your online sales data, to better determine the ideal area to open, it isn’t as simple as seeing where the majority of your online purchases are coming from and opening there.
For example, if you see a lot of orders are coming from a region, it may be simply because the target customer prefers to buy online. Also, if you are already capturing sales successfully online, determine if opening a retail store would actually increase any additional sales. All in all, opening up a retail location should be a strategic move, not simply guessing. A team of experts can also help you make the most of your budget and get the most out of your new location as a marketing engine.
7. Put it All Together
Once you’ve done all the research, the next step is to put it all together. Put your plan into action and start building your new store. Make sure to stick to your budget and timeline. You’ll also want to keep track of progress to make sure everything is going as planned. Opening a new store is an exciting venture, but it also requires careful planning and attention to detail. Taking your time and doing the necessary research is the key to success for going into retail.