Having a shop located right in your studio provides great convenience for clients. It allows them to buy shoes, active wear, and other required items onsite. Deciding to open up a retail space takes some additional consideration and planning that goes beyond just a space for dance, yoga, or fitness. Here is a checklist of items you must consider.
1. Evaluate your space
Just because you have room in the studio for classes does not necessarily mean you have space for retail. When opening a studio, consider the space necessary to open a small shop. This includes room for:
- Display fixtures
- Shelving and racks
- Dressing rooms
- Check out area
If you are leasing, be sure you have permission to build out the retail space. Once the shop space is designated, it is possible to cut costs by renting display cases or racks. If renting is not possible, look for resale options. Usually, when a business closes, they sell all their display racks or shelving at a discount.
2. Become a merchant
When establishing the studio, you may have established an accounting system for the office using Jackrabbit Dance or MINDBODY. While this software is great for helping with registration, class and attendance management, and billing, it is not always applicable for the retail portion of the business.
You will likely need to establish a merchant account. This establishes a relationship with a bank and allows clients to use credit cards for purchases. When you get a merchant account, your business enters into an agreement to abide by the operating regulations established by the card credit companies. Small businesses may use Square, but you’ll want to evaluate your costs and options. Consider:
- The type of card to accept: They all have different rules, regulations and fees for setup, transactions, and services. Keep in mind that you want to accept what your customers might use most. Sometimes you can negotiate fees by comparing one option to the other.
- Sales volume: Fewer people carry cash these days, but will you only accept credit cards? Even if you accept both cash and credit, you will want to estimate the volume of credit card sales before deciding on your account provider.
- Other payments: Consider your consumer base. Do you find that many of your customers pay for items with their phone? You may consider alternative payment methods and software integration (such as receipts via email, etc.).
3. Stock your store
It can be incredibly expensive to stock merchandise in the studio using a traditional model. Additionally, buying, stocking, and the additional administrative work is very time-consuming. That said, having retail at the studio can be done, and done well.
First, do not make the mistake of just selling what you and your friends think is cute. That is never a good business model. You must be relevant to your customers. One way to get an idea about what your clients will want is to attend appropriate conferences and see what is being touted at the popular booths.
Inventory is also a huge challenge for retail spaces, especially smaller ones within the studio. Bottom line: you only have so much space on the floor and in storage. For example, having shoe inventory can be horribly prohibitive due to the high range of available sizes.
Consider working with local vendors and entering into a consignment agreement. This will allow you to rotate stock more often while helping other small businesses in the community.
While there are several dancewear manufacturers that cater strictly to dance studios, they often require large orders. Modern technology has allowed other companies to get in the game with innovative approaches to stock. For example:
- Revolution Dancewear does not require minimum orders. It is possible to order as little or as much as your desire. Because they partner exclusively with dance studios, prices–as much as 50 percent below retail–are kept low and savings are passed down to the customer.
- CostumeManager.com allows studio owners to browse their website, view and compare products. Then, the studio determines the retail price (determining their own profit margin) and provides information on the items needed for class. Clients can then order directly from the list, eliminating the need for in-house inventory.
4. Market your store
Decide if you will rely on students and families coming in for classes for your store purchases, or if you want to draw others. It might even be possible to use your inventory or product promotions to get the attention of other studios’ membership. Purchasing advertising is one way to let the community know about your shop. There are, however, more cost-effective ways to get the word out. Use the power of your client base. Set up social media accounts for the store that are separate from the studio and ask your clients to share this information, and give feedback via Google and Yelp reviews.
Consider having a grand opening and inviting the community and local media. This allows everyone to understand the full offerings of your facilities.
5. Get insurance
You will need insurance for your store, in addition to your studio insurance. With retail added to the studio, you will need insurance to cover you against theft and fire or other damage to merchandise. You should also talk to your insurance carrier to be sure you are covered from a liability standpoint. While you still rely on the studio for the bulk of the revenue, and if the store is under the same tax ID as the studio, you may be able to get coverage under your dance, fitness, or yoga studio insurance. Remember, however, that the more revenue you generate, the higher your risk. With a small retail operation under the same tax ID as your studio, your insurance may not cost you too much more than to insure the studio alone.
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