Despite today’s digital-first economy, the traditional in-person shopping experience continues to drive consumers to open their wallets. In fact, it’s estimated that U.S. brick-and-mortar retail sales will reach $8.05 trillion in 2028.
For those looking to open a physical retail store, here are some important considerations to review before launching.
Start with an idea
Whether you are expanding a digital e-commerce business into a physical space or opening a new business, you need to know what type of retail store you want to establish. Some common types of physical retail businesses include coffee shops, apparel stores, bookstores, gift stores, craft stores, and bars.
Write a business plan
Once you have a solid concept, draft a business plan. When writing a business plan, create a step-by-step outline of how the retail store will launch and operate.
In the business plan, include an executive summary — a top-line description of the business and its goals — a description, a budget plan for the first five years, an analysis of the current market landscape, a competitive analysis, a detailed explanation of the service or product line, and an operation plan.
Register your business
When you legally register your business, you’ll need to first choose a name that suits your brand. Brainstorm different ideas, and do some research to ensure that no one else is operating a business under that same name.
Once you’ve landed on a name, you’ll also want to purchase the domain name for your business’s website and general online presence. After naming the business, determine what type of legal entity it will operate as.
“Whether it’s a sole proprietorship, LLC, or corporation, the entity type impacts liability, taxes, and long-term growth potential,” said Jack Rives, President of Rocket Legal Professional Services and former Executive Director of the American Bar Association.
Each state has different requirements, fees, and processes for when and how businesses need to register. In some cases, you may need to register with the federal government. Research what your home state requires so you can file the correct paperwork with the correct agency.
[Read More: How to Choose the Legal Entity for Your Business]
Research permits and insurance requirements
Before you can open your shop, you may need to obtain any or all of the following:
- A business license.
- A seller’s permit.
- A zoning permit.
- An employer identification number (EIN) from the IRS.
- A certificate of occupancy from your local government.
- Other permits, licenses, and business insurance as required by state.
“Consult a legal professional early, thoroughly document agreements, and ensure compliance with local and federal regulations from Day 1,” Rives recommended. “Taking these steps can save new store owners from legal headaches and set their business up for success.”
Entrepreneurs can bootstrap their business with their own money, but because retail stores often incur a lot of overhead expenses, you may need to take out a business loan or seek financial backing from outside investors.
Gather funding
Based on the five-year budget outlined in your business plan, compute costs to create a financial plan for the business, and determine how it will be funded. Entrepreneurs can bootstrap their business with their own money, but because retail stores often incur a lot of overhead expenses, you may need to take out a business loan or seek financial backing from outside investors. Regardless of your funding source, ensure that you have a solid financial plan for how you’ll use the money and put yourself on a path to profitability.
Find your location
Your retail store’s ideal location will depend on your budget and the availability of commercial space in your desired area. General factors to consider include potential foot traffic, the presence of competing businesses, and available parking. In addition, the retail location should accommodate various accessibility needs and include space for offices, restrooms, and inventory storage.
“While foot traffic is always valuable, so long as the storefront is a short drive from other retail hubs, prospective shoppers will often be willing to make the additional stop if they feel the store delivers differentiated value,” said Zach Gordon, Co-CEO of Uptown Cheapskate and Kid to Kid.
Design the right store layout
When setting up, consider the layout of your store to drive sales and improve the customer experience. Common layouts include the following:
- A grid layout: This style utilizes every inch of space.
- A free-flow layout: This format prominently displays a few items.
- A spine layout: This store layout allows customers to quickly browse all products.
- A forced layout: This format requires customers to take a set path; this layout is famously used by IKEA.
Whatever option you choose, consider accessibility, traffic flow, and the overall shopping experience.
Build a website
Having an online store goes hand in hand with a brick-and-mortar store, as it enables customers to remain brand loyal and increases sales without the need for physical interaction. In fact, research shows that 87% of shoppers research their online purchases “regularly” or “always.”
When exploring different types of e-commerce platforms to find the best fit for your business, consider how it integrates with your established point-of-sale (POS) system, what your inventory looks like, what the learning curve for maintenance is, and more.
[Read more: A Guide to Adding E-Commerce to Your Brick-and-Mortar Business]
Choose the right retail POS system
The right POS platform can expedite checkouts, automate stock alerts, and help customers repurchase items. Look for POS systems that have stock-keeping features, offer mobile checkout for customers, integrate with existing accounting software, or have lower payment processing fees.
Some popular POS systems for retail stores include:
- Square for Retail: A mobile system with support for online sales and refunds, common among startups and small businesses.
- Lightspeed Retail POS: Lightspeed supports businesses with thousands of products or multiple stores, thanks to its useful supplier catalog and inventory management tools.
- Shopify POS: Offers real-time retail analytics and enhanced customer profiles, ideal for stores with high rates of foot traffic.
[Read more: What Is a POS System?]
Hire vendors
Every retail business needs vendors for inventory needs, in-store technology like POS systems and security systems, shipping (if you offer online sales), and other essential operational processes. When vetting vendors, ask questions to help you understand their supply chain logistics, the support they offer, and payment options to ensure they’re a good fit for your business needs and budget.
When considering vendors and partners, understand how tariffs will impact import prices for small businesses. Rives advised consulting a legal professional to get any vendor agreements in writing.
“Relying on verbal commitments or vague contracts often results in disputes that are difficult and expensive to resolve,” he said.
Understand your legal obligations
As you set up your retail store, it is important to establish a solid legal foundation.
“Legal support isn’t just a safety net when things go wrong — it’s a proactive tool to set your business up for success,” Rives said. “This includes establishing clear employment policies, understanding tax obligations, and planning for future growth.”
Ensure your business complies with employment laws, privacy regulations, accessibility requirements, antidiscrimination policies, and workplace safety standards. Additionally, understanding your lease agreement and protecting your intellectual property from the outset will help safeguard your business.
Forecast your inventory needs
Estimating how much inventory your business needs is one of the most important aspects of managing a store. An inventory management system helps keep track of products, what’s left in storage, and which items are selling the fastest. Once you’ve laid the groundwork, you can stock your shelves, establish relationships with product vendors, adapt to seasonal sales shifts, and customize offerings to meet customer needs.
Market and launch your business
As you approach opening day, create buzz for the launch with a marketing campaign. Send out press releases, spend advertising dollars on high-converting platforms, and contact local news stations and journalists. While planning and promoting a grand opening will kick-start your retail store’s presence in the community, focus on a long-term plan to keep the momentum going in the weeks, months, and years to come.
“Store owners who take marketing seriously in the months leading up to their grand opening reap significant benefits when their doors finally open,” Gordon said. “What's more, these efforts don't have to cost a lot of money.”
Gordon highlighted the importance of posting consistently on social media and partnering with local businesses and organizations. These can help your business build a following in advance, driving customers to show up as you first open your doors and every day afterward.
Dan Casarella contributed to this article.
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