If you want to start a retail business in India, the present Indian retail scenario lookspromising. India stands at the 63rd position in the World Banks Ease of Doing Business (EoDB) index (2023).Kearney Research predicts a CAGR of 9% from 2019 to 2030, growing from US$ 779 billion in 2019 to more than US$ 1.8 trillion by 2030. The sector offers extensive opportunities for new businesses to tap into online and offline channels and capitalise on this expanding market.
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A retail business is a type of company that sells products or services to consumers directly - for their personal use, unlike the wholesale ones that sell to businesses.
Retailers procure products from wholesalers or directly from manufacturers in bulk and sell them to individual customers in smaller quantities.
Choose Your Retail Business Model
When choosing a business model to start a retail business in India, make sure to consider things like your target market, the type of products you sell, and your budget. Lets take you through some of the popular retail models:
Business Model
Pros
Cons
Brick-and-Mortar Store
Involves direct customer interaction and experience.
You can present the products physically.
It helps build brand loyalty through face-to-face associations.
High overhead costs, rent, utility bills, staff, etc.
It has limited geographical reach.
There is less flexibility for customers who want to shop from home.
Online Retail (E-commerce)
Offers a wider reach. You can access the global market.
It has lower overhead costs.
It offers 24/7 shopping capability.
It is convenient for customers who prefer shopping from home.
Harder to build trust without a physical existence.
The online market is highly competitive.
Shipping and returns can be complex and challenging.
Hybrid (Omnichannel) Retail
It offers the pros of both offline and online models.
It offers more flexible shopping options for customers.
It uses both digital and physical marketing.
It could be a little daunting to manage both online and physical platforms.
It requires significant investment in infrastructure and technology.
The logistics part can be tricky.
Identify Your Niche and Target Market
Conduct market research by analysing trends, gaps, and competitors and gathering demographic data (age, occupation, location, etc.) to understand your potential customers. Use surveys, focus groups, and social media for direct insights.
Also, study customer preferences and purchasing behaviour. Understanding their needs, desires, pain points, and buying habits will help enhance engagement and tailor your retail business ideas.
Create a Detailed Business Plan
Here are the components of a well-structured business plan:
Detailed Business Plan
Business Goals and Strategy
Define your business vision and mission clearly. It will let you establish long-term purposes and core values with ease.
Always set measurable and viable goals for the upcoming one to two years.
Draft strategic growth plans for at least three to five years, including market expansion, new product lines, etc.
Choose a business model, such as B2B, B2C, or hybrid and determine revenue streams.
Pinpoint your USPs and what makes you different from competitors. It could be anything from cost and quality to innovation.
Pricing, Sourcing, Logistics, and Operations
Choose a feasible pricing strategy - cost-plus, value-based, or competitive.
Always factor in the market research, competitor pricing, and perceived value to determine your pricing strategy.
To remain competitive, make sure to check and adjust your prices (if needed).
Sourcing
It is important to select reliable suppliers, vendors, or manufacturers.
Make sure to check the certifications and sustainability practices they follow before zeroing in on a vendor.
Decide whether you want to explore the local, national, or international market.
Logistics
Create a supply chain roadmap and ensure it comprises every step, from procurement to delivery.
You may choose an in-house logistics or find a reliable third-party provider and outsource.
Make sure that your warehousing, inventory management, and delivery processes are in line with your goals.
Operations
Create an outline of your daily business processes, including production, fulfilment, and service.
Always adhere to SOPs (standard operating procedures) to ensure efficiency.
Investing in inventory management and performance analytics tools is also a good idea.
Marketing and Promotion Plan
Know your target audience so that you can market your products to the right segment.
You can use both traditional and digital marketing tactics.
Focus on branding and develop a strong brand identity.
You may also offer promotions and discounts, such as limited-time offers, BOGO (Buy One Get One), seasonal discounts, etc.
Referral and loyalty programs also work wonders.
Establish clear KPIs (Key Performance Indicators) to measure your returns.
Register Your Business and Choose the Right Legal Structure
Refer to the table below for the top legal structures to start a retail business in India:
Business Type
Description
Sole Proprietorship
Owned and operated by one person.
