Retail business: a definitive guide
Retail businesses are central to the makeup of any town or city. From small, local retailers to multi-national chain stores, the industry is hugely dominant and plays a significant part in all of our daily lives.
But despite its importance, there is still an air of mystery that surrounds the popular sector. To help demystify some common queries, we’ve put together a ‘retail 101’ to provide guidance and answers.
In this blog post, you’ll find everything you need to know about the retail business sector; from key definitions to advice on how to drive success in your business.
If you'd like to discuss a custom offer for your retail business, get in touch with our Sales team.Find out more
What is retail?
It might initially seem obvious, but defining retail can help to analyse the business sector as a whole. According to the Cambridge Dictionary, retail is defined as “the activity of selling goods to the public, usually in shops.”
This selling of goods can take place in a variety of ways, such as in-store at a brick-and-mortar location, online, through direct sales or via postal services and it includes anywhere from department stores to corner convenience shops. The retailer is the shop or business that is selling the goods and the consumer is the person who purchases those goods for use.
Types of retail business
The variety and range of retail business types are ever-growing and changing, but some main examples include:
Department stores usually have a wide selection of products on offer, from homeware to children’s toys. These large retailers often stock both products from their own range and goods from other companies under the same roof. In the UK, stores such as John Lewis and Selfridges fall under this category.
E-commerce, otherwise known as electronic commerce, involves the selling of goods by electronic means, including on mobile devices and computers. E-commerce is a hugely popular and profitable retail business type, accounting for a whopping £2,089.6 billion in the UK as of 2022.
The classic corner shop (or convenience store as it’s also known) is a staple addition to streets in every town in the UK. These small stores stock all of a consumer’s everyday essentials, from milk to biscuits. The retail merchants in convenience stores are often central members of a local community and their businesses are long-standing and loved.
Supermarkets are large marketplaces that stock a large variety of products, focused primarily on food and household objects. These stores are very often chain companies with brick-and-mortar locations all around the country and sometimes even around the world. Examples of supermarkets in the UK include Asda and Tesco.
This retail type focuses on offering consumers a specific product type or category that it specialises in. For example, a store offering a selection of women’s clothes would be considered a speciality retail business given the breadth of products on offer to consumers.
How to start a retail business?
Starting a retail business is a challenging but very rewarding process. Whether you decide to open a specialised brick-and-mortar store or an online E-commerce boutique, you’re going to require a lot of planning.
To start with you’ll need a business plan. This will outline a summary of your company’s purpose, mission and vision, while also showing an analysis of the market, your product line and your financial projections. After this, you can hone in your niche and which products you want to sell. Surveys are a great way to drum up some hype around your business and to gain insight into the kinds of products the people in your local area desire, alternatively consumer panels and focus groups are another great option.
In terms of legality and finances, you’ll need to choose a legal structure for your retail business. This will determine how your taxes are handled, how you’ll get paid and your liability. Additionally, you’ll most likely need to acquire financial backing for your retail store. Many banks offer schemes for new business owners and there are a number of loans available. Research what is available to you in your local area to help you and your business get on your feet, mentors can also be excellent sources of guidance.
You’ll also need to decide how to take payments in your retail business. Mobile point of sale (mPOS) devices make great options and choosing to partner with SumUp means you’ll have access to the SumUp app and cutting-edge hardware like SumUp Solo.Find out more
Once you have everything in place, you can look into choosing the location of your retail store (if it will a brick-and-mortar business). Make sure you research neighbourhoods and shopper behaviour in each area to ensure you choose the perfect place. After this, you should get to work designing your store layout and decorating. This can be a tricky task and often requires external input to put together a retail floor plan. Make sure you plan your store so that the customer experience is as good as possible and encourages sales.
Finally, if you have the resources, start hiring and training staff. You should make sure that customer service is always a priority and the focus of your staff training. Even if to begin with it’s you alone in your store or managing your online boutique, the way you interact with customers is very important and leaves a lasting impression.
