Retail Business Plan Module

Published: Sep 13, 2004

This Retail Business Plan Module is intended as a supplement to the Standard QnA Business Plan. While it appears extensive, it is not exhaustive. These questions will prompt you to explore additional possibilities. The extent of your answers will depend on the use to which you put your business plan.

Market Area

What is the extent of the market area in terms of geography and population?
What portions are immediate and extended?
How do you describe your particular target market(s)?
How many of your target market reside in each portion?
What are your survival possibilities if another significant marketer deflected your extended area?
Do you have sufficient demographic and psychographic data for your market area?
How does your product mix match with the predominant or minor lifestyles in your market area?
Is there room for expansion of your operations?
How does your local market differ from national or regional characteristics?
Will there be, now or in the near future, branch stores?
Will you do the "Analog Approach" whereby you will define primary, secondary, tertiary for matching existing stores for the purpose of finding niche for your new store?
Will you pursue the five common market coverage strategies for selecting target markets:
1. single market concentration, focusing on one part of the market;
2. product specialization, making one product for all markets;
3. market specialization, making all products for one market;
4. selective specialization, making products for multiple niches;
5. full coverage, making a product for every customer?

Location

General

Have you heard the three keys to success defined as: Location, Location and Location?
Have you thoroughly studied local location strategies of major franchisers?
- If so, how do they relate to your operation?
Do you have detailed maps for the area under review?
- Do these maps have associated details on traffic counts, market area, population density, demographics, potential customers, consumer buying patterns, vehicular and pedestrian access, image and pertinent historical data.
Does your outlet depend on passing traffic?
Will you have a staff person with sufficient authority living in close proximity for emergencies or immediate response?

Specific Types of Locations

Enclosed Mall

Do your commodities complement those of the anchor stores?
Do your commodities compete with those of the anchor stores?
What is the traffic pattern and access to your front door?
Is there adequate control over nuisance factors (wayward youth, panhandlers, drug dealers, etc.) by mall administration?
What are the details and COSTS included in the leasing contract namely: duration, penalties, fixed (space) cost and percentage of sales?
How are your opening hours determined?
Are there any mandatory surcharges such as shared promotion and common area?
Is there a vacancy for an adjoining arcade or satellite or adjacent strip?
What are the parking and access features?
Is there acceptable security for all parts of the mall?

Strip Mall

What are the traffic patterns to and from the mall?
Do one or more units attract consumers to the mall?
What is your position in the mall?
What is the traffic pattern and access to your front door?
How does your signage complement or compete with the other units?
What customer parking is available to your unit?
What is the visibility and image of the mall?
Are there any nuisance factors (wayward youth, panhandlers, drug dealers, etc.) in the mall or neighborhood?
Will security measures inconvenience your target customers?
Will there be any shared costs?
Are there any restrictions on your hours of operation?

Business District

Will there be greater exposure to your store's target customers?
What are the buying patterns of the consumers in this district?
- Are these patterns compatible with customers desired for your store?
What is your position in the block and district?
What is the traffic pattern and access to your front door?
How does your signage complement or compete with the other stores?
What customer parking is available to your store?
What is the visibility and image of the district?
Are there any nuisance factors (wayward youth, panhandlers, drug dealers, etc.) in the neighborhood?
Will your anticipated sales justify the rental costs for being in this district?

Attached / Adjacent to a Major Attraction

What is the major attraction?
Does it attract your target clientele?
Will you be paying a premium for traffic that is not in your target market?
Will your store name reflect your proximity to the attraction?
Are the hours of operation compatible?
Does the amount of discretionary and disposable income of the attractions clientele coincide with your market?
Can you list and qualify the advantages and disadvantages of your association with the attraction?

Major Stand-alone Retailer

Do your commodities complement those of the major retailer?
Do your commodities compete with those of the major retailer?
What is the traffic pattern and access to your front door?
Are the hours of operation compatible?
Does it attract your target clientele?
Do you have a significant niche by your proximity to this retailer?
Can you list and qualify the advantages and disadvantages of your association with this retailer?

Major Building

Is the building a common reference point?
What type of people does the building house?
What type of people does the building attract?
Are the hours of operation compatible?
Does the building and its tenants attract your target clientele?
Do you have a significant niche by your presence in this building?
Can you list and qualify the advantages and disadvantages of your location in this building?

Service Center

(Transportation, Post Office, Government Office, etc.)

What are the hours of operation for the service center?
How do these hours match with your openings?
Is there sufficient time to justify your facility expenditure?
Can you attract sufficient customers to justify your facility expenditure?
How much traffic is generated to the service center?
What portion of the consumers of the service have a need for your service?
What is the traffic pattern passing your entrance?
How can you reach and promote to the service clientele?
Why is the location superior to other location options?
Will the service and/or its personnel direct prospective customers to your site?
Will you be permitted to sell such things as tickets at your location?
Will you offer special discounts to the personnel of the service?