It is the basic and simplest form of structure.
Partnership
When two or more people run a business together, it is called a partnership. Here, all the partners share the profits and responsibilities.
Limited Liability Partnership (LLP)
It follows a hybrid structure that combines the flexibility of the partnership model with limited liability like a company.
Private Limited Company
It is a company with a distinct legal identity that is different from its owners. It offers limited liability protection.
Now it comes to the legal requirements for opening a retail store. Here is how you go about it:
GST Registration
If your business exceeds the turnover threshold of INR 20 Lakhs or you wish to claim input tax credit, GST registration is mandatory. To register, visit www.gst.gov.in, create an account, fill out Form GST REG-01, upload the required documents, and once approved, you will get your GST Identification Number (GSTIN).
Documents needed
Documents required for GST registration include the PAN Card of the individual or business, proof of business address (such as an electricity bill or rent agreement), and bank account details.
Obtain Necessary Licenses
Standard licenses required to open a retail store in India include the FSSAI Licence, Trade Licence, Import Export Code (IEC), and the Shop and Establishment License.
Select a Location or Platform
Each option comes with its share of ifs and buts. So, select a platform depending on your budget and business goals.
Visibility, Foot Traffic, and Rental Costs for Physical Stores:
When selecting a location for your retail store, consider visibility, foot traffic, and rental costs. Higher visibility attracts more potential customers, and increased foot traffic leads to more walk-ins. However, prime locations typically come with higher rent, so it is essential to balance visibility with your budget.
Marketplace Platforms vs. Standalone Websites for Online Businesses:
Selling on marketplaces like Amazon, Flipkart, or Myntra gives quick access to a large customer base and the ability to start a retail business from home, but comes with fees and limited control over the customer experience. A standalone website gives you complete control over branding, customer interactions, and sales, but requires significant investment and effort to drive and retain traffic.
Procure Inventory and Set Up Supply Chain
To procure inventory and establish a supply chain, start by building strong relationships with reliable suppliers who can deliver products or materials on time while negotiating favourable prices and terms. Also, an effective inventory management system should be implemented to track stock, orders, and shipments.
Hire and Train Staff
When hiring, look for individuals who have the necessary skills and a warm, approachable attitude, as these qualities are essential for excellent customer service. Once hired, provide proper training on effective selling techniques, using point-of-sale (POS) systems, and adhering to store policies.
Market Your Business
It is a good idea to use both online and offline promotion strategies to make a mark. Offline methods like banners and flyers help reach your local audience, while online strategies such as SEO improve search visibility, social media engage your audience, Google Ads drive targeted traffic, and influencer collaborations boost credibility.
Ensure Legal and Financial Compliance
Maintain accurate financial records to track income, expenses, and profit, and file taxes on time to avoid penalties. Ensure compliance with local labour laws, including fair wages, proper working hours, and employee rights. Additionally, obtain necessary licenses to operate legally.
Protect Your Retail Business with Insurance
Consider Shop Insurance to protect your business against loss, damage, or theft. Fire Insurance is also essential to cover fire-related damages to your property or inventory.
Monitor and Grow
Track key performance indicators (KPIs) such as sales, customer satisfaction, and inventory turnover to evaluate your performance and identify areas for improvement. Actively listen to customer feedback through surveys, reviews, or direct interactions, and use it to refine your products, services, and processes. Additionally, consider expanding your business through franchising or enhancing your online presence.
Conclusion
To start a retail business in India and become successful, you need to choose the right business model that aligns with your core objective and your customers. However, before you launch your brand, make sure to learn the legal requirements for opening a retail store. Understanding compliance and current market trends is also essential.
And to build a strong foundation, invest in branding, technology, and customer experience from day one. It will also build customer trust and drive growth.
Most importantly, do not overlook the need to secure your brainchild. Visit Policybazaar for Business to explore tailored insurance options to protect your assets.
Every shop owner must put in extra efforts to make their retail...Read more
29 Apr 2022 by Policybazaar9351 Views
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