10 Steps to Setting up a Profitable Clothing Store

Steps to Setting up a Profitable Clothing Store

Opening a clothing store is a dream for many people who want to feel the freedom and joy of owning their own business, in a sector that they are passionate about. It is a simple business to start, even by one person that requires a small amount of capital to start compared to other businesses and that involves the creativity and passion of the owner. All of these ingredients often lead to business success.

Your Clothing Store in 10 steps

Decide the type of clothing store you want to open

There are basically 3 types of stores in terms of how they store their merchandise – Consignment stores, Buy and Sell stores, and Franchise stores.

A consignment store stores products made by other designers or manufacturers and gets a percentage of the sales when they are made.

The consignment model means that you do not need to spend money to obtain the inventory, save for a small deposit as a guarantee, but the percentage of the profits will be much lower than the usual purchase model. Consignment stores operate by volume, meaning they will have to sell a large number of products to make a decent profit. These types of stores are a good option if you don’t have money to invest in buying merchandise. You will have to look for designers or manufacturers who are willing to leave their products in your store until they are sold.

Common trading stores buy their products for a price from manufacturers or distributors and sell them for a higher margin to customers. This boutique model will make a much bigger profit at the end of the day, but it takes a large initial investment to buy the clothes. You will have to negotiate with the wholesalers to get the best possible price for higher profits. You may need to purchase certain quantities of the same clothing model to get a discount (minimum quantity order). You will earn more money with this model than with the consignment store.

The franchisee operates under a large brand and sells exclusively the products indicated to it. You will have to pay a franchise fee (once a year) to the parent company so that you can use the brand, logo, corporate colors, etc. and be allowed to sell your merchandise.

This model needs a large initial investment, as there is a fee to be paid to the company, as well as maintaining the quality standards specified by the company in terms of decoration, etc. It has the advantage of already developed brand awareness, company advertisements, etc. And you may not have to convince customers to buy the products as much as if you were starting a new clothing store.

Decide the purpose of the clothing store

Decide why you want to open the boutique and what you are going to offer, you will also have to know what is fashionable and the colors that attract the public at the moment.

Develop an entrepreneurial mindset from the get-go. You are in this for profit and a better life. Without profit, nothing is possible, so you always think about profit and cost reduction.

Think about the reason why you want to open a store?

Some people think that a boutique will help them pass the time.

Some want to escape from home. Some think they will have a lot of clothes and will be able to wear what is not for sale.

Some feel compelled by their family to prove themselves.

These are all reasons to start a business, but they are not enough for a business to be successful. It takes a burning desire to make any business a success, but especially in fashion related businesses.

You must make sure you have enough education to run a business.

I’m not talking about a fashion degree or something. A general education on how to run a business is an essential part and you can get it by reading relevant information.

This way you are not dependent on others. If you have the knowledge, no one can fool you. Even if you hire qualified employees to take care of everything for you, they are just employees. Knowledge will be of great use to you and you will be able to make sound and informed decisions. Doing business is challenging and requires experience and care.

clothing store

Decide what clothes and to whom you will sell them.

Make profiles of your ideal customers and find products for them.

Think about the purpose of your business and try to solve a real problem. You can do a little market research to find out what is currently missing and what you can offer.

You should not please everyone: finding a market niche is the best way to achieve success; You can’t like everyone, unless you have the Amazon budget, of course.

Decide on a target market: the customers you are going to sell to. Identify a problem in that market that you can solve. Check the purchasing preferences of your customers. Clothing styles, colors, and types should meet the preferences of your target market.

If you are starting in a residential area with a largely retired population, you are not likely to be successful with a boutique that sells funky, modern clothing.

Think about what your customer wants instead of what you like.

If something is sold, and it is in demand, you know it will be a success. One trick that most experts advise is to start selling what is already sold.

If there is a demand, it means that they will buy from you, you just have to increase the value proposition of the product, give a better quality than what is already in the market.

Remember this quote “Don’t reinvent the wheel”; This is contrary to what we have always heard, but it makes strong business sense. We’re not all Steve Jobs to invent a trend – following the pack in business is a good choice for most, especially if you don’t have money to spend (splurge) on marketing.

Visit stores that seem similar to your idea and compile a list of the clothing brands they sell that you would like to sell in your store. Most likely, they are also the best-selling products.

Decide the source of financing for the store

Ideally, you should start with enough money to last for at least the first 6 months. Better if they are 1 or 2 years old. Most companies do not make a profit during the first years of life, so it is necessary to have enough capital to support the expenses of the store and, in addition, to cover your personal expenses if you do not want the store to close before reaching the success.

Just to name some expenses, you will need money for the deposit of the rent of the premises; money to pay employees, money for inventory or for decoration of the clothing store.

Will you need a bank loan?

This will depend a lot on the location of the store, if you are going to rent or buy, the type of clothing you plan to sell, the size of the premises, if you are going to hire employees, the decoration, other expenses, etc. Also about whether you have the capital to start the boutique on your own or if any of your friends or family are willing to lend you the money.

Risk is a double-edged sword. It can be your savior in business or it can sink you forever. Therefore, you take only calculated risks, especially when it comes to money from other investors. How money is used must be carefully planned.

