Welcome to our community of retailers. Here you can find all the resources you need to start, run and grow your retail business. Discover the latest industry trends, suppliers and software and get connected with the right industry professionals.
I think it comes down to two things: 1. No point of difference or unique selling proposition (USP) 2. High overhead costs either from rapid expansion or poor financial planning
I think it comes down to two things: 1. No point of difference or unique selling proposition (USP) 2. High overhead costs either from rapid expansion or poor financial planning
This applies to a lot of bankrupt retailers, regardless of what they sell. Masters expanded too rapidly and couldn’t differentiate itself from the incumbent Bunnings, whether from price, customer experience or product line. Dick Smith had a lot of obsolete or unsold stock when they folded, which signals that they failed to keep up with consumer demand changes. If you asked consumers to describe Dick Smith in fewer than 10 words, many would struggle simply because Dick Smith had no USP.
It’s an important lesson to think about when you are starting a retail business nowadays, in this highly competitive environment – what is your USP?
The retail industry has faced a considerable number of challenges over the years, mostly due to changing consumer behaviours which continually push businesses to find ways to adapt and stay relevant. KPMG’s Australian Retail Outlook 2020 Report offers key insights into the future of the retail industry.
The top three challenges facing the retail industry are consumer confidence (56.4%), rental overheads (44.9%) and discounting (42.1%).
The top business priority for retailers over the next 12 months is increasing turnover (59.3%), followed by an increasing margin (54.3%).
50% of retailers are more concerned than last year about the influx of international retailers in Australia.
42% of retailers think online delivery speed is the consumer expectation that will increase the most over the next 12 months.
As one of Australia’s fastest-growing platforms for startups, entrepreneurs and small business owners, we have one of the largest communities of retail businesses. SavvySME makes it easy to connect with industry experts and other retail business owners, to discover the latest ideas, advice and technology needed in the retail industry.
Retail businesses in our community include those in:
Clothing, shoes, accessories and fashion
Beauty
Health
Sports and fitness
Electronics and home appliances
Home and furniture
Gifts, toys and entertainment
Machinery, tools and hardware
Arts and crafts
What is a retail business?
By definition, a retail business is one that buys products or services from a wholesaler and sells them to consumers. Retailing refers to the distribution process of purchasing products and services through a supply chain consisting of manufacturers, wholesalers, retailers (or merchants) and consumers:
Manufacturers:Manufacturers produce goods from raw materials in warehouses and factories, often at a mass scale. They sell the goods to wholesalers at low prices.
Wholesalers:Wholesalers buy goods from manufacturers and resell in bulk qualities to retailers at a higher price than they paid. Wholesalers may also sell goods directly to consumers.
Retailers:Retailers purchase goods from a wholesaler, or in some cases, directly from a manufacturer. They sell the goods to consumers in small quantities.
Consumers: Consumers buy goods and services from retailers in low quantities and fulfil the demand of the supply chain.
But beyond this simple definition, there are many different types of retailers that vary in size, management structure and the products and services they offer.
What are the different types of retail businesses?
Below are the most common types of retailers:
Department store retail:A large store that offers a vast range of products in various categories such as electronics, homeware, clothing and beauty.
Grocery stores/supermarkets:Self-service stores with serviced customer checkout facilities where you can find an extensive range of food and non-food items, e.g. Coles and Woolworths.
Non-store retail:Selling goods and service outside of shops and stores, e.g. mail ordering, door-to-door sales and vending machines.
Corporate retailing:Corporate retailing includes chain stores, franchises and consumer cooperatives.
Discount retail:This type of retail sells consumers popular goods at discounted prices.
Warehouse retail: Warehouse retailers like Costco sell goods of wholesale quantities at very low prices.
Online retail:Online retail or ecommerce is the sale of goods and services primarily through a website. Many brick and mortar stores have transitioned partially online to expand their target market.
Service retail: Service retail refers to businesses whose product is a service such as banks, airlines, hair salons and beauticians.
How do you start and run a retail business?
To start and run a successful retail business, there are a number of things you need to do:
Understand key legislation
Get the relevant licenses and permits
Health and safety
Take out insurance
Tax requirements
Hire staff
Consumer law
Sustainability
Supply chain and logistics
1. Understand key legislation
You need to a good understanding of key legislation that applies to retail businesses including:
These laws and legislation regulate the way you operate and cover things like labelling, product safety, refunds, warranties and country of origin claims. The Australian Competition & Consumer Commission (ACCC) is the independent body that enforces the Competition and Consumer Act (2010) and other legislation that promotes fair trade for retailers and consumers alike. Check out theACCC website to understand the specific laws that apply to your business.
2. Get the relevant licenses and permits
The next thing is applying for relevant permits and licenses for things such as signage display, preparing or selling food, waste disposal and restricted trading days. Licensing and permits are regulated by state governments. You can check which ones apply to you with the Australian Business License and Information Service (ABLIS).
