Forgive me for stating the obvious: Retail is a huge industry, comprised of many different types of businesses. To say, "I want to open a shop," is really not saying much at all. Over the weekend, I did little bit of research, which helped me understand the different facets of the retail industry, so I could be a little more specific about what my goal is. I also researched different organizational strategies which helped me focus my goal even more.
Let's talk about what retail is in a broad way and then we can get more specific. Retail is buying merchandise or services from a manufacturer and then selling these to a consumer. According to Entrepreneur's Magazine's Start Up: Start Your Own Retail Business and More, there are three main types of retail businesses:
Store retail: Retail in the traditional sense, including "independent shops, department stores, discount and off-price enterprises, convince stores, membership warehouse clubs, national and regional chains, category-killer stores....conventional supermarkets and more"
Nonstore retail: Selling directly to the customer through "TV, electronic shopping, paper and electronic catalogs, door-to-door solicitation, in-home demonstrations, portable stalls, vending machines and mail order". Pop-up shops, and markets fit under this category.
Service retail: Selling services to customers, such as repair or insulation services.
After just reading the introduction of Start Up: Start Your Own Retail Business and More, I was able to able to articulate that I want to start an independent shop. But what is going to set this shop apart? What organizational structure will it have that will give it a competitive advantage? According to the Society for Human Resources Management, there are three different organizational structures which are defined below:
Cost Leadership: The company is the low cost producer of the industry.
Differentiation: The company product of service has unique characteristics that customers value and are willing to pay more for.
Focus: The company focuses on a particular target group and what this group may need.
My brother in-law, Ivan Espino, started his very successful online business, LordShopping, with a Cost Leadership Strategy. His company offers a variety of apparel, electronics and home goods, at a very competitively low price. The goods I offer are different. So, I decided, that I need to use a Differentiation Strategy to set my business apart. My customers are looking for items that are socially conscious. These items are handmade and not mass produced. The source of the materials and the traditional process used to make each item is very important. It is also important for my shop to be active within the community, which includes offering classes about crafting techniques and opportunities to meet the artist, designer and maker behind the product.
So, what will your shop be like? What are the values that are important to you and to your community?