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How to Start a Clothing Store

Dave Thomas

Follow these 11 steps to start your physical or online clothing store.

Anyone who steps into a mall in the middle of a large city may feel that the apparel industry is crowded. The truth is, there is always room for another apparel store, particularly if you offer consumers something unique and new to your area. What's more, with e-commerce booming, starting an online business is also a viable option to make your dreams of a clothing business come true. However, success in the retail clothing industry requires motivation, hard work and a solid plan of action.

Follow these 11 steps to turn your retail business idea into a successful clothing store.

1. Find your business niche.

Finding a niche is an important process of starting any business. You want to provide a product or service that there is a need for. For example, what specific type of clothing will you sell in your store? Evaluate whether your market will take to a new men's, women's or children's clothing store, or whether you should sell a combination of these. Then you can choose a specialty, such as vintage clothing for women, boutique clothing design items, maternity, sportswear or accessories. You can even create your own clothing brand if you are a fashion designer. [Read related article: Business Ideas for Fashion Fanatics]

2. Identify your target audience.

This step goes hand in hand with finding your niche. You need to identify who will be purchasing your clothes. What type of potential customer are you targeting, and what type of clothing would they buy? Do you want to target those looking for a high-end fashion brand, or would you rather appeal to those looking for more affordable clothing? Identifying your target audience will help you make these choices and narrow down your brand identity. 

3. Perform a competitive analysis.

A competitive analysis is an assessment of your current or potential business competitors. To perform one, you must identify the other companies in your market that currently offer a product similar to yours, and then analyze how their products are positioned. The results of a competitor analysis help you learn about current market trends, product pricing, market saturation, industry best practices, market gaps and business opportunities. Although a competitor analysis is a necessity when you start your business, it should also be routinely performed throughout the business's lifecycle to increase your competitive intelligence.

Bottom lineBottom line: A competitive analysis should not only be done when you start your business but should also be routinely performed throughout the business's lifecycle. 

4. Write a business plan.

Although it may not always be legally required, every business owner should write a business plan for their company. A business plan serves as the blueprint of your business and helps you see the full picture of your company's mission, vision and feasibility.

Look to the U.S. Small Business Administration's website to determine the most appropriate legal structure for your business. You can incorporate your business online, or you can work with a lawyer to make sure you take all the necessary steps. They will help you obtain a tax ID number and advise you on which business licenses you may need. You will also want to look into obtaining the appropriate business insurance.

6. Secure financing.

Starting a clothing store is no inexpensive feat. In fashion, you need to spend money to make money. You'll likely need to borrow money to fund your business through a small business bank loan. You may consider working in the fashion industry or in a clothing store to not only learn the ropes of the industry, but also save some money to fund your company.

Don't underestimate the amount of financial capital you'll need to get started. You'll need to purchase merchandise, pay store employees, buy marketing materials, and furnish the store with fixtures and lighting, to name just a few expenses.

7. Find your storefront.

If you are starting a brick-and-mortar clothing store, the location is one of the most important decisions you'll have to make. Not only do you need to commit to a location in a specific town and state, but then you need to consider the various neighborhoods and streets that will bring you foot traffic and a large consumer base interested in (and able to afford) your merchandise.

Once you've narrowed down your location options, you'll need to find the right building. Consider storefronts in strip malls and stand-alone locations, or look into mall leases if it's suitable for your type of clothing store. You'll have to keep your inventory numbers in mind: How much square footage will you need? What can you afford, and what will it cost to fill your store with merchandise?

8. Set up your online store.

Whether or not you are opening a brick-and-mortar store, you will also want to create an online clothing store to sell your items. If you are solely using e-commerce to sell your merchandise, this step is even more imperative to master.

Most startups and small businesses choose to build their websites using website-builder software. You can also hire a web design firm to build it for you, but that route is often expensive.

When you are looking for a website-building platform to create your online clothing store, it is important to find one that is affordable, easy to use and optimized for mobile users. Some companies even offer retail-specific web design templates, which can simplify the e-commerce store building process. Settle on software that can not only support your current product quantity, but also scale with your business as you grow.

When you are setting up your online store, only use high-quality photos of your inventory. You will also want to optimize the photos for mobile devices.

9. Purchase and price your inventory.

Speaking of inventory, you'll want to get the process moving to purchase merchandise from designers or manufacturers at the same time you settle on a location or set up your online shop. To start, you'll need to get in touch with vendors who carry the clothing you want to sell. A trade show is one of the best places to buy wholesale merchandise for your clothing company. At trade shows, you can connect with suppliers and see their product offerings firsthand.

When making orders, consider the amount of inventory you'll need when you first open your store, plus the inventory you'll need to regularly replace the items that sell. Don't forget seasonal trends, plus those new styles and brands that become popular from pop culture influence. You'll need to have a diverse mix of clothing, while understanding that you can't necessarily satisfy everyone who walks through your door.

Throughout the process, research the best way to set your prices based on the merchandise you're selling. You'll need to determine your markup amount, understand effective pricing techniques for your type of store, and know how to discount merchandise effectively. [Read related article: How a Bookkeeper Became a Successful Clothing Reseller]

TipTip: When purchasing inventory, be sure to consider the inventory you'll need when you first open your store and what you'll need to regularly replace items that sell. Be sure to factor in seasonal trends. 

10. Establish policies.

Anticipate problems or questions that might arise concerning employees, store hours, customer service, loss prevention, damages, returns and other day-to-day operations. Consider best practices from other established stores, and distribute materials explaining these procedures to all new employees (if you hire any).

11. Market your store.

When you're ready to open your doors (physically or virtually), don't be afraid to tell everyone, from friends and family to all your social media connections. Make sure you have a message to share with them and reasons they should shop at your new store. You might consider holding an open house with special discounts, giveaways and other perks. Put your best foot forward, and emphasize amazing customer service to build the best brand image.

As social media has become a major driving factor for business marketing, you also want to take advantage of social media marketing. Build your branding and marketing strategy around platforms like Facebook, Instagram, Twitter and YouTube to stay connected to your target market. When posting on social media, be sure to use the right photography strategies for each platform.

You might also consider incorporating physical advertising into your marketing plan. Advertise your clothing store in your local newspaper or lifestyle magazine, as well as on your local radio stations.

Keep the momentum going by sponsoring fashion shows, sample sales, trunk shows, holiday promotions, and other special days to celebrate your customers and give them new, exciting reasons to visit your physical location or online clothing store.

Skye Schooley contributed to the writing and research in this article.

Image Credit: bernardbodo / Getty Images
Dave Thomas
business.com Member