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.
Your journey into the world of shoe retail requires not only a sense of fashion, a keen eye for quality, and an understanding of what makes a good pair of shoes, but also an entrepreneurial drive. To help get you on the path of running your own successful shoe store, we have crafted a detailed guide.
Business Overview
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 on the same day, which means that these stores must have large budgets for inventory and significant storage space.
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Industry Summary
Because consumer spending drives the shoe store industry, the increase in consumer spending over the last five years has led to increased shoe purchases. The industry is diverse, with several types of retailers, from specialty shoe stores to department stores and online retailers.
However, according to IBISWorld, 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 0.7 percent and is expected to generate $61.1 billion in revenue in 2023.
Industry Trends
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 and Designer Brands, Inc. currently hold the largest brick-and-mortar shoe store market share, 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, if you are planning on solely operating a retail store, 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 in the footwear market can evolve seemingly overnight, so it’s important not to 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.
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. However, generally speaking, the target market for a shoe store includes:
- Men and women: Shoe stores typically cater to both genders, offering a variety of styles, sizes, and designs to meet their specific preferences and needs.
- Age range: The target market can span across various age groups, from children to adults. Shoe stores may offer diverse footwear options for different life stages, including kids’ shoes, trendy styles for young adults, and comfortable shoes for seniors.
- Fashion-conscious individuals: Shoe retailers often attract customers who are interested in keeping up with the latest fashion trends. These individuals value stylish and fashionable footwear that complements their personal style.
- Athletes and fitness enthusiasts: Athletic shoe stores have a target market consisting of athletes and fitness enthusiasts who require specialized footwear for sports, running, training, and other physical activities.
- Professionals: Shoe stores may cater to professionals who seek stylish and comfortable footwear suitable for the workplace, such as office shoes, dress shoes, and formal footwear.
- Budget-conscious shoppers: Discount shoe stores or stores offering affordable options may target budget-conscious shoppers looking for quality footwear at lower price points.
It’s essential for shoe store owners to understand their target market, tailor their product offerings, marketing strategies, and store experience accordingly to attract and retain their desired customers.
Checklist For Starting A Shoe Store
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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: Conduct Market Research
Understanding the demand for your products is crucial before starting any business, including a shoe store. Without a sufficient number of customers, your business is unlikely to be profitable. The shoes you plan to sell must not only appeal to customers, but they should also be within their purchasing power.
Assessing demand can also help you refine your product range, price points, and marketing strategy. Some tools to help assess market demand include:
Demographic data: Demographic data can give you insights into the potential demand for your shoe store. By looking at characteristics like age, gender, income level, occupation, and lifestyle, you can get a sense of whether the population in your area is likely to be interested in your products. Resources for this data include U.S. Census Bureau data, local chamber of commerce, and city planning departments.
Consumer surveys: Conducting your own consumer surveys can also be a good way to gauge demand. You can create online surveys and distribute them via social media or email to get a sense of people’s interest in your products. These surveys can also help you understand the types of shoes that are most in demand and the price points that consumers are comfortable with.
Competitor analysis: A careful analysis of your potential competitors can also help you estimate demand. Look at the number of shoe stores in your chosen area, their size, and the range of products they offer. A high concentration of shoe stores might suggest high demand, but it also means increased competition. On the other hand, few or no shoe stores could indicate an untapped market or low demand.
Trade associations and publications: Trade associations and publications, like the Footwear Distributors and Retailers of America (FDRA) and Footwear News, often provide industry trends, sales data, and other useful information. This data can help you understand the overall state of the shoe market and where it’s headed.
In conclusion, assessing demand is a multi-step process that involves looking at demographic data, analyzing competitors, and reviewing industry data. Each of these steps will give you a piece of the overall picture of demand for your shoe store. With a thorough understanding of the market, you’ll be better prepared to make informed decisions about your business strategy.
Step 2: Write a Business Plan
After researching the market and determining that an opportunity exists, the idea, the next step in starting your business should be to write a business plan.