Destination Area

Is your business a true destination business not dependent on passing traffic?
Why have you selected this location?
Are there any special attractions in that area?
Will there be similar businesses attracting your target customers?
Do you have a special need for extraordinary parking space?
Does this location offer lower rental costs?
Will the savings in rent justify any extra costs in attracting customers?
How will you attract customers to this location?
Are there opportunities for unique advertising such as rooftop, area entrance, topography, major traffic artery?
Will your promotion be short term or must it be an ongoing campaign?
Will there be greater vehicular access?

Competition

How many competitors exist in your market area?
What is the market share for each competitor?
What is your niche or opening in relation to these competitors?
What are the probabilities another retailer will directly compete in your niche?
How does your product mix compare with competitors?
What is the anticipated reaction to your entry into the market?
Will your prices be competitive?
How does the quality of your merchandise compare?
Have you done extensive research by visiting similar stores in other communities?
Are there or will there be big box retailers in your community offering similar merchandise?
Do you have advantages in non-price competition such as better products, promotion, service, convenience with minor emphasis on price?
What types of Industrial Espionage will you employ?
How will you react to any unforeseen competition?
Do you have contingency plans adverse campaigns by existing competitors?
Do any competitors have exclusive influence over your main suppliers?
Are any existing competitors capable of under-pricing your merchandise for an extended period of time?

Sales Revenue

How do your industry projections (see QnA basic ) relate to your expected sales?
Will there be service revenue to provide immediate and short-term cash flow?
- Will the service attract buyers of your merchandise?
- How will you convert service customers to merchandise buyers?
Will your profit margins on merchandise sales be greater than your net margins on service?
Will your revenue from services rendered be a loss-leader?

Consumer Behavior Relative to Your Store

Are you sufficiently aware of the consumer trends in your industry?
How will you be able to update your information on trends?
Do you have information on the discretionary income available to and relating to your type of merchandise?

Purchasing Policy

Do you have a purchasing policy?
Will you purchase independently or with a buying group?
What proportions of your merchandise mix from each source?
What are your buying criteria?
How will you finance your purchases?
What strategies do you have for stock replenishment to minimize inventory costs and prevent stock-outs?
Who will do your purchasing?
When will the bulk of purchasing take place?
Where will the bulk of purchasing take place?
What proportions of your merchandise mix from traveling salespersons?
What proportions of your merchandise mix from trade show?
What proportions of your merchandise mix be established brands?

Merchandise Mix

What are the unique aspects of your mix?
Do you have rare or one-of-kind items that would attract consumer interest?
Do you have a reliable supply of merchandise with competitive prices?
Will your mix have broad appeal or high appeal for a restricted clientele?
Will your mix stress fewer products with deeper selection?
Will any of your merchandise be produced on-site?
- Will your production facilities be an attraction to prospective buyers?
Is your merchandise segmented?
- Do these segments complement each other or serve the needs of a broader clientele?
Will you be re-packaging bulk purchases into convenient individual units?
Will you be bundling or repackaging small units to convenient combinations?
Will you have merchandise priced as loss leaders?
Will your loss leaders generate significant extra traffic to your store?
Will you be carrying a general line or specialty or both?
Will your store function as a factory outlet, distribution outlet providing pickup, drop-off center to gain traffic?
Will you offer related services or products such as accessories?
Have you done a market basket analysis to determine what products are frequently purchased together (cf. Amazon other books by same purchaser)?
Do you need to provide a repair service?
Would your customers patronize a rental service for your merchandise?
Will you be creating some branding or house brands or private labels?
Will you be selling on consignment for specific suppliers?
Will you have exclusive product distribution or territory or be a protected authorized dealer?
What is your position in Fashion Cycle of (1) distinctiveness - high demand, (2) emulation - growth and (3) economic - lower prices?
What portion of your merchandise mix is considered to be a fad?
What portion of your merchandise mix is considered to be one-of-a-kind?
Will your service or bundling be for adding value or for convenience or both?
What procedures do you have for check cashing?
Do you offer gift wrapping?
Will there be a lay-away program?
What portion of your mix will be self-service?

Inventory

Does your business require periodic or up-to-the-minute reporting of inventory?
What strategies do you have to maximize turnover?
Will your inventory data be collected directly from sales data?
Will data collection involve electronic or physical (tag, counts, manual reports) procedures?
How will you control replenishment to prevent stock-outs?
Will you use Just-in-time methods to reduce lead time?

