How to Start a Gift Shop

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Gift shops are a popular retail format in many different settings. In walkable downtowns and local shopping districts, gift shops are common and are often a destination point for the downtown district. Gift shops are also very popular in areas that attract visitors, like beach towns, entertainment districts and resort areas.

Although many resorts operate their own gift shops, independent gift shops can and do operate alongside them successfully, capitalizing on the resorts’ visitor traffic. For example, stores like U.S. Gift Factory and 360 Gifts operate successfully in Orlando, Florida because of the visitor traffic from Disney World and Universal Studios.

Starting a gift shop business involves taking many of the same steps you would take when starting any other kind of business. Main concerns for gift shop entrepreneurs include identifying the target audience, finding an appropriate location for the business and creating a business plan that fits the budget.

Determine a Gift Shop Business Niche

Not all gift shops are the same. Some sell a wide range of products that all have one thing in common, while others sell only one type of item. Some don’t even have a “common denominator” among their inventory; they simply sell a range of products that their target markets want to buy. The items a gift shop sells are a significant determining factor for its niche.

However, your choice of inventory isn’t the only thing that defines your niche. Your shop’s price range, location and target demographic are also important considerations that shape your niche. A niche is a specific description of a shop’s mission and strategy. Examples of gift shop niches include:

  • A high-end potpourri and fragrance shop in an upscale shopping mall

  • A kid-friendly souvenir shop with inexpensive items like T-shirts, toys, coloring books and magnets in a rest area

  • A beachside shop with moderately priced beach towels, T-shirts and magnets displaying the name of the beach town

  • A general gift shop on a country road that sells items like wooden signs and home decor themed around the farm and country lifestyle

  • A small storefront in a downtown shopping district that sells items curated to appeal specifically to affluent male gift receivers, like whiskey glasses and humidors

  • A holiday-themed shop in an outlet mall that sells items like ornaments and outdoor holiday decorations for a wide range of budgets

Determine your niche by creating a customer persona. Basically, this is a template for your shop’s average customer. Determining the customer most likely to buy items from your shop in terms of age range, gender, socioeconomic level, values and interests can help you tailor your niche and build a successful gift shop business. This doesn’t mean other kinds of customers won’t shop at your store but that the customer most likely to shop there is one who closely fits your identified primary customer persona.

Choose an Appropriate Location

Your niche will determine the most appropriate place to operate the gift shop. A child-focused gift shop that sells inexpensive plastic souvenirs probably won’t perform as well in a high-end shopping mall as a shop that focuses on handmade jewelry and women’s accessories. A shop that exclusively carries coffee mugs might not be sustainable in a large retail space. For some gift shops, complementing a brick-and-mortar shop with an online shop only amplifies sales and builds brand recognition, whereas other gift shops see no benefit from making online sales part of their strategy.

Once you’ve determined the right environment for your gift shop, the next step is finding a space that fits your budget and your needs. To make this process easier, ask yourself the following questions:

  • Will my gift shop be open year round or seasonally?

  • Am I open to sharing space with one or more other vendors?

  • Will my gift shop rely heavily on foot traffic?

  • Does the gift shop rely on another attraction, like a nearby beach or theme park?

  • Does my gift shop have utility needs beyond the typical electric and water hookups?

  • Will I rent or buy a space for the gift shop?

  • How much square footage does my shop need for inventory storage, office space and the retail floor?

Popular locations for gift shops include shopping malls, strip malls, boardwalks, downtowns and spaces within larger gift and vendor emporiums. This last option is popular for gift shop owners who have limited budgets or plan to only be open during part of the year, such as during the summer tourist season.

Register the Business

Any new business has to be registered with the state where it operates and with the IRS. When you register with the IRS, your business is assigned an employer identification number (EIN).

You also have to register your business at the state level with a unique business name. This name does not have to be the gift shop’s actual name; you can register your shop as “Sally G Gifts LLC” but operate under the name “Sally’s Gifts and Goodies” by applying for a DBA. When registering the business with your state, you also incorporate it for tax purposes. Usually, a gift shop business is registered as a limited liability corporation.

Be sure your business meets all its legal obligations. A business attorney can review your business plan and determine whether anything within it needs to be changed to comply with federal and state law. You might need to obtain permits to sell certain types of gifts, like cigars, or you might need to ensure that the space your shop occupies complies with federal laws like the Americans with Disabilities Act.