How to run a successful retail store
You’ve opened the store and started trading from your very own retail business - congratulations. Now you can start thinking about how to optimise your sales and begin growing your business. Small changes can make a big difference; check whether your store layout needs to be updated to make the products appear more attractive and test out new incentives and bundle-buys for complementary products.
Here are some ways to set yourself up for success in retail.
Know your peak times
Knowing your store’s peak times is essential so that you can organise as effectively as possible.
How can you uncover your ‘official’ peak time? Well, you can use a footfall counter (these are pretty easy to find online), or most till register systems have the ability to produce hourly sales reports.
On top of that, SumUp launched the first truly open mPOS system allowing companies to have an end to end programme on their mobiles. These could be used at peak times alongside your normal systems to streamline customer waiting time even further.
Our POS gives you real time access to all the data about your business, from number of sales to most popular products to average transaction size.Learn more
It also helps to review your actual sales reports year on year. This will give you a clear understanding of what your busiest times have been historically.
Increase staff numbers during peak hours so that there’s always somebody available to answer any queries and help reduce queuing time. Admin, cleaning, and restocking the shelves should be completely off-limits during peak times. Make it all about the customers.
Keeping up to date with local events that will see a flood of people land in your town or city will also better prepare you for extra footfall.
Organise your store
Taking into account the layout of your store is essential. Small changes, like putting popular items at eye level or placing impulse purchases by your sales point, can have a positive impact on sales and help raise your profit margins.
Taking time to organise your till points, back offices and stock rooms will enable you to offer a faster and better service to your customers. You’ll want your customers to see as many products as possible during their visit, while still creating a comfortable shopping experience. The last thing you want is for people to leave without making a purchase.
Here are some tips for organisation:
Design a welcoming threshold. The first hurdle is actually getting customers to enter, so make your threshold enticing with products that evoke the senses, such as products that smell or look the most appealing.
Make the most of right turns. Right-handed people make up 70-90% of the world’s population. This suggests most people entering your store will be reaching for products with their right hand, and a study by Shopworks even suggests that right-handed people will be drawn to the right side of space. When thinking about a customer’s journey, focus on the right turns you would expect them to make and organise accordingly.
Strategically place your products. Just as putting sensory products at the front can draw people in, placing other products strategically can help increase sales. Place low-cost “impulse” purchases near the checkouts, products that appeal to children at their eye-level, and group products that are often bought together in the same section.
Design a buying path. Leading your customers where you want to go could help you improve sales. Think about their journey from the entrance to the exit (carefully considering right turns, of course). Also, organise everything in a way that allows people to comfortably ‘loop back’ to previous aisles if they want to. You can use fixtures and merchandise to help you create this buying path.
Encourage shoppers to slow down. If your shoppers linger and browse, then they may be more likely to make a purchase, or add even more to their cart. Encourage shoppers to take it easy with relaxing music, try before you buy stations, and anything else that will stop them in their tracks and turn their shopping trip into a shopping experience.
Create the right atmosphere. The products you sell and the type of customers you attract are key factors in creating the ‘right’ atmosphere. Think about everything from the music, to the way your employees greet customers.
Allocate the ideal space for payments. Nobody enjoys queueing, and with the advent of online shopping, people are less and less tolerable of it. Make payments quick and easy for your customers by allocating the ideal space to take payments, or by equipping your floor staff with card readers.
Customer experience plays a huge part in how you choose to organise your store. The way a customer feels and what they expect from their in-store experience is paramount to customer satisfaction. According to a survey by Clicktale of UK and US shoppers, 83% of customers say they feel frustrated with hard-to-navigate store layouts.
Effectively delegate tasks
It can be difficult to find the right balance when it comes to delegating tasks to your employees. If you keep all of the important tasks to yourself, because perhaps you feel that you are the best person for the job, then you could quickly become overwhelmed. On the other hand, you don’t want to delegate too much as it’s important to be seen doing your fair share of tasks. There’s a balance you must strike between these two extremes.
