If growth is your game and you’re ready for the next step in your business journey, here are four key tips to help you get there.
We all love the idea of growth. Retailers who can grow their businesses enjoy increased revenue, brand recognition and, hopefully, bigger profits. Which all sounds great. Who wouldn’t want to sign up for that?
Unfortunately, reality is much more complicated, particularly when it comes to business growth. In truth, focusing on growth for the wrong reasons can do a lot more harm than good. According to the Statistic Brain Research Institute, only 47% of new retail businesses remain in operation following their first four years.
Some of those casualties are businesses that tried to grow without the right strategies in place, or when they shouldn’t have been considering growth in the first place.
Build a solid foundation before you spread your wings
If you’re nervous because your business isn’t bringing in as much revenue as you’d hoped, don’t add a new product simply to bump up your cash intake. Generally speaking, if you’re already feeling cash flow issues, a new project can just end up draining resources instead of increasing cash flow, at least in the early stages. If you’re serious about growth though, choosing the right strategies for your business is critical.
4 Growth strategies to scale your retail business
- Strategy 01: Decide whether growth is a good idea – or if your retail business is perfect the way it is
Not all growth is created equal. Growth adds complexity to a business. For some retailers, a string of stores spanning from Joburg to Cape Town is the dream, and they embrace the intricacies of running multiple locations and building a recognisable brand.
If your cash flows are healthy and you’ve hit a ceiling in how much bigger your current business can get, and you love the idea of watching your brand become a household name, growth might be the perfect path for your business.
But if your cash flow isn’t strong, you’re struggling to capture market share and operations and staff relations are struggling, rather focus on getting your current store operating at 100% before you start focusing on growth.
Here’s another key consideration: If you’re personally involved in your store, love your local community and enjoy enough flexibility to spend quality time with your family, do you want to trade that in for a lot more stress and hours in the business as you build it up?
There are great businesses that are not focused on growth – it all comes down to what you want to achieve, and what’s important to you.
- Strategy 02: Add a new product line
If you’ve decided that growth is your game, the next step is figuring out how you’re going to get there.
There are two key ways to grow a retail business: Either you increase the number of different products you sell, or you capture more market share, or you focus on a combination of both.
One way to achieve both of these scenarios is by adding a new product to your current offering. There are a few ways to do this:
- Offer additional sizes of existing products. Larger packaging helps bulk buyers, while smaller sizes give customers the opportunity to test the product to see if they like it. By derisking the buy, you could encourage more purchases down the line.
- Add a variation of the same products. What are your best-sellers? Does it make sense to offer it in a different colour to add variety?
- Add a complementary product line. This could include adding new scents, flavours or colours, or adding a line of products that goes well with your current products. For example, if you sell picnic baskets, could you include picnic blankets and plastic glasses to your range?
- Create a completely new product in the same range. For example, if you sell home entertainment systems, can you add portable speakers?
- Keep your energy up for the post-holiday crowd
The post-holiday period is often pretty quiet after the ‘silly season’ boom, so you’re going to need a focused team if you want to clear your shelves.
“Also, there will undoubtedly be returns and things of that nature to deal with, so you need to make sure that the quality of your customer service does not decrease during this period,” says Humanity’s David Galic.
You and your staff members will already be tired after the holiday rush, but toughing it out and staying focused for the first few weeks of the new year will have a lasting impact on your customers. Find some exciting ways to incentivise your staff and get them excited about January.
- Strategy 03: Increase your market share for your existing products
There are a few ways to increase your market share. You could start with something as simple as a marketing campaign that targets your competitors’ customers. Special introductory offers that encourage new customers to try your brand could entice them to your store.
You could target a new demographic with your existing product line, or evaluate gaps in your competitors’ offerings and optimise your product line to fill those gaps.
The best way to figure out which options will work best for you and your business is through market research.
Ask the following questions to figure out what your potential customers are looking for:
- Are customers asking for a product that you don’t stock?
- Are there products that currently don’t exist in your industry, but that might complement what is on offer?
- Are there products that exist but that you can give a unique spin to?
- Does your idea align with your existing brand? Brand consistency is important, so don’t waste time pursuing an idea that doesn’t align with the brand you’ve worked so hard to build. People respond to consistency and you don’t want to dilute your brand equity or customer loyalty.
There are always risks when venturing into a new market. Before you dive into a whole new customer base, thoroughly research and test your ideas. Make sure there’s an existing demand for your offering and don’t make assumptions that the new market is the same as your existing customer base.
- Strategy 04: Expand into new locations
This is probably the most common expansion technique for retail businesses. Setting up new stores in different locations, from a nearby suburb to an entirely different city or province, is a great way to widen your brand presence and access new customers.
If a multi-store operation forms the basis of your growth strategy, keep the following points top of mind:
- Replicate your success. Your business is in a position to grow because of how well you have run your initial store. You need to formalise and document your operations so that they can be replicated. It’s also important from a management perspective for all stores to follow the same systems and processes.
- Inject local flavour. While it’s important to follow the same systems and processes, each store should embrace the local community its servicing. By adding a personal element to each store, you will capture the hearts and minds of your market.
- Get involved. This speaks directly to the previous point. Support a local charity or host an event – just get involved. Show your customers that you care about their community.
You can always test the waters of a new location with a pop-up store. According to Vendhq, retailers can save up to 80% by opening a pop-up versus a traditional store. Based on the success of your pop-up store, you can then determine if it’s worth setting up a more permanent store.
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