Create a Business Plan

Your business plan is the comprehensive document that covers everything related to your business, like its corporate structure and its projected income for the next five years. A business plan can be a lengthy, complex document or a relatively straightforward one depending on the nature of your business. A large chain of gift shops that employs hundreds of people and does business in multiple states has a more complex business plan than a small, one-person gift shop along a rural town’s main street.

No matter how large or small a gift shop, its business plan needs to cover the following:

  • The shop’s physical location, if applicable
  • The shop’s leadership team
  • The inventory the shop will sell
  • The shop’s operating budget
  • How the shop will be financed
  • The shop’s day-to-day operations
  • How the shop is incorporated
  • The shop’s target demographic
  • The shop’s marketing strategy

Generally, a business plan for a large business is between 15 and 25 pages, and smaller business’s plans are often under 10 pages. The length of a business plan does not matter nearly as much as its content. The business plan serves to organize all the information about the business into an easily accessible reference document. It can be updated as the business grows, develops and changes course to fit its market.

Develop Business Budgets

Once the business plan is in place, you can start creating budgets for the gift shop. At this point, you should already have a good idea of what your specific budgets will be, like your operating budget, your marketing budget, your inventory budget and your labor budget. These are all points to cover in your business plan. Once these general budgets are developed, you can work out specific dollar figures for each of them.

Choose Inventory for the Gift Shop

When you consider gift shop inventory ideas, consider your gift shop’s niche. This doesn’t just refer to the kinds of products you sell but the demographic to which you are selling them. For example, a gift shop near the National Mall sees a lot of traffic from school groups, so inexpensive, durable products are a better choice of inventory than expensive, fragile teacups and china plates.

Similarly, a gift shop in a location primarily patronized by adults enjoying a bawdy time, like Las Vegas or Atlantic City, can get away with selling items like T-shirts and mugs with irreverent and risque slogans in a way that a gift shop in a small town or a family oriented downtown cannot.

The best gift shop inventory ideas are ones that are unique to the shop. By selling items buyers can’t get anywhere else, you make your gift shop a “must visit” for people who specifically want those items. For example, a gift shop in a beach town might partner with a local candy maker and become the exclusive seller of the maker’s salt water taffy. Similarly, a graphic artist can open a shop to sell prints of her work on T-shirts, mugs and other items and make her shop the only place where buyers can get her art.

Your shop will probably stock more items than the uniquely branded ones you purchase. Just like you choose unique items based on your demographic and budget, find other items that fit your store’s brand to build your inventory. An effective way to explore gift shop inventory ideas is to do an internet search for gift shops that are similar to yours. Take a look at the kinds of items they sell and use these shops as inspiration for your own.

Source Inventory for the Gift Shop

Gift shop inventory can be purchased wholesale from online suppliers like Alibaba and Kelli’s Gift Shop Suppliers. If you plan on selling uniquely branded merchandise or even merchandise you’ve created yourself, sourcing it for the shop means finding a manufacturer instead of a company that’s just a supplier. Wholesale product manufacturers, just like product suppliers, can be found online.

Large-scale suppliers are not the only way gift shops can source inventory. If your focus is local arts and crafts, you can source items from the makers in the community around you. Connect with local artists and crafters via social media and at in-person craft and vendor events.

Market the Gift Shop

The final step in launching a new gift shop business is marketing the shop. The most effective way to market a gift shop largely depends on the type of gift shop it is. A gift shop developed to capitalize on tourist traffic to a specific resort can be marketed directly to that resort’s visitors through content on related social media channels and promotions involving the resort. Gift shops that open in downtown districts and country stores and gift shops that cater to a more local clientele can market themselves effectively through involvement in community events.

Marketing strategies that gift shops can utilize include:

  • Offering sales and promotions
  • Posting flyers around town
  • Participating in local events like vendor fairs
  • Social media marketing 
  • Hosting events like live music and pop-up galleries
  • Renting billboard ad space

A gift shop that focuses on vacation souvenirs can benefit significantly from a billboard along the highway leading to the resort area, whereas an online gift shop generally needs to market via social media. For smaller, community-oriented gift shops, participating in local events like silent auctions and vendor fairs can build the recognition and relationships that lead to sales.