A business plan is a roadmap for your shoe store. It outlines your business goals, strategies for achieving these goals, potential problems that might occur, and ways to solve them. Writing a business plan not only helps you understand your business better but is also used to apply for funding.
Related: How to write a business plan
Step 3: Find a Location
Finding the right location is the next step in establishing your business. If operating a physical location, the perfect location should offer high visibility, be easily accessible to your target customer demographic, and have a sufficient amount of foot traffic to attract spontaneous shoppers. You should also consider the proximity of your store to your competitors – while a little competition can be beneficial, you don’t want to be lost in a sea of similar stores.
Start by researching potential neighborhoods, keeping in mind the characteristics of your ideal customer. Use the demographic information gathered during your market research phase to identify areas where your target customers live or shop frequently. Next, explore specific properties in these areas. Consider factors such as the size of the space, parking availability, and the condition of the property. You want to ensure there’s enough room to display your products and also that the store is inviting and convenient for customers.
If you are planning an online shop, you may be able to operate out of a spare room, but if more space may be needed.
Before signing any lease or purchase agreements, ensure you have confirmed your funding sources. It’s essential to remember that if the funding doesn’t come through, you could be held liable for any contracts you’ve signed.
Step 4: Secure Funding
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.
Outside of personal funds and loans or investment from friends and family, bank loans are a common funding source. Securing a loan from a bank requires a solid business plan and good personal credit. If the bank considers the loan to be too risky, they can utilize a loan guarantee from the Small Business Administration (SBA). The SBA offers several loan programs designed to meet the needs of different types of businesses. These loans often have lower down payments and longer repayment terms (though higher interest) than traditional bank loans, making them more affordable for new business owners.
Business credit cards can also provide an accessible way to cover initial expenses, and if managed wisely, they can also help to build your business credit rating.
Step 5: Register for Business Licenses and Permits
When starting a shoe shore, there are potentially several registrations to be aware of. Each state has its own specific requirements, so be sure to check with local and state authorities to ensure you’re meeting all legal obligations. A few common registrations include:
Choosing a business structure: Choosing the right business structure is a crucial step in starting your shoe store business. The structure you choose affects your personal liability, tax obligations, and ability to raise investment capital. The most common structures for small businesses include sole proprietorships, partnerships, limited liability companies (LLCs), and corporations.
For a shoe store, an LLC is often a good choice due to its liability protection and potential tax advantages.
Related: Comparison of business structures
Business name registration: After registering the business structure, you may need to register your business name. This process will vary depending on what business structure you pick. Sole proprietors and partnerships will often be required to register a “Doing Business As” (DBA), while corporations and LLCs register with the state during the formation process.
Related: Ideas for naming a shoe store
During this time, it’s also a good idea to check if the name you want is available as a web domain, even if you’re not ready to set up a website yet.
Related: Finding a domain name for your business
Applying for business licenses and permits: Depending on your location, there will likely be a variety of general licenses or permits needed before opening. This could include a business license, seller’s permit, signage permit, and Employer Identification Number (EIN).
Related: What licenses do shoe stores need?
Step 6: Acquire the Store and Begin Setting Up
Once the funds are in place and the business is legal to operate, it’s time to get the keys and begin setting up for customers.
While this step is targeted more to physical storefronts, the layout for an online operation is important to consider to ensure efficiency and secure storage.
A retail store’s layout is a vital component in shaping a customer’s shopping experience and influencing their buying decisions. Before finalizing your design, it can be helpful to visit other shoe stores to understand how they display their products and guide customer flow. A well-designed shoe store should offer a clear path for customers to navigate, highlight key products, and make it easy for customers to try on and select shoes.
There are also free retail store design software options, like SmartDraw or SketchUp, which can be used to help create an optimal layout. These tools can help you experiment with different layouts before committing to physical changes, ensuring you use your retail space effectively.
