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How To Grow Your Retail Business: 11 Proven Ways In 2024

how-to-grow-your-retail-business:-11-proven-ways-(2023)
How To Grow Your Retail Business: 11 Proven Ways (2023)

For retail businesses, achieving growth is about more than just increasing inventory or opening new stores.

The key lies in adopting technology to help you expand and keep up with evolving customer demands. Although there's no universal formula, several proven methods exist for achieving retail business growth. Whether you're a startup or an established player in the market, it's always wise to review your growth strategies from time to time and make necessary adjustments to stay ahead of the competition.

Here, we'll delve into 11 proven ways to amplify your retail success.

11 Ways To Grow Your Retail Business

  1. Analyzing your retail business
  2. Understanding your customers
  3. Effective inventory management
  4. Improving in-store experience
  5. Expanding retail locations
  6. Leveraging ecommerce for retail business
  7. Adding a new product or product line
  8. Marketing strategies for retail business growth
  9. Loyalty programs and customer retention
  10. Using data analytics in retail
  11. Leveraging automation in retail

1. Analyzing your retail business

The first step to growing your retail business is understanding your business’s current state to determine the next steps you can take to reach your goals.

You need to get a broad business perspective and have a more in-depth analysis.

Here are the main areas every retail business owner needs to focus on:

Financial analysis

Take the time to review your cash flow.

  • Total sales: Measure monthly, quarterly, and annual sales.
  • Sales by category/item: Identify high-performing and underperforming items.
  • Sales by location (if multiple locations): Determine the most profitable outlets.
  • Sales trends: Track sales growth or decline over time.

Operational analysis

Review these key metrics of your operations to unlock opportunities for improvements.

  • Inventory turnover: Work out the cost of goods sold and average inventory.
  • Inventory management: Check for stockouts, excess stock, dead stock, and inventory holding costs.
  • Supply chain efficiency: Assess lead times, supplier reliability, and procurement costs.
  • Employee performance: Evaluate sales per employee, customer reviews, and overall staff productivity.
  • Customer traffic: Use foot traffic counters or web traffic tools for online retailers.
  • Conversion rate: Out of the people who enter your store or website, how many make a purchase?

Customer analysis

Your customer metrics can offer critical insights into where your business needs to catch up.

  • Customer satisfaction: Use surveys, feedback forms, or face-to-face interactions.
  • Customer retention: Track repeat customers and determine retention rates.
  • Customer acquisition: Understand where new shoppers come from and their acquisition cost.
  • Customer segmentation: Identify customer groups and tailor strategies to each segment.

Competitive analysis

New competitors enter the market all the time. Take a moment to analyze your competitors and see how you compare.

  • Competitor benchmarking: Compare your metrics against key competitors.
  • SWOT analysis: Identify your strengths, weaknesses, opportunities, and threats relative to other businesses.
  • Mystery shopping: Send individuals to assess competitor services and products firsthand.

Strategic review

Ensure you’re following your business strategy and keeping track of your goals by reviewing:

  • Business goals and objectives: Are you on track to meet them?
  • Key performance indicators: Monitor sales, customer satisfaction, and inventory management KPIs.

By digging into inventory turnover or studying sales trends, you uncover invaluable insights about your current retail business performance and where to improve.

Analyzing your retail business is ongoing, so build it into your schedule. Make time to check in on your business’s metrics monthly, quarterly, and yearly.

2. Understanding your customers

Every successful retail business has a solid understanding of its customer base. Deeply understanding your customers goes beyond recognizing their buying habits; it means digging into their needs, preferences, and behaviors.

Retail analytics help you understand your customers' challenges and how your business can solve them.

Start by tapping into data from the following sources:

  • Point-of-sale system: Your retail POS provides plenty of data on sales, customers, and products to understand consumers better.
  • Email analytics: Platforms like Shopify Email help you understand order rates, products purchased, and CTRs.
  • Foot traffic analysis: Foot traffic counters like Dor let you see how many people visit your store. You can then compare this to Shopify POS data. This data will help you understand why and when customers visit your physical store.
Shopify POS screenshot of New York flagship clothing shop
Use the Shopify POS to collect and manage customer data.

Retail analytics can tell you more about why customers shop with you and what else they need or want from your business.

