Shoe store business plan
Nowadays, people are already accustomed to making purchases in online stores. It is fast, very convenient, and what is the most - affordable, i. many products are sold much cheaper than in regular stores. Just today, Reconomica magazine managed to talk with the owner of the online store of UGG Australia branded footwear Ruslan Shcherbakov. The young man talked about how he and his partner managed to organize a profitable business, what difficulties they had to go through, are there any further prospects in this business, and also what income the online shoe store brings.
I started doing business by accident
Hello everyone! My name is Ruslan Shcherbakov, 30 years old, I live in Moscow. I was born in Tyumen, came to the capital 6 years ago. I am currently the owner of the online store UGG Australia-msk. u. I've always done internet marketing. For some time he worked for "uncle" - he tested various sales channels, increasing profits, reducing costs, etc.
I found out about the UGG brand by chance. Once I came to a hairdresser. There was a bright magazine on the table, which I wanted to look through. There were presented very interesting shoes, which at that time were not yet in Moscow.
I really wanted to buy such shoes for myself, but I did not know which store they are sold in. Then I started to analyze online stores, read more information about this shoe and found out that this is an American brand that is very popular in the market. The boots I bought exceeded all my expectations, because they turned out to be not only very warm and comfortable, but also of high quality. This is where I got the idea why not start my own shoe business.
The main page of our online store
It all started with the signing of a contract
Soon I managed to get in touch with the official representatives of the brand. I was informed that their production is in China, that they are ready to cooperate with Russia (there were no official representatives of this brand in our country at that time). As a result, I signed a contract with UGG, ordered a minimum batch of goods, which were delivered to Moscow in the near future.
The first batch went to my surprise very quickly. I realized that this is a gold mine and it is possible to build a profitable business on this. Moreover, the product quality was excellent, and there were simply no competitors.
The initial costs were not required, except for the warehouse rent. Since at that time the Internet was just beginning to develop, there were no online stores yet, my partner and my friend in one person were among the first in this niche. We created a website, took high-quality photos of the product, and placed everything in the online store. To promote the business, we used sites that were still free at that time. We invited everyone to the showroom, people started to come and buy shoes. At that time, the rent of the showroom was 30 thousand rubles.
Shoes from the UGG brand have excellent quality and stylish design.
One of the lucrative ideas for your own business is selling sneakers. This type of footwear has always been and will be in good demand. Sneakers are a versatile wardrobe item. They can be worn in any season (for winter, sneakers are provided with insulated insoles). They are suitable for a variety of activities: walking, playing sports and more. The target audience for such a product is also not difficult to choose. Sneakers are worn by both children and the elderly. Next, this article will discuss how to create your own sneaker business.
Market and target audience analysis
A sneaker business can be a profitable business if you organize it right. The most important thing for a beginner entrepreneur in this field of activity is not to overestimate your capabilities, but at the same time be confident in your every action.
In order to really assess the opportunities and prospects in this industry, it is necessary to carefully study the market and the availability of demand for such a product. After doing this analysis, you can start drawing up a plan to open a store to sell sneakers.
Market analysis will consist of the following stages:
- study of competitors;
- assessment of the quality of goods;
- availability of demand;
- study of the range of products;
- analysis of pricing policy;
- search for potential partners and buyers.
An important element in trading such a product is its quality. It is better to immediately look for partners among more or less well-known and reliable manufacturers. Shoes are the type of clothing that customers are willing to save the least on. Therefore, the high quality of the promoted product will ensure a constant influx of buyers. In a world where environmentally friendly materials are becoming a trend, sustainable sneaker materials will be a huge plus for a store's image.
The choice of location for the opening of a real store will depend on the availability of demand. It is best to choose regions in which there is a pronounced interest in leading a healthy lifestyle. These are usually cities with many parks, promenades and sports clubs. In sparsely populated areas, there will be little demand for sports shoes. Also, to start a sneaker business, you should consider the cities in which various sports marathons are often held.
One of the important aspects of the competitive stability of a retail store is the prices at which it sells goods. You cannot set too low a price. First, dumping has a bad effect on relations with competitors. Secondly, some customers may be intimidated by a very low price due to the lack of confidence in the quality of the product. Too high a price also will not allow you to conquer a large audience of buyers. The cost of a product should be set after the entrepreneur decides on partners and conducts a marketing analysis of the market.
It is very important for sneaker buyers to have a good assortment. When choosing sneakers for sale, it is worth choosing different options for color, design and style. In the field of such sales, it is better to focus on different age categories. It is also worth choosing shoe options for different types of activities (sports, walking, etc.).
Despite the presence of a different assortment, it is necessary to select the main target audience to which the main assortment of goods will be directed. These can be sneakers for professional athletes, for children, the elderly and others.
Where to open a sneaker shop?
A budding entrepreneur should think about opening a similar business on the Internet. So, at first, you don't have to spend money on renting or buying premises. Thanks to such savings, you can quickly begin to receive stable profits and direct part of the earnings to expanding your business. When there is a formed base of regular customers, it will become easier to open your own store.
Shoes and clothing are always in demand on the market, and the frequent change of seasons in Russia forces people to change shoes along with the change of season.
The weakening of the ruble and the rise in prices for footwear led to the fact that in the period from 2021 to 2021 the volume of footwear sales in the Russian Federation decreased, but since 2021 this market began to grow again and is now increasing by an average of 1 -3% per year.
In order for the shoe store to work and make a profit, you need to correctly draw up a business plan, in which you need to register the project, calculate the costs, indicate the risks and overestimate the start-up capital.
Consider an example of starting a shoe store from scratch, which includes:
- project summary,
- production plan,
- financial plan,
- marketing plan,
- risk analysis.
