How to Start a Shoe Store
If you love fashion and are always looking for the next emerging trend, then starting a shoe store might be a good fit for your talents. And, if you’re in an area that lacks a shoe store or if you’ve found a need for a specialty shoe store, you might be looking at a valuable opportunity. Starting a shoe store will require work and a significant initial investment, but it also means that you have the chance to build your business into a successful, sustainable operation that can support both you and your employees.
Business Overview
Shoe stores offer customers the ability to come in, browse, touch, and try on shoes, which is something that online stores cannot offer. Shoe stores may specialize in certain types of shoes – athletic shoe stores are common, as are discount stores. Some stores carry merchandise just for certain demographics, like women, men, or children. Most stores have a large inventory of both styles and sizes that buyers can purchase and use the same day, which means that these stores must have large budgets for inventory and significant storage space.
Industry Summary
Because consumer spending drives the shoe store industry, the increase in consumer spending from 2014 to 2019 has led to increased shoe purchases. However, according to IBIS World, consumer shopping habits also changed during this time, and consumers bought more shoes online or in department shops than at shoe stores. As a result, the shoe store industry experienced an annual growth of just 0.2 percent from 2014 to 2019. During that time, the number of businesses declined to 28,922 as of 2019. In 2019, the shoe industry was expected to bring in $37 billion in revenue.
Today, owning a shoe store is challenging because of the presence of competition in the form of other shoe stores and online businesses. Foot Locker Retail and Designer Brands, Inc. currently hold the largest share of the brick-and-mortar shoe store market, but all physical stores face stiff competition from online retailers. Online retailers can often offer the same or better inventory variety that physical retailers can provide and often have more size options and greater stock.
With the shift to online shopping, consumers may choose to buy shoes online rather than going to a brick and mortar store. Because of this, it’s important to find a way to deliver something exceptional through your store, whether it’s superior customer service, inventory that customers can’t find anywhere else, specialty products, or a curated selection of a type of shoe that isn’t locally available, like an athletics store or a luxury shoe shop.
Be prepared to be part of a rapidly changing industry, too. Trends can evolve seemingly overnight, so it’s important to not only immerse yourself in the shoe industry but also in the fashion industry of the customers you’re marketing to. Connecting with a wholesaler who is always ahead of cutting-edge trends can help to keep your store ahead of the competition, too.
Related Industries
Industry Trends
A number of trends are currently shaping the shoe industry. In 2019, the industry experienced a disconnect between the retail seasons and the actual weather outside. According to the NPD Group, because spring was slow to arrive, the industry experienced a slow first quarter. While February marks the beginning of the retail spring season, winter boots and fashion boots were still in high demand. Consumers tend to buy when they have a need for a product, rather than purchasing shoes in advance, so shoe stores need to anticipate need and time the availability of their inventory to reflect that need.
Sustainability has also become a major focus when it comes to shoes. Both millennials and generation Z customers are looking for sustainable and eco-friendly options from brands and retailers alike. Retailers have responded by creating online “sustainability shops” that promote the shoes they have available that are responsibly sourced. This transition has proven to be a challenge for established shoe stores and brands; while these brands can access and produce sustainably made shoes, finding tasteful, honest ways to communicate news about these sustainable products is challenging.
Target Market
The target market of a shoe store will depend on the store’s specialty, unique brands sold, and the niche that it falls within. For instance, athletic shoe stores will market to athletes, while luxury shoe stores will market to a different audience than a value or discount shoe store.
The potential market for a general shoe store is wide. Still, by specializing a bit, shoe stores can develop their brands and target a much more specific audience, making advertising and marketing efforts more effective.
Checklist for Starting a Shoe Store
If you’re thinking about starting a shoe store, it’s important to do your research first. Here is a checklist to help you get started.
Step 1: Write a Business Plan
After coming up with the idea, the next step in starting your business should be to write a business plan. Not only will a bank require you to have a business plan, but multiple studies have shown that a business plan helps increase the odds of starting a successful business.