Once you’ve gathered customer data, sort and segment them by grouping your customers based on similar characteristics or purchasing patterns. This allows you to tailor your retail marketing efforts and product offerings accurately.

Start by categorizing your customers by:

  • Age
  • Gender
  • Location
  • Interests
  • Life stage (single, married, retired, etc.)
  • Shopping Frequency
  • Average order size

Customer segmentation helps you create more personalized experiences and a better overall customer experience.

Segmenting customers allows you to:

  • Upsell and cross-sell products of interest
  • Create targeted marketing campaigns that resonate with customers
  • Choose the best type of communication for specific customers
  • Create personalized loyalty programs to boost customer retention
  • Find ways to improve products or customer service

Tapping into customer data helps you better understand what potential customers and existing shoppers want and need from your business. From there, you can use that information to make strategic changes to improve the customer experience and target your most valuable customers.

3. Effective inventory management

A retail store’s success is often tied to how well it manages its inventory. Effective inventory management is essential to retail growth, serving as the bridge between supply and demand.

When appropriately managed, inventory ensures product availability and reduces overhead costs associated with excess stock or emergency replenishments caused by a stockout. Well-managed inventory can help you save on storage costs and improve fulfillment while contributing to your business’s cash flow.

To improve your inventory management, adopt best practices such as:

  • Regular stock audits (including physical inventory, spot checking, and cycle counting)
  • Leveraging inventory management systems for real-time tracking
  • Maintaining a balanced safety stock and understanding par levels
  • Understanding seasonal trends in your market
  • Forecasting demand accurately
  • Keeping an organized stockroom
  • Maintaining relationships with suppliers

Adopting these best practices can differentiate between a missed opportunity and a sale. In the retail world, where profit margins and customer satisfaction hang in the balance, a solid inventory management system is not just a best practice—it's a necessity. Improving your inventory management could be the key to growing your business.

4. Improving in-store experience

The physical space of a store remains a cornerstone of retail success. A thoughtfully designed store layout does more than showcase products; it shapes the customer's journey, dictating the ease of browsing, the flow of foot traffic, and the likelihood of impulse purchases.

For example, research shows shoppers usually look left first and right when entering a store. Customers also like to move directly and walk counterclockwise around the store space.

It helps to start observing how customers currently interact with your store layout. You can monitor the customer flow, keeping an eye on how many customers come into the store, where they stop, how they behave, and how much they buy.

This can help you identify areas of the store that get the most attention and sales and those that are avoided.

As you think about adjusting your retail store layout, consider how you can optimize these in-store elements to increase customer flow and sales:

Excellent store design appeals to your customers in a variety of ways. It:

  • Has an engaging window display
  • Avoids critical products at the entrance where shoppers will miss them
  • Incorporates breaks or stopping points
  • Displays the right amount of product and leaves enough space to browse
  • Uses cross-merchandising
  • Regularly updated displays

Try creating memorable shopping experiences with experiential retail to drive engagement with your brand.

Some 35% of customers shop in-store because they enjoy the experience, so tap into the desire for better physical shopping with these engagement ideas:

  • Host masterclasses
  • Create seasonal pop-up shops
  • Hold community events
  • Host interactive workshops
  • Showcase relevant exhibitions

Alongside this, retail management and excellent customer service are pivotal in growing your retail business.

Knowledgeable staff who can assist, advise, and answer questions make shopping more enjoyable. Friendly team members can turn potential returns into exchanges and hesitant customers into confident buyers. Invest in training your staff to be secure and knowledgeable about your brand, products, and policies.

By optimizing store layout and investing in stellar product and service offerings, retailers can elevate the in-store experience, ensuring customers leave with products and positive memories.

5. Expanding retail locations

It's not just about having multiple retail store locations but ensuring each one resonates with its target market. Before expanding, you must assess whether there's a genuine need for more new stores.

This involves understanding:

  • Market saturation: Has your product or service reached a maximum level of consumption? Or is there still room for growth in the existing market?
  • Regional demand: Is there enough demand for your product or service in the geographical location?
  • The logistical implications of branching out: Can your business reasonably scale without hindering other growth areas?

