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Are you planing to start a shoe store business? This article provides you vital information you need to know about the business. The demands for shoe stores have increased proportionally to the increasing fashion trends across the globe; this has made the shoe selling a business a lucrative venture for entrepreneurs.

Different varieties of shoe stores are emerging globally, ranging from orthopedic shoe stores to stores for designer’s shoes, from stores for children to the ones for males and females. Setting up a shoe store, as with any business is not easy, but like everything, you have to start at the beginning and as preliminary steps in achieving that you have to assess the location where you are going to start the shoe store, how well it is communicated, the competition in the area, and the initial investment you need.

If you intend to start up a new business to generate more income, starting a shoe store is an ideal business for you. In this article, I will show you step by step guide to use in starting a shoe store in any locality.

1. Carry out a Market Research

The first step to opening a shoe store is to carry out market research specifically on the target location to know the level of competition, market trends, and customers’ expectations. This will help prepare your business plan and define a clear strategy to implement for the business’s growth.

Market research will provide you with vital information on your competitive environment, most importantly, in regards to your store’s location and the product to offer for sale. For instance, it’s not advisable to start up a sports shoe store when there are several sports shoe stores in your proposed business location; instead, opt to open a women’s shoe store or open the store in a locality with less competition.

Detailed market research will provide you with sufficient information on the particular catchment area where you intend to start the shoe store; it shows the customers’ behavioral patterns in shoe purchasing. This is a vital tool in determining the niche you would specialize in.

Read Also: Why Market Research is Important to Small Business

2. Develop a business plan

When starting a shoe shop, preparing a business plan allows you to plan your costs and future investments and predict your margin rates and profits. This will help in running the business so as for the business will be profitable over time.  A business plan will give you the rudimentary knowledge on how to run a business, and it serves as a blueprint for the business.

Also, a business plan is an essential tool for seeking funds from banks and investors. It provides the banks and investors with an overview of the business, the required steps to take, the viability of the store and its profitability potential, resources to achieve the desired business goals and a time frame of actualizing the proposed results.

Your business plan should be able to answer the following question:

• Who is your target audience?
• How will the business make money?
• How much is required to start the store?
• What is the operating cost for the store?
• What is the financial projection for the business?
• Marketing plans for the business.

If your business plan successfully answers all these questions, the shoe store is on the verge of becoming not just a lucrative, but a profitable business at large.

Also, contact successful shoe store owners for advice on how to write your shoe store business plan.

3. Register Your Business

You should register your business in order to give it a legal status. You need to determine the legal structure of your tutoring business. It can be a sole proprietorship, partnership or a limited liability company. Each of these has its pros and cons. For instance, if you register the business as a sole proprietorship, you will have the full control of the business. It is the easiest and cheapest way of structuring a business. However, at the same time, you will bear the whole risk of the business. If you don’t want to do it alone, you might consider partnership. Partners in a partnership are collectively responsible for all business debts and profits, and also have full control of the business. For a limited liability company, the company is seen as an artificial body that is separated from the owners; it can sue and can be sued. Unlike sole proprietorship and partnership, owners are not personally responsible for business debts and liabilities of the limited liability company.

Read Also: How to Start a Mini Supermarket or Grocery Store

4. Register With Tax Authority

It is important that you register your business with relevant tax authorities both at state and federal levels. As an entity, there are certain taxes your business should pay. Also, if you hire staff working for you, you need to deduct tax from their salary which you are expected to remit to the state tax authority. Doing otherwise will be seen as tax evasion. Of course, this has its own legal implications. It is necessary to obtain the permits required to open a shoe store in your desired location. These permits vary depending on the location and the authorities in charge. Some of the permits include a sales tax license and business permit,  etc.

For instance, when trying to buy merchandise from certain shoe wholesalers or dealers, you will need to provide proof of a sales tax license, resale permit, and other business documents to make orders for your shoes.

It is imperative to legalize your shoe store to prevent disturbance from local and federal authorities.

5. Open a Bank Account

It is important that you have a bank account for your business. Even though you have a personal bank account, you still need to open a separate account for your business where you can lodge all the shoe store revenues. Also, you should make all the expenses relating to the business from the company. This makes you more accountable. At the same time, it will be easier for you to source loans from the bank when needed. Furthermore, having a bank account makes it easy for your accountant to prepare the financial statements of the shoe store. 

6. Choose the Right Store

After registering your shoe store with the appropriate authorities, you will have to search for the best location for your shoe store. This statement can never be overemphasized: ”The store’s location is just as important as the quality of the products sold’’. 

So, to increase the chances of achieving your business goals, consider as many factors as possible when choosing your shoe store. Some of the factors include: how spacious the store is, the catchment area of your customers, the dynamism of the local market, the proximity of the store to a passing axis, ease of parking (parking, public transport, etc.), and the types of building in the locality (shops, cinema, schools, etc.)