Related: How to write a business plan
Step 2: Form a Business Entity
A business entity (also referred to as a business structure) refers to how a business is legally organized to operate. There are four primary business structures to choose from, which include the sole proprietorship, partnership, corporation, and Limited Liability Company (LLC). Each type of entity has its own pros and cons, such as liability exposure, costs, and administrative requirements.
When deciding on which business entity is best for a shoe store, it normally comes down to the sole proprietorship and Limited Liability Company.
A partnership opens the owners up to unnecessary personal liability because if a partner does something to get the business sued, or runs off with cash from the business, the other partners are personally liable to repay.
The corporation can be a good choice to minimize liability risk because it separates the business assets from the owner’s assets. If the corporation is sued or certain business debts can’t be paid back, the owners aren’t personally responsible to repay them. The downside to the corporation is that it is more complicated than all the other entities and requires more administration than the LLC. If you plan on raising a lot of investment though, the corporation is usually the better choice.
That leaves the sole proprietorship and LLC.
The sole proprietorship is the least expensive and easiest entity to start which is appealing. The downside is that the owner is personally liable should anything happen to the business, which is an important consideration. The LLC offers the ability to operate as a sole proprietorship with the liability protection of a corporation. Depending on the state, the cost to form an LLC runs from $40 – $500, which is pretty inexpensive for protecting the owners from business-related lawsuits and certain debts.
Related: Guide to forming your LLC
Forming an LLC sounds complicated and expensive, but using an entity formation service guides you through the process so you know it was done right.
Some popular LLC formation services include:
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Step 3: Name the Business
Finding the perfect business name can be challenging. Not only does the name have to resonate with your customers, but it also has to be available to use.
Step 4: Select your Location
Having a location with a prime, high-traffic storefront is usually beneficial for a retail business. Lease costs can vary according to the size and location of the store. While rent of buildings in high-traffic retail areas can be expensive, that expense may be justified by the walk-in traffic and general awareness that such a location can provide.
Related: Choosing a business location
Step 5: Register for Business Licenses and Permits
There are no licenses required specifically for shoe stores; however, there are general local, state, and federal business registrations such as a business license, sales tax permit, Employer Identification Number, and Occupancy Permit that may be needed.
Related: Common business licenses, permits, and registrations by state
Step 6: Find Financing
Coming up with a good business idea and having the skills to run it are one thing, but getting the funding to start a shoe store business is another, as many startup costs will go towards store build-out and inventory. Funding to start a shoe store can be difficult. In order to get a small business loan, the borrower(s) will need to have good credit and be able to personally invest 15-25% towards the total start-up costs.
Step 7: Open a Business Bank Account
Keeping your small business and personal finances in separate bank accounts is important to track the income and expenses of your business and identify trends.
Many banks offer free business checking accounts, so be sure to find a cost-effective option for your business.
Step 8: Get your Marketing Plan in Place
Shoe stores need to actively market to bring in new customers, draw in returning customers, and share news about new products, sales, and other specials. Common marketing activities include the use of social media platforms like Facebook, Instagram, and Twitter, along with email and print advertising. A shoe shop may also create its own e-commerce website and/or sell on Amazon or eBay.
Related: Low-cost ideas to market a new business
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Step 9: Get Business Insurance
There are several types of insurance to consider when starting a shoe store. A few of these include:
– General liability insurance protects the business if customers are ever injured while in the store and can cover expenses like medical bills or legal fees.
– Commercial property insurance can cover expenses the business might face after an event like a fire. This type of policy often covers the cost of the building and the cost of the inventory within the store.
– Worker’s compensation insurance can cover expenses like lost wages or medical bills if an employee is ever injured while at work.
The cost to insure a shoe store will depend on the value of a store’s building and inventory, its location, and even how many employees a store has. To get the most accurate idea of what insurance will cost, request quotes from multiple companies. Then, compare those quotes while focusing on factors like premiums, coverage limits and exclusions, and deductibles.
