I got my first practical experience of an SME loan by sanctioning a MUDRA loan for a retail shop. For this project, I had to analyze how people run their retail shops. I present here the best practices that I came across and some additional factors. I have seen many established retail shops employing these strategies.
Contents
So let’s discuss the matter at hand, how to grow a retail shop business? In the simplest term, your shop grows and earns a profit when more customer visits you and leave happy. Make your shop easy to access, for customers. Make sure your customer has a good experience. Ensure that the customer can make a purchase in a relaxed way. How you can ensure these things, we will be discussing in the rest of the article.
There is an issue which needs to be addressed first and foremost. You have to treat your retail shop as a serious long term business. If you don’t have a vision about the long term future, all your gains will only be for a short term. Businesses many a time forfeit a portion of their immediate profit. Using and investing this part of profit back into your business can do miracles in the long term.
So, let’s discuss some factors which can help you achieve the conditions we mentioned in our answers previously.
Carving out a unique identity
Imagine a situation related to a regular customer. A housewife asks her son to buy some goods from your shop. What will she tell her son, so that he can recognize your shop? Will she ……..
- Tell the name of the shopkeeper.
- Tell the name of your shop.
- Tell the color of your shop.
- Tell some unique feature of the shopkeeper like big glasses, big beards, etc.
- Tell the location of your shop.
These things act as a unique identity for your shop. People use this identity to talk about your shop and to recommend your shop. Make sure this identity is easily visible and easy to remember.
If it is the name of your shop, make sure it is a short and simple name. Make sure that the name is visible and readable. If it is the color of your shop. Make sure to choose a bright and unique color.
If your shop already has an identity, do not change it but enhance it. For example, if your shop is famous as the shop on the corner. Add the name of your shop as an identity too. If the name of your shop is famous. Add unique color to your front counter, and let this also be your identity.
Maintaining a positive image
I have seen a very successful shop becoming a total loss-making business. The greed of a little more profit made the shopkeeper sell some duplicate and forged products. This caused dissatisfaction among customers. Within months this shop was famous for selling bad quality products.
Be aware of the image of your shop in the local area. Make sure to correct any negative aspect if there is one. The image of a shop takes time to be built. But, it can be ruined within days. A single incident of you being rude. A single product, which is of low quality. These can seriously harm the image of your shop.
If you encounter something which is harming your image. Accept it, sincerely apologize publically for it, and change it. You should always be pro-active and vigilant about this matter.
Communicating with customers
There are companies having the sole business of conducting a customer survey for other companies. Many brands spend a lot of money to collect data and feedback from their customers. This is the area where a retail shop has a lot of benefits. A retail shop owner meets his/her customer face to face regularly.
You can use this for your benefit. Regular constructive communication with the customer can hugely benefit you. Ask your customer simple questions. But, do not make it an interview, just one or two simple questions. Do not make your customers uncomfortable by asking too many questions.
The question can cover the following topics.
- Quality of things they buy from your shop.
- How do people talk about your shop? (unique identity, factor 1)
- Is there anything which you can improve in your shop.
- If it is a new customer ask them what you can do to make them a regular customer.
- You can also ask if there is some other shop which is better than yours. If yes, then what are they doing differently.
Do not implement/change everything the customer says. But, if many customers are raising a similar issue, you should immediately address it.
Customer satisfaction
Always keep customer satisfaction a top priority. Customer satisfaction is even more important than profit. You should always work hard to ensure that your customer gets even more than what they expect. But, do not endure losses just for making a customer happy. You can’t make your customer happy if you don’t earn from your shop.
Customer satisfaction can be achieved by keeping in mind the following factors.
- Always be polite with the customers, especially with a rude customer.
- Never criticize one customer in front of other customers.
- Be professional while talking to customers.
- Do not avoid or mistreat children who are alone, they are customers too.
- Always follow the first come first served rule.
- Never criticize a customer for visiting some other shop.
These are just a few points and there is always room for improvement.
Adopting new technology
In the present scenario, you cannot afford to neglect technological developments. There are many new technicals tools you can implement in your shop. Using them will surely benefit you. Avoiding them will prove problematic in the future.
Payment related technology:
There are many methods of cashless payment common public is using today. Digital wallets, UPI, and credit/debit card are prime among them. You can easily provide wallet payment and UPI payment by using any popular platform. Paytm and Bharat QR code are worth checking out.