Delegation can be one of the most powerful training tools for your employees and can lead to increased development. You can shape the best staff members for your business by agreeing on the outcome of a task with your employee and make the timeframe for the task clear.
It sounds obvious, but making a ‘to do’ list at the beginning of your day is a great place to start. This way you’ll know what needs to be accomplished and you can begin to assign the most suitable employee to each task.
Interestingly, according to Inc.com, 53% of business owners feel they can grow their business more if they delegate tasks to their staff members.
Get your employees involved... and keep them happy
Your employees are your most valuable asset. And they spend a lot of time on the shop floor interacting with customers, so they’ll have important insights from the front line.
Ask them for their opinions and feedback, as it’s likely you’ll get observations from them which will help you in making decisions about your business. Including your employees will also show that you value them, and make them feel like an important part of the business.
A survey by ORC International found that a little over half (58%) of UK employees feel engaged at work, and including them in decision-making could further improve this.
If your employees are happy, it can also have a positive effect on your customers. Happy workers will be more likely to build strong relationships with customers and provide better customer service. Positive engagement is how businesses create positive retail customer experiences, so make a point of encouraging this.
Employee satisfaction and happiness can be encouraged in a variety of ways:
Recognise progress. If employees are doing well, be sure to tell them.
Trust them. If an employee is showing you they are trustworthy, trust them with more important tasks. Start them on the road to promotion and watch them thrive.
Prioritise a good work/life balance. It’s important to still be ‘human’, not just a manager. Encourage them to leave work at work, and don’t expect them to burden their hometime with daily tasks or worries.
Encourage breaks. Know how many breaks you should be giving your employee vs the hours they are working and encourage them to always take their breaks. A rested, refreshed employee will perform much better for you.
Understand them. This goes alongside ‘being human.’ Knowing your employees and their strengths and weaknesses will go a long way.
Offer perks. It doesn’t have to be anything huge, it could be a simple bottle of wine to the person who managed to upsell the most that week. A little will go a long way in terms of recognition.
Say thank you. On top of everything, a simple ‘thanks’ or ‘great job’ will show your employees you’re noticing their hard work.
It’s important to keep an eye on how your employees are acting and look for new ways to keep them happy and engaged. Some ways to evaluate employee satisfaction are:
Have a suggestion box. A suggestion box takes the pressure off employees to approach management themselves. Place one in a communal area and make a point to check it regularly.
Regular performance reviews. Make one-to-one time with your employees a priority, it gives them a chance to air any grievances.
Anonymous surveys. Annual surveys to gauge how your employees are feeling are useful. They’ll help you find out any issues that are happening across the board.
Equip your employees correctly
Your employees are guided by you. So it’s down to you to make sure they have everything they need to do their job. If they don’t, then it’s possible your workforce will become frustrated when they can’t deliver what you’re expecting.
If you want your employees to offer the best customer service possible, make sure they have the appropriate equipment to do so. SumUp card readers allow your employees to create a streamlined buying process that makes taking payments effortless.
All our machines accept debit cards, credit cards, contactless payments, and mobile wallet apps like Apple and Google Pay. Whichever model you choose can fit right in your hand and go anywhere with you.
There are no hidden or recurring charges associated with owning a card reader, only a 1.69% fee per transaction.Order your reader
Why are retail stores closing?
Running a successful retail business means you’ll be up against a lot of challenges. From rising rental prices on storefronts to omnichannel shopping, retailers need to constantly adapt to keep their heads above water. By using a modern mPOS system, you’ll be able to keep up with the latest in trends and technology to make sure that your payments system is always reliable and up-to-date.
Other challenges include a rise in competition between more niche specialised stores and online. With this in mind, it’s more important than ever to make sure your in-store or online experience is as good as it can be. You can also stay on top of retail changes and important news by following industry blogs such as Retail Customer Experience.
With SumUp, your retail business will have the best chance of success. If you'd like to discuss a custom offer for your business, reach out to our Sales team via the form below.
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