Depending on the condition of the acquired location, renovations might be necessary. This could include building fitting areas, installing shelves or displays, painting, and adding appropriate lighting. When renovating, pay attention to the store’s ambiance and match it to the customer you plan to serve. The interior should reflect your brand image and appeal to your target customers. Whether your store caters to luxury clientele, athletic customers, or bargain shoppers, ensure the design elements convey that message effectively.
Step 7: Set Up Accounts with Suppliers
Now that the business has been registered and the location is coming along, suppliers will be more open about providing pricing and setting up a wholesale account.
The first step to finding suppliers for your shoe store is to look for manufacturers and wholesalers who supply the type of shoes you want to sell in your store. This might be brands you’re interested in or suppliers who specialize in certain types of footwear, such as athletic shoes, designer shoes, or budget-friendly options.
Trade shows and industry events are great places to connect with potential suppliers. Online directories, such as ThomasNet or Alibaba, can also be valuable resources.
Once you’ve selected a supplier, the next step is to negotiate terms. This includes pricing, delivery schedules, and payment terms. It’s important to clarify these details upfront to avoid any misunderstandings down the line. Remember, everything is potentially negotiable, so don’t be afraid to ask for terms that will benefit your business.
Step 8: Implement an Inventory System
As the store is coming together, an inventory and Point of Sale (POS) system should be decided. While a pen and paper or spreadsheet strategy can be effectively used, a digital system will allow you to better keep track of stock, manage reorders, and analyze sales trends.
Some of the more popular systems include:
Lightspeed Retail: This cloud-based POS and retail management system is designed to simplify inventory management, track sales, and improve customer service. With its intuitive interface and powerful features, Lightspeed is a popular choice among many shoe retailers.
Vend: Vend offers comprehensive inventory management features, multi-outlet retail capability, and seamless integrations with various e-commerce platforms. Vend is also known for its user-friendly design and excellent customer service.
Shopify: If you’re planning to sell shoes both in-store and online, Shopify might be an excellent option. Shopify offers robust e-commerce capabilities, along with POS features and inventory management for physical stores.
Step 9: Craft a Marketing Strategy
Even though you probably started creating a marketing strategy in the business plan. Since then, some time has passed and ideas have changed, so in this stage, it’s time to finalize and begin to implement how you will get the word out to customers that the store is open.
First and foremost, a marketing strategy should center around your target customers and their shopping behaviors. A deep understanding allows you to tailor your marketing messages to their interests and needs.
Whether operating a storefront or online store (or both), building a strong online presence is likely going to be a key strategy. This involves creating a professional website, maintaining active social media accounts, and optimizing your online listings. Email marketing is also a powerful tool for a shoe store, allowing you to send personalized product recommendations, special offers, and updates to your customers.
Additionally, depending on the relevance to your market, hosting in-store events such as launch parties for new shoe models, fashion shows, or shoe care workshops can generate excitement and attract customers to your store.
Step 10: Hire & Train Employees
Should employees be a part of your business plan, the next step would be to staff the store.
The most common types of employees in a shoe store include sales associates, store managers, and stock clerks. Sales associates are typically responsible for assisting customers, arranging displays, and handling transactions. Store managers oversee operations, manage employees, and ensure customer satisfaction. Stock clerks handle inventory, restocking shelves, and maintaining organization in the storage areas.
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.
Before starting the hiring process, the store owner has certain responsibilities to fulfill. These include obtaining an Employer Identification Number (EIN) from the IRS, registering with the state’s labor department, and setting up a payroll system for wage reporting and tax withholding purposes. The owner should also obtain workers’ compensation insurance, which is a legal requirement in most states.
Related: State guides to hiring employees
Step 11: Prepare to Open!
As we come to the end of the list of steps to start a shoe business and prepare to open, there are likely going to be some loose ends to tie up. Everyone’s needs will be different, and ss you prepare to open your shoe store, here are some additional steps to consider.
Business insurance: You should acquire business insurance to protect your store from potential risks. There are different types of insurance to consider, like liability insurance to cover injuries or accidents in your store, property insurance to cover potential damage to your inventory or store fixtures, and business interruption insurance to cover losses if your store has to close temporarily due to a covered event.