Pricing

Do you have a Pricing Policy?
Will your markup margins sustain all costs?
Do your customers have a high price awareness?
Do you have full-line pricing or price-break ranges?
Will you have average-cost pricing which is adding fair or reasonable markup to average cost of goods?
Is there ticket coding providing sales staff guidance?
Will you do a transaction cost analysis periodically, frequently or ongoing?
Do you have a bargain corner for shop-worn or damaged goods?

Store Positioning and Image

Exterior

What are the attention getting features?
What is the type and content of your signage?
Who will do your window displays and how often?
Are there opportunities for displays in locations such as rooftop, parking lot, or under utilized spaces in neighboring stores?

Interior

Will your interior reflect your customers' lifestyle?
What In-store Fixtures are employed?
Will the lighting reflect and match the other display features?
Will the floor covering be practical and decorative?
Does your layout meet the needs of display and security?
Will there be facilities for customer convenience such as product examination, waiting and testing?
Will your color schemes match your customers' lifestyle and stimulate sales?
What role will cleanliness play in your presentations?
Are there in-store promotions revealing special features or usages?
What is the image of the neighboring retail outlets?
What is your positioning in the neighborhood mix?
Is there an opportunity for store branding?

Sales Promotion

What are your policies for promoting sales?
- What is the policy for merchandise returns and what are the procedures?
- What is the policy for cash, credit and your own Accounts Receivable transactions?
- What is the policy on "sales" frequency and discounting?
- What is the policy for publicity promotions?
What schemes are in place to convert more than the average 20% of walk-ins to purchasers?
Do you have a plan to stimulate Opening Sales Events?
- Will you have special invitations to pre-opening sales?
- What is your strategy for the timing of the Opening Event(s)?
Will you promote your own, or that of others, distress merchandise (perishable, unfashionable, damaged, unseasonal?)
What are the point-of-sale devices for processing cash and credit cards?
Will there be point-of-sale promotions to encourage impulse buying?
Will you offer specialty orders?
Will you conduct off premises sales?
Will you promote with backdoor selling?
How often will you use the "buy one - get one free" technique?
Is there an opportunity for take-one pads at your checkout?
How often will you use free samples?
Will you offer buyback allowances?
How often will you use coupons?
How often will you use contests?
How will you promote employer group or union member discounting?
Will you offer a portion of sale proceeds for local clubs' fund-raisers?
How often will you send a newsletter to regular customers and/or subscribers completing a fill-in entry form?
How often will you be exhibiting at trade shows?
Will you conduct demonstrations at events, on your sidewalk, ongoing in-store or in window displays?
Will you offer a delivery service?
Will you offer a installation service?
Will you promote trade-ups?

Customer Relationship Management (CRM)

How will you measure customer satisfaction?
How will you create and control customer satisfaction?
How will you anticipate and gain information on customer expectations?
How will you encourage repeat sales?
Will detailed customer records be maintained?
- Will these be used for reminders, invitations, greetings for birthday, anniversary, major purchase anniversary?
Will you employ traffic counters for tracking such data as sales type, amount and frequency?
Will you do a floor audit by cash register or with other electronic and physical devices?
Will you measure total sales by salesperson, type of sale, amount or profit by specific hour?
Will there be frequent shopper recognition (sales / visits) rewarded by points, funny money or punched card?

Sales Staff

What hours will each set of employees work?
Are there work schedules for regular hours, peak hours, slack times or for on-call staff?
What portion of staff will work full or part time?
Will training include such topics as attitude, sales, product knowledge and appearance?
What are the remuneration schedules?
What portions are base salary, commission, incentives or bonuses?
As asked above, will someone with authority be compensated for living in close proximity for emergencies or immediate response?
Will you employ outside salespersons?
Who will serve at the order desk?
Will you have some staff designated and trained as a greeter?
Will sales people use a hard or soft sell?
Will there be teams for using "good guy - bad guy" tactics?

Loss Prevention

What will be the electronic surveillance during open and closed hours?
Is your store layout designed for maximum protection?
What are your staff training procedures for minimizing theft?
What are the legal procedures for handling thieves?
What precautions are taken to avoid employee theft?
Is there a theft allowance included in your prices?
Will there be ongoing and frequent inventory calculations?

Regulatory Issues

Have you familiarized yourself with all or most municipal by-laws and regulations?
Are you in compliance with zoning and fire department regulations?
Are you subject to any covenants or restrictions by your landlord or communal body?
Do suppliers impose any restrictions on your sales procedures?

Association Issues

Are you required or encouraged to join a local association?
- Are decisions made by local organizations binding on you?
Are you required or encouraged to join a national association?
- Are decisions made by national organizations binding on you?
Are you required or encouraged to join an industry association?
- Are decisions made by industry organizations binding on you?
How is labor unrest usually resolved in your industry?
Have work stoppages affected your local industry in recent history?

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