Open your clothing store in the perfect location

Location is one of the most important factors in deciding the success of your store.

But choosing the best location will depend on the budget. A boutique located in a busy shopping center will have a lot of customers, but a high rent. A boutique located in a quieter residential area will not have as many customers, but the rent will be much lower. The choice is up to you and what you can afford.

Being where your customers are is the only criteria for choosing a store location.

Decide where to buy clothes

You need a supplier that supplies you with good quality products.

Look for manufacturers or distributors who specialize in the products you have in mind to sell. Request samples; images on websites or catalogs never tell the whole story. After having seen them first hand, you can negotiate with them and they can prepare a budget for you according to the quantities you need.

You may want to bring clothing from a particular designer to your store, in which case you should contact them directly.

Find the providers

  • If there are wholesale trade shows near your area, attend them.
  • Visit wholesale clothing vendors and distributors in your area.
  • Talk to other boutique owners. They may not be willing to provide their vendor information. You should visit the owners in a place that is not close to where you plan to start; so they can share the information more easily since you are not their competition.
  • You can also get clothes from online wholesalers like Alibaba or similar in countries other than yours. Before buying, you should obtain samples of the products that interest you; read recommendations from other buyers and look at the good ratings and reviews they leave on online platforms.
  • Some clothing stores consider making their clothes themselves, but it is always best to do it after they have established themselves by selling other people’s products.

Once you identify the supplier, you may need to decide what style you want from their collection. You may need to buy in bulk to get discounts.

A clothing store needs accessories for its activity

You will need the following accessories when you open your clothing store:

  • Point of Sale Terminal (see POS for clothing stores)
  • Barcode reader
  • Coin drawer
  • Ticket printer for purchase receipts
  • Touch screen to streamline sales
  • Barcode Label Printer for Products
  • Dataphone to process credit card payments
  • Furniture and office supplies
  • Telephone
  • Hangers
  • Mannequins to display clothes
  • Shelves

You also need surveillance cameras to make sure you don’t get robbed.

Remember that the tickets and invoices must have the name of the company printed with its logo, the NIF, the fiscal address and the telephone number; the back must have the return policy.

Shopping bags

This accessory needs a special section because the shopping bag that you give to a customer is a type of advertising, so it must be of good quality and project a good image of your business. When the customer takes her, proclaim to the world that she has been to your store. If they transmit a quality image, they will keep it and use it later too: so it will be a free advertisement for your business.

Decide the price of the products

Pricing the right way will get you closer or closer to success. Remember that you must take into account a large number of factors when deciding the price.

Decide on a price that your client (see the client profile) can pay and that leaves you a good profit. If you want to make a profit, you must have a correct price margin over the sale price. Some types of clothing will have a higher markup than others. Study the profile of your target customer to know how much you should charge.

Most stores have a 100% markup on the sale price, which is twice the wholesale price. Do not forget to add the corresponding VAT.

Decide the decoration of the clothing store

clothing store

Decoration is an important element for customers to decide whether to buy from your store or not. The colors, the shelves and the design are factors that influence the purchase decision.

The customer must feel that the product you offer is worth the money you ask for it. They are going to spend money on your business so you must first instill confidence in them and this confidence can be induced by the interior design of your business or the appearance of the facade and the shop window.

The environment should make the customer feel comfortable inside.

Search the Internet for attractive images of other establishments; visit a few you admire to get an idea of ​​the ideal layout.

Some owners want customers to walk freely inside the store touching and trying on the clothes. Some prefer not to be so. They prefer to show the garments and serve customers personally. Store design must support this policy.

The way mannequins are dressed can display clothes in an attractive way in the window and thus attract people who pass by to enter.

Garment display and storage shelves are essential for your business to be successful.

For example, if you have a wedding dress store, you will need space to present the collection to a potential buyer. A good idea in these cases will be a catwalk with a large mirror.

A fitting room with mirrors on the sides is common. People need to know how they look in the clothes they are going to buy.

The efficient use of space is essential in this type of business. Check with a decorator for a professional touch.

Your employees will need a break room to rest and eat.

Garment Storage Shelves and Showcases

You can spend a lot of money on decoration or just get creative and create your own shelves to store clothes with a little taste.

Customers should have enough space to walk around the store between display cases and shelves. Cluttered storage shelves put shoppers off. Make sure you always have a routine to keep clothes in order after every purchase or display.

All the big box stores have bright lights inside the fitting rooms to keep customers looking good. This is necessary if you want them to buy the clothes you offer. So spend money on bright lights, it is not a luxury but a necessity.

You will also need a counter to bag your clothes and charge your customers.

Design a plan to manage the clothing store

We refer to the policy you want to establish on how to run your business.

You must have an account book where you can keep a record of all the sales made, as well as the expenses and taxes that you must pay to comply with the law.

It is recommended that you hire a manager or accountant who has experience in retail trade to take care of the accounts and your obligations with the Treasury. In addition, it will help you a lot to acquire an accounting software in which you can save all the necessary information.

You should also have a system to store the contact information of all your customers because:

The customer you have now is more valuable than the prospect you may have.

You will need a system for managing inventory, how to handle cash, how to deal with customers, and a return policy.


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