For credit/debit card you have to apply for a POS (Point of Sale) machine. Major banks like SBI, AXIS Bank, HDFC, etc provide these. The bank charges a small fee for the facility.
Inventory and billing related technology:
There are many inventory management and billing related software. Many software performs both functions. Using these softwares you can manually enter the number of pieces in inventory and rates. After this everything becomes automatic. You just entre the quantities customer is buying and the bill is automatically generated.
When inventory is running low the software will notify you. This can reduce the manual hassle of preparing bill and inventory management. This will also increase customer satisfaction by reducing the time taken of buying.
You can use a large number of technologies easily available. You can use barcode scanners to further simplify billing and inventory maintenance. You can also have a website for a shop. But, what technology you need can be determined based on the following factors.
- The number of customers that visit your shop on a single day.
- The area your shop serves.
- Amount of profit you make from your shop.
Staff hiring, training, and monitoring
When you start a retail shop the number of customers is low. A single person is capable of handling these customers. But soon the number of customers start rising. I have seen many businesses fail because they didn’t realize that they need more staff. Asking what a customer want, gathering the items they want, preparing the bill, taking payment and packing their belonging. These, if handled by a single person can increase the waiting time for a customer too much. Thus increasing customer dissatisfaction.
If you notice your customer complaining about slow service on a regular basis, it is time to hire someone. But just hiring is not enough. You have to train them. Telling them about responsibilities in clear terms. Guiding them about how to talk to customers. Teaching them how to handle rude customers. Showing them the arrangement of goods in your shop are very essential.
But the most crucial aspect is continuously monitoring the staff. Staff can cause serious damage to the reputation of your store by treating customers badly. Theft by disloyal staff can also make a dent in your profit. Regularly keep an eye on your staff. Always remember they are your staff, not slave. Treat your staff with respect and they will do the same. Conduct staff meetings to solve issues amicably and to take staff suggestions.
Remember after your customers, your staff is the second most important source of truthful feedback.
Shop cleanliness and hygiene
An unclean shop will only attract losses, rather than new customers. Your shop is the source of your livelihood. The message an unclean shop convey is, if you do not care about your shop why would you care about your customer. Your customer knows this and reacts accordingly.
Everyone understands the importance of cleanliness and hygiene. But, moving each and every item, cleaning/dusting them is a laborious and time-consuming job. Sometimes due to being busy or just due to laziness shopkeepers avoid it. They start by avoiding it sometimes for a day. Soon days pass without proper cleaning.
No matter how boring it seems, no matter how unimportant it seems. Do not under any circumstances overlook the cleanliness and hygiene of your shop. Periodic pest control, deep cleaning once or twice a month and normal dusting should be done daily.
Also, do not avoid the cleanliness around your shop. This is your shop and your customer. You will be the one at a loss if there is a huge pile of garbage next to your shop. If authorities of the city are not picking it up, hire someone and get it cleaned.
Coupons and schemes
I have seen many times, regular customers asking for a little more discount. Even customers who are making a big purchase ask for discounts. Shopkeepers too usually agree to these requests. There is nothing bad about it, and this should be done. But you can benefit more from this if properly done.
Instead of waiting for customers to ask, offer a discount from your side. Use schemes and coupons to advertise discounts on bill higher than a certain amount. Provide discounts to customers who buy regularly from your shop. Motivate your customers to buy more from your shop. You don’t even need fancy things, just display these offers in front of your shop on banners/boards. Use a simple diary where have names of regular customers. Keep writing the amount of their purchases in the diary.
You will have to give discounts to certain customers. Either you can let customers hassle with you for these discounts. Or, you can offer it legitimately in exchange for increased sales.
Location of your shop
Where your shop is located plays a huge role in your sales. A shop on the main road is easily accessible and more visible. It will attract a number of new customers. But a shop on some small road deep in the locality will be less visible and will be known only to regular and local customers.
Now I do not expect you to shift your shop overnight, it is impractical and foolish. But, your long term goal should be to have a shop in a good location. Until then you can use a small board/banner and ads on walls (with permission) to let people know about your shop. You can also ask your regular customers to tell others about your shop.
Keep thinking about ways to have more sales in an ethical manner. Ask your staff, customers, dealers for advice. Ask for help and take it from wherever you get. If it feels that some idea can increase your sale, do not be too afraid to try it. But, don’t aim for more than what you can afford. A person with a small shop will be called an idiot if he is running ads on a television channel.