Retail is pretty high on the list of industries where the failure rate is significant. Just like how many restaurants fail in their first few years, retail stores face the same struggle. Not everyone gets to survive the trade and make it to the top – and this phenomenon is understandable in such a competitive market.
Of course, failure happens in any industry, but the more important question is why this happens. In the case of the retail business, it’s usually because of these three reasons:
When operating a retail store, your primary source of revenue is walk-in customers. As such, placing your store in a bad location with little to no foot traffic is a pretty terrible choice, unless you are an established brand with a sizeable following.
Another aspect of location is the store layout. You would want to have a floor plan that’s appealing to your customers. You don’t want them shuffling through piles of goods just to find what they want. Showcase your products properly and learn to use data from door counters to improve the overall flow of the floor plan.
How well do you manage the goods in your store? For many failed retail stores, not having enough or having too much to sell are big problems. You would want to have an efficient inventory management system that plays along to the supply of and demand for your products.
Cash Flow Issues
Lastly, cash flow issues spell the bane of many retail stores. This usually stems from a pricing problem, but other concerns can also play a role in this. You would want to hire just the right amount of people to avoid overspending on salaries. Consequently, you should keep an eye out for goods that don’t sell quickly. And if ever you start expanding, make sure you know what you are doing.
Identifying these reasons is key in making sure you can avoid facing the same problems. Although it’s a competitive market, it’s definitely possible to succeed in the retail industry. You just have to pinpoint these problems, avoid them, and know how to solve them if ever you face such issues.