Related: What types of insurance does a shoe store need?
Bookkeeping setup: A proper bookkeeping system is essential to track income, expenses, and profitability. This can be as simple as a spreadsheet or as complex as a dedicated accounting software, such as Wave Accounting (FREE) or Quickbooks, depending on the size and needs of your store.
Bank account: Opening a business bank account is necessary to manage your store’s finances separately from your personal accounts. This is important for tax reporting and gives a professional appearance to suppliers and customers.
Setting prices: Pricing your products is a critical step. It’s important to strike a balance between covering your costs and remaining competitive. Your prices should reflect the value of the shoes, your target market, and the prices of your competitors.
Grand opening preparation: Planning for a grand opening is an effective way to draw attention to your new store. This might involve advertising, special promotions, or a special event on the day of opening.
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Common Questions When Starting A Shoe Store
How much does it cost to start a shoe store?
Starting a shoe store involves several key expenses. The total costs can vary widely depending on the size and location of the store, the type of inventory, and other factors. However, on average, you can expect to invest anywhere from $60,000 to $500,000 to start a shoe store.
This range is inclusive of all the expenses listed below:
Initial inventory: This is likely to be your most significant initial cost. Depending on your focus (designer shoes, athletic shoes, budget-friendly shoes), the cost of your initial inventory can range from $10,000 to $200,000 or more.
Lease and renovations: The cost to lease a retail space varies significantly based on location and size. You might expect to pay anywhere from $2,000 to $10,000 per month in rent. Additionally, you may need to budget for renovations to the space, which could add another $20,000 to $100,000 to your start-up costs.
Furniture and fixtures: Shelving, display racks, seating for customers, cash registers, and other furniture and fixtures can add another $10,000 to $50,000 to your start-up costs.
Permits and licenses: Depending on your location, you may need to budget for permits and licenses. While these costs can vary, a general budget of around $1,000 to $5,000 should cover most of these expenses.
Marketing and advertising: Launching a successful shoe store will also involve some marketing and advertising costs to get the word out about your store opening. Depending on your strategies, you might budget between $5,000 and $20,000 for initial marketing and advertising efforts.
Miscellaneous expenses: These might include professional fees for legal or accounting services, costs to set up your website, signage for your store, and more. A budget of $5,000 to $15,000 should cover most of these expenses.
Operating expenses: It’s wise to have three to six months of operating expenses on hand as a buffer. This includes rent, utilities, employee wages, insurance, and other monthly costs. For a typical shoe store, three to six months of operating expenses might total $30,000 to $150,000.
Remember, these are average estimates, and the actual costs to start your shoe store could be higher or lower based on various factors. Be sure to do thorough research and budgeting to ensure you’re financially prepared for this new venture.
Is a shoe store profitable?
The profitability of a shoe store can vary widely, depending on factors such as the size and location of the store, the type of shoes sold, and the store’s overhead costs.
A common way to estimate potential profit is to calculate the gross margin, which is the difference between the sales price of the shoes and the cost to purchase the shoes from the supplier, divided by the sales price.
Assuming an average pair of shoes sells for $100, and the cost to purchase the shoes from the supplier is $50, the gross margin would be 50% (the industry average is 46%, but your actual cost of inventory will vary).
If the store sells 200 pairs of shoes per month, that would result in $20,000 in sales revenue ($100 x 200). The cost of the shoes sold (also known as the cost of goods sold, or COGS) would be $10,000 ($50 x 200), leaving a gross profit of $10,000 ($20,000 – $10,000).
From this gross profit, you would subtract the store’s overhead costs, which include expenses such as rent, employee wages, utilities, insurance, marketing, and more.
So, for example, if the store’s monthly overhead costs total $6,000, the store’s net profit for the month would be $4,000 ($10,000 – $6,000).
This is a simplified example, and actual results could be higher or lower. It’s also important to note that profitability can vary by month, due to factors such as seasonal trends in shoe sales. However, this example gives a basic illustration of how to calculate potential profit for a shoe store.
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.
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
