Clothing stores remain as one of the few retail businesses that will continue to operate in a brick-and-mortar capacity despite the substantial increases in e-commerce. This is primarily due to the fact that people want to try on clothing before they make a purchase. This is one of the key strengths for this type of business. The startup costs associated with the new clothing store are relatively low in these businesses can be started for $50,000 to $100,000 depending on the location and the amount of inventory that will be carried at the onset of operations. It should be noted that many manufacturers will provide clothing inventories on a credit basis in order to reduce the amount of startup costs that are required by a clothing store entrepreneur. The gross margins from sales for these types of businesses is significant. Most clothing stores have gross profits that range anywhere from 40% to 70% of aggregate revenues. One of the other key strengths associated with these businesses is that they are highly scalable. Once the initial location becomes profitable, a clothing store entrepreneur can easily establish additional locations.
As relates to weaknesses, clothing stores do have moderately high operating costs given at an expensive retail facility must be being maintained along with a large staff. These expenses must be kept heavily controlled especially given the fact that clothing stores are also subject to economic fluctuation. During times of economic recession, most clothing stores do experience a moderate decline in the amount of revenue that they generate on a month-to-month basis. As such, a qualified entrepreneur is going to need to make sure that all unnecessary expenses are trimmed from a clothing stores annual budget.
As it relates to opportunities, clothing stores can again expand by simply establishing additional locations. Most financial institutions are willing to provide a working capital line of credit or business loan secured by the inventory and predictable revenue streams of the business. Many clothing stores also establish substantial online presences via a proprietary website while concurrently maintaining a presence on Facebook, Twitter, and Instagram. This is especially important as people may come directly to the clothing store and then ultimately make their purchase online. Having a large-scale online presence is an absolute necessity for any clothing store entrepreneur.
As it relates to threats, outside of a major economic recession there is no otherwise direct threat outside a competition. The clothing store must find ways to differentiate themselves from other retailers in the market. This is usually accomplished by sourcing unique apparel from a number of different manufacturers so that customers can try on a number of different types of clothing from one location. There are no pieces of pending legislation or regulation that would substantially impact the way the clothing store conducts their operations.
Clothing stores will remain popular for the foreseeable future. Again, with the rise in e-commerce – brick-and-mortar clothing retailers have had to find ways to differentiate themselves from online sellers. This includes providing outstanding level of service that is not able to provided in an online capacity. For an entrepreneur that is very well familiar with how a retail store operates, a clothing store can be a highly lucrative small business enterprise that is readily scalable.