Step 8: Hire Employees
Most shoe stores will need at least a few employees to cover the long shifts that this industry demands. According to Glassdoor, full-time retail sales associates make an average of $33,774 each year. Payscale reports that retail store managers earn an average salary of $41,186.
Employees come with more expenses than just salary costs, though. Be sure to also budget for workers comp insurance, paid time off, and health insurance contributions.
In addition to budgeting for salary expenses, a store’s budget also needs to include workers comp insurance, paid time off, and health insurance contributions.
Related: Hiring your first employee
Step 11: Set up an Accounting System
Setting up an accounting system is critical to the long-term success of your business.
Staying on top of taxes not only keeps the business out of trouble with the government, but the numbers can be used to track and monitor trends and cash flow in the business and maximize profits.
StartingYourBusiness.comHow much does it cost to start a shoe store?
The cost of starting a shoe store depends on many factors, including the store’s size and the type and volume of inventory carried. Expect to spend about $60,000 and up to open a smaller store. Larger stores with significant inventory can cost upwards of $150,000 to start.
Some common startup costs for a shoe store include:
– Building renovation costs
– Inventory
– Furniture like shelving, checkout counters, and chairs
– Cash register
– Signage
– Working capital to cover the first few months of operating expenses like payroll, rent, utilities, internet, etc.
How much can a shoe store owner make?
The income and profits of a shoe store depend on many factors, including the store’s size, specialty, and competition. While data on the average shoe store income is not available, Redwing Shoes surveyed 109 of their franchise business owners and found that average annual sales per store were $851,076. The owner/operator’s cash flow averaged $127,363, and owners saw an average 46.1 percent return on investment. Keep in mind that that information refers to franchises of an established brand so that new independent stores may have different results in their profit potential.
What skills are needed to run a shoe store?
While starting a shoe store doesn’t require a business degree, certain skills and experiences can make this venture easier and more successful.
Awareness of trends. Customers demand that shoe stores have the latest trends – and a variety of them. A store owner needs to be aware of current and evolving trends to keep the store well-stocked and appealing to customers.
With a business that holds inventory and can be quickly influenced by trends, it’s important to be on top of managing the inventory, so you aren’t left holding a lot of stock that can’t be sold.
Experience within the shoe industry. Some experience in the shoe industry is helpful but not necessarily required. An understanding of shoe styles, manufacturers and brands, materials, and fit will allow a store owner to be more helpful to customers, allowing for a memorable customer service experience.
Organization skills. Organization is so important to a shoe store’s success. A store owner needs to be well-organized in tracking inventory and maintaining a budget, but that organization is important within the physical store. A well-organized and tidy store makes it easier for customers to find what they’re looking for, and it also makes for a more enjoyable shopping experience.
Customer service skills. A shoe store owner needs to have strong customer service, and interpersonal skills since creating a positive customer experience can lead to valuable repeat customers and good reviews. A store owner who offers great customer service can also lead by example, teaching these skills to employees.
Management skills. Nearly any shoe store will need multiple employees, which means a store owner will need to have good management skills. From interviewing and hiring staff, to training and overseeing staff, this skill set is important to be a successful store owner.
Are there grants to start a shoe store?
It’s extremely rare to find a grant to start a shoe store. If you search for business grants, you will come across a lot of scams and misinformation. Occasionally an organization will offer grants to start a business, however, be skeptical and don’t provide any sensitive personal information or pay money to get more information.
Legitimate federal grants can be found at Grants.gov, and you can check on your state’s economic development office to see if they have any grants available.
What is the NAICS code for a shoe store?
The NAICS code for a shoe store is 448210.
The NAICS code (North American Industry Classification System) is a federal system to classify different types of businesses for the collection and reporting of statistical data.
Related: What is a NAICS code?
Resources:
American Apparel & Footwear Association
Footwear Distributors and Retailers of America
National Shoe Retailers Association
United Shoe Retailers Association
National Retail Federation