As stated above, your store should benefit from meaning traffic because it’s located at a spot with a high influx of people, making the store more attractive to customers. Also, the store must comply with security regulations for business stores that are opened to the public.

Read Also: How to Choose Business Location for Your Business

7. Decoration and Branding

Attractive decoration will draw prospective customers to the store. The arrangement of the shoes in the store should be made excellently to allow movements within the store. I will advise you to contact a professional interior decorator to guide you in your shoe store’s decoration details.

Branding is one of the most effective means of attracting the favor of customers in business. You will have to build a brand that will uniquely attend to your prospective customers’ desires and needs. Branding will provide your store with a corporate image that is distinctive from other stores. Some of the components to identify when branding include: business name, logo, store colors, visual identity, and many more.

To be a recognized brand in the shoe retailing business, you will need to differentiate yourself from your competitors. Take a study on the type of products and services, payment methods, shipping, and consultation employed by existing shoe store owners and incorporate fresh and creative ideas to them.

8. Finding Professional Wholesale Suppliers and Distributors

Next, open an account with various wholesale shoe distributors and contact suppliers. It is easy to find such dealers listed in the local business directory. Ensure you buy your stock in bulk; this will afford you with discounts ranging from 50 percent to 70 percent of the retail price for profit.

Also, you can think of starting as a franchise for notable brands such as Adidas, Nike, Puma, D&G, and others. Your store will benefit from the reputation and notoriety of the brand, which will naturally bring customers to the store. However, to open a franchise, you would be required to pay an entry fee to the brand to allow you use the brand’s name and its products.

If you intend to import your shoes from other countries, it is essential to respect the import rules and laws of your country.

9. Marketing Strategy

After choosing the right store, it is essential to draft out a communication and marketing strategy to establish a strong customer base. You can offer a promotional discount to attract new customers since the store is a relatively new one.  Ensure you build a stable relationship with your customers

It is highly recommended to create a business website (or e-commerce store) in addition to your physical store; this will allow customers to learn more about your shoe store and the type of products available. Having a web presence and business accounts on Facebook and Instagram will allow you to reach a broader target and attract new customers to your proposed shoe store.

Read Also: Email Marketing Tips for Small Businesses

10. Building the Right Team

Having the right team is a necessity for the smooth running of operations in the store. Since shoe stores operate with a certain seasonality level, it is recommended that at festive seasons when there are lots of sales activities in the store, more staff would be needed to complement the increased number of work.

In terms of human resources, the store should operate with fixed-term contracts and short-term contracts to meet up with ad hoc requests in different seasons.

Trust, dedication and accountability should be the significant factors to consider when choosing a team to manage the shoe store’s day-to-day activities.

11. Acquiring the Necessary Skills

Achieving your business objective will require you to master several skills. These can include sales and negotiation techniques, effective communication, managing your customers’ requests and complaints, ability to analyze performance indicators.

12. Software to use in managing your Shoe Store 

When starting a shoe store, it is advisable to have software to manage the activities in the store. Some of the software include:

• Solvermedia: This software helps in managing your shoe store. It helps in controlling the stock and distribution of products by brands. It also allows other functions, creates lists, places orders, reports by employees or products, etc.
• Ecosoft: Programs that allow the comprehensive management of commerce. From everything related to stock and buying and selling to customer loyalty, through the control of employee hours.
• Catinfog: This software is a tactile POS that allows you to sell shoes by color or size. In addition to being able to manage all aspects of your physical store. Also, it is adapted for your online store.
• POS 123 Shoe Store: The POS 123 Shoe Store is a tool that allows you to manage any aspect of your shoe store. This helps control the box, products, launch offers, and promotions, manage inventories, and vie all kinds of reports and statistics.

Further Analysis of Shoe Store Business

There are many tools you can use to analyse the feasibility of your shoe store business idea. However, we shall focus on using the Porter’s Five Forces

Porter’s Five Forces

This model helps you assess the attractiveness of the industry. You will be able to analyze your competitive strengths and the position of your shoe store. It is good that you understand your business from a competition and market dynamics points of view. While carrying out the analysis using this model, we shall consider five important factors as listed below:

Threat of New Entrants

Before you invest into shoe store business, you may like to consider if there are threats to new entrants. Any business where any people can start without any barrier will soon become saturated. If you want to determine how easy anyone can open a shoe store, you will consider the following:

• Economies of scale:Can you leverage of economy of scale so that you can buy in large quantity so as to enjoy bulk discounts which may not be available to a starter?
• Product differentiation: There are different types of shoes out there? Even though there are many people selling shoes, you can decide to differentiate your shoe store by selling a particular type or brand. You may specialize selling basketball shoes, men shoes, running shoes, sport shoes, women shoes, high heels shoes, or flip flops etc)
• Capital requirements:Is opening a shoe store capital intensive? Well, it all depends on the scale at which you plan to operate. For somebody starting a shoe business from home, that capital requirement is very low. But if you want to open a shoe store in a high brow area, the cost can be huge. At this scale, it may be difficult for new entrants to compete with you favourably.
• Switching cost to buyers:Is there any cost attached when customers switch from one shoe seller to another? The answer is no. But if you are the only one selling a particular type of shoes within your geographical location, buyers may find it difficult to switch from you without incurring additional costs such as transportation cost.
• Access to distribution channels:How easy can new entrant get access to your source of supplies? If you sell franchised shoes, it may be difficult for new entrants to penetrate your market.
• Government policies:Is there any government policy that encourages or prevents new entrant? You must be conversant about government rules and regulations as they affect shoe business. For instance, government restrictions on importation of shoes may affect franchised shoe stores.
• Incumbent’ defense of market share:Who are the current players? What percentage of the market share do they control individually or collectively? Can you afford to spend on marketing to compete with them? Can you match their prices?
• Industry growth rate:A lot of people make mistakes here. They rush into a business because they perceive the business is profitable. A business may be very profitable but if you don’t enter the market when the market is still growing, you may end up not making much sales.

Bargaining Power of Supplier

Who are your suppliers? If your shoe business depend on the mercy of your supplier, they may be dictating the terms which are not favourable to you. You need to consider the following:

• Supplier concentration:How many suppliers are available for you to buy from? A large concentration of suppliers will promote competition. This will give you bargaining power. You can be sure of buying your shoes at good prices. But in a situation that you just need to buy from one particular supplier, a case of franchised branded shoes, you may just have to but at dictated prices.
• Availability of substitutes:If you don’t buy a particular shoes, can you buy other types or sizes? If you don’t have substitutes, continuity of your business may be in threat.
• Suppliers’ product differentiation:If your suppliers have succeeded in differentiating their products, buying alternatives may not be acceptable to your customers.
• Buyer’s switching cost:How easy can you switch from one supplier to the others without you incurring significant costs. If you are operating a franchised shoe store, switch costs may be high for you. This is part of what you need to take into consideration before entering into franchising agreement.

Industry Rivalry (Rivalry Among Existing Firms) 

You will like to know the level of competition among the existing shoe stores. You will cover this area when you are carrying out your market research.

• Number of competitors:Who are the competitors? Do they scatter across various geographical location or they are concentrated in a particular area? Can you break away from the place and open your shoe store in a new or less crowded place?
• Relative size of competitors:Is there a balanced competition or the market is dominated by few individual?
• Industry growth rate:Is the market emerging and still growing? Growing population can be an advantage here.
• Fixed costs Vs. variable costs:What are the fixed costs. Fixed costs include such costs like rent and staff salary. Is there any way you can avoid these fixed costs so as to control your costs. One good way is to start your shoe business from home.
• Product differentiation:Do the existing shoe stores sell the same type of shoes. If you are starting your own shoe store, you may consider selling a different type as mentioned before. Options to choose from include basketball shoes, men shoes, running shoes, sport shoes, women shoes, high heels shoes, or flip flops etc
• Buyers’ switching costs:Can the existing shoe stores hold their customers tight that they cannot switch to you when you start? This is not common in shoe business. Customers will buy from a store that provide them with good buying experience.
• Exit barriers:How easy is it for the existing shoe shops to exit the business if they choose to? If a business is not profitable as envisaged, one should be able to exit easily in order to cut the loss.

Bargaining Power of Buyer

• Number of buyers relative to sellers:In shoe business, there are large number of buyers. But if you sell a particular type of shoes such as basketball shoes, your customers may be limited. You should ensure that you have a market that is large enough for your shoe business vis a vis the existing number of sellers.
• Product differentiation:If you sell differentiated brands that are not available elsewhere, buyers may not have much power in this case.
• Buyers’ volume:The number of buyers you have may influence their bargaining power. If few people account for more than fifty percent of your sales, they may be asking for discounts which are too outrageous for you to bear. Granting too much discounts will definitely erode your margin

Read Also: How to Start a Perfume Business

Threat of Substitute

• Relative price of substitute:If your shoes are considered too expensive, customers may start looking for cheaper substitutes
• Relative quality of substitute:If the substitutes are of a relative quality to what you sell, then you may not be able to leverage on quality when it comes to pricing.
• Switching cost to buyers:There is no known switching costs to buyers for switching to substitutes as far as shoe business in concerned.

With the steps listed above, one can successfully start a shoe store in any locality without any hindrance or difficulty.

Beauty and Fashion, Retails

Tags: Beauty business ideas, Business ideas, Fashion business ideas, Retails Business Ideas