3. Health and safety
As a business owner, you are responsible for ensuring your shop is compliant withwork health and safety requirements. You have a duty to ensure that you, your staff, your customers and other members of the public are safe. This includes safe manual handling, mitigating safety hazards, noise abatement and maintaining standards for protective equipment and clothing.
4. Take out insurance
According to AAMI, the top claims for retailers are property damage, business interruption and theft. It’s vital to get adequateinsurance to protect your business against natural perils, product liability, machinery breakdown, theft and malicious damage among other risks. If you hire employees it’s compulsory to take out a workers’ compensation policy which covers accidents, injury and sickness.
5. Tax requirements
Retail businesses have specific goods and servicestax (GST) requirements. GST is a 10% tax applied to most products consumed or sold in Australia, and it is up to you to add this levy to your products. You must register for GST if your business has an annual turnover of $75,000 or more. Learn more about GST for retailers on theATO’s website.
As a small retailer you may also be eligible for tax concessions such as:
Instant asset write off for capital purchases, e.g. delivery vans, shop fitouts, store security systems and POS systems
Stock purchases
Property costs, e.g. leasing or mortgage interest
Employee fringe benefits
Accounting fees
Hiring anaccountant orbookkeeper is a good option as they have a thorough understanding of tax for retailers and can help you reduce your tax bill.
6. Hire staff
As an employer in retail, there are a number of legal and compliance-related factors to understand when you hire staff. This includes:
Determining employment type and the correct award rate
Ensuring your shop is workplace ready and OHS employment conditions are met
Registering for PAYG and setting up your payroll
Developing a staff handbook/employee guidelines
7. Sustainability
Sustainability is a pertinent issue across the board and retailers are being pushed to find more environmentally friendly ways of trading. Some of the biggest sustainability-retailed issues include waste management, recycling, environmentally-friendly packaging and sourcing more sustainable products. This could mean reducing the amount of plastic wrapping you use, finding a local supplier and training your staff on waste reduction.
8. Supply chain and logistics
You will need to find and foster relationships with wholesale suppliers or manufacturers. The suppliers you choose have a direct impact on the quality of your products, your daily business operations and your bottom line. Learn more about supplier selection and get connected with wholesale distributors in your sector.
In addition to getting started in retail, you can access resources on SavvySME to help your business grow. Some of our most popular Q&A from small retail businesses include:
How do I start a retail business?
Is ecommerce more profitable than a brick and mortar store?
How do I transition online?
What is the best ecommerce website builder?
How do I create a retail pricing strategy?
How do I market my retail business?
How do I build customer loyalty?
How do I find wholesalers and distributors?
Which POS system should I use?
Retail is one of the fastest-moving industries and continues to change to accommodate issues such as changing consumer behaviour patterns, digital disruption, personalisation, technology and sustainability.
Current retail trends show that personalisation and customisation are becoming more popular with consumers and retail businesses will have to accommodate more flexible service and product offerings. Cloud-based technology, mobile,social media and data analytics mean retail is becoming increasingly convenient and personal for consumers. In addition, consumers are becoming more aware of how their purchasing choices have a direct impact on the environment. They are choosing brands whose values align with their own
These issues arguably have a greater impact on small retailers. While the term “digital disruption” sounds like it may only apply to large retail corporations, technology influences the way businesses across all industries operate and small retailers will need to adapt to meet customers’ needs. One way is through online retail, also known as ecommerce.
With more consumers going online for convenience and greater shopping options, the ecommerce industry is booming. Let’s take a look at the current landscape:
Ecommerce sales account for around 18.1% of global retail sales (Oberlo, 2020)
48% of online shoppers head straight to a large ecommerce marketplace (BigCommerce)
45% of ecommerce sales in the U.S are from mobile ecommerce (BusinessInsider)
By 2040 it’s predicted that 95% of all purchases will be through ecommerce (Nasdaq).
Source: WebAlive.com.au
Brick and mortar businesses that haven’t yet established an online presence are missing out. Expanding into an omnichannel business model can increase your reach, allow you to tap into bigger and new markets and create a more seamless customer experience. Transitioning online can feel daunting and brick and mortar retailers may be concerned about things such as:
Not knowing how to get started
Web development and design costs
Data and security issues
Not having enough time to manage an online and offline store
Retail is an ever-changing landscape and it’s important to adapt by utilising retail software, leveraging customer data and analytics and monitoring consumer behaviour patterns and trends. With a web of industry experts and access to over 400 professionals, you can find everything you need to grow your business on SavvySME.
There are many moving parts involved in running both an online and brick and mortar retail business. If you’re just starting out you may need shopfitters, security staff and signage installers. Ecommerce businesses will need a web hosting platform, web designers and potentially web developers to maintain your site. We can connect you with industry experts includingdigital marketers,market researchers and ecommerceweb developers.
Whether you are an online or offline retailer, you will need to find suppliers for your products. It can be tricky trying to find reliable wholesalers and maintain a steady supply chain. At SavvySME, you can access a range of wholesale suppliers and distributors at your fingertips. Learn more about how to choose the right supplier.