Shoe store project summary
A shoe store can sell shoes for men, women and children, and can be versatile. It can be located in a shopping center, on the market, in a separate building. Location, assortment, pricing should be written in the summary of the business plan. Also in this section you need to analyze the market in your region and the main competitors, including online stores.
If you are looking for a retail space in a shopping center, then you should take into account the income level of the population visiting this shopping center. If the retail space is located in a separate area, it is important to pay attention to the environment (outskirts or city center, sleeping area, the presence of other shoe stores, the price category of nearby stores).
The store can target customers with:
- below average income (economy class);
- average income (economy plus average cost of goods);
- elite footwear (expensive branded or exclusive).
When planning to create their own business, many aspiring entrepreneurs choose the shoe trade, and not without reason. This is understandable, because regardless of economic and social changes, the demand for this product always remains high. Therefore, we will consider the information for those who decided to open their own shoe store.
Pros and cons of a shoe store as a business
- Hot selling product. Sales will be at any time of the year. Peaks occur during the off-season, but it is worth considering that if the volume of inventory is incorrectly planned in the warehouse, the leftovers will "hang", which can only be sold next season.
- The markup for shoes in the middle price segment is 80-150%.
- Possibility of assortment selection. Correct selection of goods, creation of a unique model range that can attract a potential buyer will help to bypass competitors.
- No need to purchase expensive equipment. No production capacity is needed for the sale, so the cost of equipping the store is low.
- Fashion influence. With a decrease in sales, some of the models will remain “dead weight”. If the store is focused on selling women's and men's shoes, it is possible that in a couple of seasons unsold shoes, boots and sandals will become irrelevant, they will not be interested, and it will be impossible to display such shoes so as not to frighten the buyer with old models.
- Large purchases. You will have to spend money to display at least 40 models on the shop window. The work of the store assumes the availability of sizes in the range. One size range is 5 pairs, and only one of them will be on the window, and the rest will be hidden from the buyer. For trade, you will have to purchase at least 2 size ranges, which means that for placing only 40 models, you need to buy 400 pairs. This will result in high costs and necessitate the removal of the warehouse.
- High competition. To stand out from the background of other stores, you will have to carefully study their assortment, analyze what the buyer needs.
- Difficulty defining assortment. The entrepreneur sells the models that he personally liked the most at the factory (from wholesalers), but everyone has different tastes. To please the consumer, you will have to constantly monitor fashion trends, see which shoes are in priority.
Example of ROI calculation
For example, an approximate calculation of costs and revenues has been made. When planning your business, you should study demand in more detail, set the average price and sales volume.
The initial (start-up) costs of the store will be:
- registration of an individual entrepreneur, opening a bank account - within 1000 rubles;
- purchase of glass racks - 120 thousand rubles. (4 pcs. X 30 thousand rubles);
- purchase of shelves for inventory - 10 thousand rubles;
- interior decoration, light cosmetic repairs - 50 thousand rubles. ;
- cash register - 30 thousand rubles;
- banquet, pouf for fitting - 15 thousand rubles. (3 pcs. X 5 thousand rubles);
- rugs - 5 thousand. rubles;
- full-length mirrors - 6 thousand rubles. (3 pcs. X 2 thousand rubles).
The monthly expenses of the store will be:
- rent of premises - from 50 thousand rubles;
- salary of 2 sellers (rate +% of sales) - from 60 thousand rubles;
- taxes and other payments - about 15 thousand rubles;
- advertising of the store - 5 thousand rubles;
- unaccounted expenses - 5 thousand rubles.
According to an approximate calculation, the minimum amount of profit that must be obtained to cover the monthly costs of the store, excluding the costs of purchasing goods, is 135 thousand rubles.
Considering that the average mark-up on shoes in retail stores is 90%, you can calculate the amount of the purchase of goods, the sale of which will cover current costs. It is equal to (135 thousand rubles / 0.9 * 100) - 150,000 rubles. Since the markup is 90%, the sales amount should be 285,000 rubles. You should sell at least 285 thousand rubles per month, but you need to stimulate trade, otherwise the initial costs will not be "repulsed". So, for example, increasing the amount of income to 500,000 rubles. per month, you can make a profit of about 100 thousand rubles, then the payback period of the store will be only 3 months. It is not easy to achieve such income at the start, so in reality the payback will be 6-8 months.
Conclusion - selling shoes is profitable, you just need to attract regular customers with reasonable prices and good quality goods.
Financial model of a shoe store
Brief Investment Memorandum
Shoes and clothing are among the most demanded goods in our country. According to statistics, an ordinary Russian spends about 6.5 thousand rubles on this product. per month. This is due to the peculiarity of the climatic conditions in the country: the frequent change of seasons forces to change the wardrobe, so the shoe business will never lose its relevance.
From 2021 to 2021, the sale of footwear in Russia declined annually. This decline is explained by the weakening of the ruble that occurred in these years, and, accordingly, by the rise in prices for foreign shoes. In addition, there was a decrease in the purchasing power of the population, which means that purchases of this type of goods were postponed for future periods.
It is also known that in 2021 there was a significant increase in footwear sales with indicators of 17.1% higher than the previous year. This is evidenced by the BusinesStat research conducted in 2021. In 2021-2022, footwear sales are expected to resume growth at a rate of 1.4-3% per year. Thus, with the correct organization of a shoe store, you can get significant profits and have a constant stream of customers.
The initial investment is 826,000 rubles.
The break-even point is reached in the second month of operation.
Payback period is 6 months.
Average net profit: 205,000 rubles.
Description of business, product or service