Successful retail expansion relies on thorough research, understanding local demographics, and adapting to market changes. You need to consider the different types of retail locations and what will suit your business. Types of locations include:

  • Brick-and-mortar retail
  • Mall space
  • Shopping centers
  • Business parks
  • Downtown
  • Home-based

A strategy to consider when opening a new store is choosing a location that can also be used for fulfillment. Consider a place with more storage for in-store pickup of online orders, local delivery, and in-person returns. Likewise, you can consider a smaller location primarily as a showroom where customers can experience your products and then place orders online.

Another approach to reducing risk is to test demand with pop-up shops. These temporary shops can gauge customer interest and sales potential without the commitment of a full-fledged store.

For example, direct-to-consumer beauty brand Glossier tests out new retail stores with seasonal pop-up shops. In 2020, its London Covent Garden pop-up shop was so successful (100,000 customers came through the doors over two and half months) that the brand decided to open a permanent store there.

Glossier London covent garden store location featuring pillars iron railings and a central staircase
Glossier’s London pop-up shop was so successful that it became a permanent store. Glossier

Previously, Glossier opened seasonal pop-ups in cities like New York and Los Angeles before opening permanent year-round stores.

6. Leveraging ecommerce for retail business

What began as a convenient in-store shopping alternative has become a primary shopping channel for many consumers worldwide.

For brick-and-mortar retailers, it presents a golden opportunity. In 2022, US online sales hit more than $1 trillion, while China was the only other country to reach the trillion mark that year—retailers who don’t tap into this demand for online shopping risk losing money to their competitors.

Integrating ecommerce into a traditional retail business requires a blend of strategy and adaptability.

This means:

  • Optimizing mobile platforms for online shopping
  • Ensuring consistent branding across all touchpoints
  • Creating a seamless user experience that mirrors in-store shopping

Tools like integrated inventory systems can help manage stock across online and physical storefronts. By embracing ecommerce, retailers aren't merely staying in the game—they’re reaching customers in new markets and tapping into the vast potential of the digital marketplace.

7. Adding a new product or product line

Adding new products or product lines gives customers more choices. Think about how better to meet customer needs and preferences with multiple options. Sometimes, it isn’t about developing a brand-new product from scratch but reworking a current offering to meet shoppers’ needs and provide more value.

For example, bath brand Happy Hippo Bath Co. lets shoppers choose between purchasing one unit of its product or a five-pack for less. Customers can also choose to subscribe for even more significant savings.

Product page for a purple dinosaur discovery bath bomb showing subscription option
Happy Hippo Bath Co. makes it simple for shoppers to choose the right pack size.

This might mean adding a new variation to your existing product line. Instead of selling red shirts, you might offer blue shirts in the same style or expand your sizing options.

For example,  Bombas sells the same ankle socks in multiple colors.

three pairs of Bombas ladies ankle socks in pink, orange and blue
Bombas is known for offering customers plenty of size and color choices.

You can also create a new product that fits a famous existing line. For example, wellness brand Olly creates lines of related supplements that complement one another and support customers’ health.

Olly supplements frequently bought together including laser focus, goodnight stress and probiotics
Shoppers can easily purchase similar wellness supplements on Olly.

Some other product ideas include:

  • Create a new product line to complement an existing one: Start offering quirky pens to go with the strange notebook you sell.
  • Create a new product in the same vertical: Start selling casual shoes in addition to formal shoes.
  • Expand to a new vertical: Start renting out your store space to related groups or businesses as an event venue when the shop is closed in the evenings.

8. Marketing strategies for retail business growth

Social media marketing is an indispensable asset for retail businesses. Platforms like Instagram, Facebook, and Pinterest showcase products and craft a business brand's story, build community, and drive instant purchases through shoppable posts.

For example, the homeware brand Jungalow promotes its products through shoppable Instagram posts:

Email marketing remains an effective strategy for retailers. Through email marketing, you can offer:

  • Personalized promotions
  • Loyalty rewards
  • New product announcements
  • Brand updates that foster deeper customer relationships

For example, insole brand Fulton shares a discount via email for first-time shoppers who sign up:

Reformation promo email offering ten percent off to new customers
Really Good Emails

By using the combined power of social and email marketing, retailers can craft cohesive strategies across sales channels that drive traffic, boost sales, and elevate their brand in the competitive market.

