If you ask yourself what product is ideal, is in constant demand among all categories of the population, then these are, of course, gifts. Significant events and family celebrations take place throughout the year, although there are days when the demand for gifts exceeds all reasonable limits.
The idea of starting a gift selling business is a natural one that comes to the mind of many aspiring entrepreneurs. But, having tried to put their idea into practice, many are convinced that this type of business has many pitfalls.
The desire of people to acquire an unusual and original gift leads to the fact that gift shops are forced to endlessly expand their range, while losing working capital. Therefore, the opening of a gift shop should be preceded by marketing research, a study of demand, drawing up a portrait of the target client, which the store will focus on.
The results of the study may show that the main client of the gift shop will not be an individual at all, but a corporate client.
Some corporate gift shops are doing better than retail shops. While sales of corporate gifts are rarer, they are usually much more expensive and allow for higher returns.
Some gift shops choose for themselves a different target category of buyers, compiling an assortment based on inexpensive gifts designed for students, schoolchildren, and young people.
The second most important step, when opening a store, is the choice of premises for its placement.
Because gift shopping often occurs under time constraints, shoppers are less likely to go shopping in a remote store. Most often, retail outlets located in the city center, at transport interchanges, in shopping centers, in crowded places turn out to be successful.
The most optimal is to open a gift shop in a shopping center, since people most often go there for gifts, and the presence of such a store is a real find for them.
The advantage of this location is also that it is possible to reduce the cost of organizing the economic support of the store, security and advertising. On the other hand, the cost of renting in shopping centers is quite high and reduces the overall profitability of the project.
When equipping the trading floor of a gift shop, it is necessary to pay special attention to good lighting, ease of access for customers, and a clear and simple systematization of gifts according to interests.
The initial cost of setting up a gift shop is not too high. The two main cost components are the repair and equipment of the premises, and the purchase of inventory. Undoubtedly, expenses will also be required for the registration of an enterprise and an advertising campaign. Experience shows that an investment of between $500,000 and $1,000,000 is sufficient to set up a small gift shop. Approximately half of this amount will be spent on the equipment of the premises, the rest will be spent on the purchase of goods.
Depending on the mode of operation of the store, the amount of current costs will also change. The main cost items will be wages, rent and utility bills. The return on gift shop is usually 15-20%, however, due to the high mark-up and low initial costs, the investment in opening a gift shop often pays off within 1 year.
The main danger of this business lies in the wrong choice of assortment and the growth in the share of illiquid goods.
Therefore, you should carefully work with suppliers, I focus on constantly updating the range of goods and purchasing them in small lots. It is also necessary to skillfully use the holiday periods in order to get rid of illiquid assets and get additional profit.
Skillful business management comes with experience, so we suggest you order a business plan for opening a gift shop by filling out the order form on our website.