Lots of people love getting a good deal on clothes, so opening a discount clothing store can be a lucrative business if you cater to your customers and market your products effectively. The key is to understand what kind of clothes your customers want to purchase and implement a marketing strategy that makes your products and prices stand out from the competition.
Draft a Business Plan for Your Clothing Store
Before you open a discount clothing store, you need to write a detailed business plan to acquire funding and develop your strategy. Your business plan should include these components:
- Executive summary: Summarize what you hope to achieve with your discount clothing business. Write this section after you have flushed out the details for the rest of your plan.
- Company details: Offer some background on your company. What experience do you have that will help you succeed at opening a discount clothing store? What are your company’s main goals, and what is your unique value proposition? What experience do you have running a business with slim profit margins? Investors want to know that you're a safe bet if you are looking for finance.
- Customer analysis: To whom will your discount clothing store cater? Men, women, children? Describe their demographic, geographic, behavioral and psychographic characteristics. Is finding a low price their priority?
- Industry analysis: What is the retail clothing market like in your area, and how will your discount clothing store fit into it? What market conditions will help your store succeed?
- Competitor analysis: Are there other discount clothing stores in your area? Regular retail clothing stores can also be competitors if they frequently slash prices on their inventory.
- Marketing strategy: Using the four 4 P's of the marketing mix, describe how you will market your products to your customers. Because price is a major factor for your discount clothing customers, consider how you will promote the low-cost items to your target market.
- Financial projection: Include your projected earnings for the next five years and attach your balance sheet, cash flow and other financial documents for investors to review. List the kinds of expenses you will have when running your discount clothing store like rent and operating expenses.
Understand the Fashion Choices of Your Target Market
Using your customer research, establish what kind of discount clothing your clientele will want to purchase. For example, if your target market is young families with children, you will need to carry clothes for men, women and kids in multiple sizes.
Do they want outerwear, casual clothes, formal outfits or many different options? It’s critical to have a deep understanding of the kinds of products your customers want to buy.
Find the Right Location
When you’re opening a retail store, location is a paramount concern. You want to make sure that your store is convenient and easy for your customers to visit. It needs to be in a high-traffic area that is near other locations your customers will visit, like grocery stores, shoe stores and restaurants.
Since your merchandise is heavily discounted, your profit margins will be slim. Consider whether a permanent retail location is the most profitable option. Would a stall at a local weekend market or at a larger flea market be a better option? Decide if your discount clothing store will offer online sales through your company website. This can add another revenue stream for your business, and help you to increase your profit margins while managing the high rent expenses.
Build Your Clothing Inventory
Purchase products to sell at your store. You can find low-cost clothing that you can sell through overseas wholesale distributors. You may even consider partnering with local clothing companies to sell their last season's clothes at your store. Consider approaching local and overseas factories for clothes that they are not able to sell in retail. Some of these clothes may have small imperfections but are otherwise salable, and can be bought for a heavily discounted price. Before you open, it’s important to have a solid inventory so that your first customers will have a good experience in your discount clothing store. If you will be selling used clothing as well, consider seeking donations from members of the community.
Organize your store in easy-to-find categories. For example, have all the men’s clothes in one section and the children’s clothes in another section. Make sure you have plenty of shelves, racks, hangers and display cases to effectively showcase your inventory.
Promote Your Discount Clothing Store
Get the word out about your discount clothing store so that your target market is interested in visiting your location. Regardless of which promotional medium you choose, it’s important to cater it to your target market. Make sure you mention the low prices your store offers. Try:
- Advertising in local newspapers and magazines
- Posting in local social media groups
- Handing out flyers in key locations
- Posting front-of-store signage and banners
- Offering loyalty programs to entice customers to come back
- Releasing press releases about the grand opening of your business