9. Loyalty programs and customer retention

In the ever competitive world of retail, it's not just about acquiring new customers but ensuring they keep coming back. Loyalty programs help encourage customers to become loyal fans.

Loyalty programs reward repeat business, fostering a cycle where customers feel valued and are incentivized to continue purchasing.

For example, menswear brand Mizzen+Main has a loyalty program that gives shoppers one point, or company coin as they’re known, for every $1 they spend with the brand.

To get customers excited about the potential rewards, the brand highlights what customers can get in exchange for company coins. It offers a variety of features to appeal to different customers, including birthday gifts, free shipping, and early access to sales and products.

Mizzen+Main loyalty program featuring three corporate tiers in black, blue, and green
Shopper can quickly see what they need to climb the corporate ladder.

Redeeming points or coins means customers must visit your store for another purchase, which increases the chances they’ll spend again. It also builds customer loyalty, as it incentivises them to choose your business over a competitor, as they’ll earn more reward points.

Loyalty programs can help you grow your business when used as a customer acquisition tool. Offer points for referrals, and encourage loyal customers to act as brand advocates by encouraging them to show off their perks.

An effective loyalty program is only one facet of customer retention.

Strategies like personalized offers, consistent engagement through feedback loops, and quality post-purchase support play equally crucial roles.

By intertwining the allure of loyalty rewards with genuine, customer-focused strategies, retailers can create a magnetic pull that not only attracts customers but keeps them engaged and invested in the brand's journey.

10. Using data analytics in retail

Retail data analytics provide a clear snapshot of consumer behaviors, purchasing patterns, and market trends. But collecting data is just the beginning.

It’s key to use this data to make informed decisions. By dissecting analytics, retailers can pinpoint what resonates with their audience, tailor marketing campaigns for maximum impact, and forecast future trends.

Whether it's adjusting pricing strategies, refining product assortments, or enhancing the customer journey, data-driven insights offer a roadmap for growth.

Here are a few places to start with using retail data analytics:

Online retail analysis

  • Website analytics: Monitor metrics like bounce rate, conversion rate, and user flow to optimize the online shopping experience.
  • Cart abandonment analysis: Identify reasons customers might be leaving without completing a purchase.
  • Customer review analysis: Use sentiment analysis tools to get insights from customer reviews and feedback.

Marketing and advertising

  • Campaign effectiveness: Measure the ROI of marketing campaigns by tracking metrics such as conversion rates, click-through rates, and customer acquisition costs.
  • Customer retention analysis: Understand which strategies keep customers coming back.
  • Social media analytics: Analyze engagement, reach, and sentiment on social platforms to refine your social media strategy.

Operational efficiency

  • Sales performance: Analyze daily, weekly, or monthly sales data to identify trends.
  • Employee performance: Track employee sales performance to identify training needs or staffing adjustments.

Predictive analytics

  • Churn prediction: Identify customers who might be at risk of not returning and find ways to re-engage them.
  • Sales predictions: Use past data to forecast future sales, helping with planning and stocking.

11. Leveraging automation in retail

When you decide to pursue a growth activity, you need to consider how to optimize new product development and production to reduce variable costs while increasing output.

Simple automation is anything that allows you to lower the cost of making decisions. Scaling allows you to increase capacity within a given process while either maintaining or reducing the variable costs of that process.

For example, you might scale your sales by hiring additional floor staff for your store.

As long as those new employees sell at the same rate at the same base salary, your relative costs will remain stable.

You might start ordering your materials in bulk at a wholesale cost. As long as your other production costs don’t increase, your overall cost per unit would be lower because of the discounted rate.

This prevents loss of profit margins, operating at a loss, or increasing waste alongside the increases in revenue and output that come with growth.

Grow your retail business sustainably

Growing a retail business sustainably is not an overnight job. You’ll need a long-term strategy of embracing tech and adapting to evolving consumer behaviors.

Start by thoroughly analyzing your business’s current state and customer expectations. Then, using the strategies in this article, you’ll be on the path to achieving long-term retail business growth.

Try Shopify POS for omnichannel selling

Bring your in-store and online sales together with Shopify POS. Gain insights about your business from one view so you can work smarter, move faster, and think bigger.

 

This originally appeared on the Shopify Retail Blog and is available here for discovery.
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