Pros and Cons of opening a fashion store

I have started several fashion retail businesses, and I remember that many of the expectations I had were not right. Some things went better than I thought, but others went worse.

That’s why I think I’m able to explain the advantages and disadvantages of opening a fashion store.

This is my personal opinion based on my experience as a retailer and as a consultant.

No theories. Just reality.

Disadvantages of opening a fashion store:

  • It’s very important to have a location with high traffic of people. If you are thinking about opening a brick and mortar store, you have to find a store with a lot of passing people. Fashion stores live mainly of customers that pass in front of the store. Getting customers outside the store area is difficult and costs money. If you open the store in a place where few people pass by, it will be difficult to get new customers. And even if you can get them, it costs money and takes time. You can save money on the rent on a mediocre location, but will be exceeded by the cost of getting new clients.
  • High staff turnover rate. This is a problem of all retail businesses, not only in fashion businesses. Jobs in retail are not seen as long-term jobs. Usually they are occupied by very young people who are always looking for a better job. I remember once, an employee telling me, in the day I paid her the salary, that she would not came the next day. She had just been hired for the job of her dream. Our relation was very good, and I can’t criticize her for what she did. That’s how things are in retail. The point is, if you have few employees, there’s a big chance you’ll have to be a salesperson too. At least for a limited period of time.
  • Fashion stores have to follow fashion trends. Twice a year (at least), you have to change completely the products you are selling. Products in fashion have an average of 6 months of life expectancy. After these 6 months, these products lose almost all value. You’ve got to have the mindset that you need to sell your products the sooner the possible. If you wait two or three months for things to “get better”, it will be too late.

Advantages of opening a fashion store:

  • Although having to change collection every 6 months is a disadvantage, it is also an opportunity. If you fail in a collection, you can recover in the next collection. Not all business have this capacity for recovering quickly.
  • The value customers assign to clothing is very subjective and depends on many factors that are not too difficult to a retailer to improve. Such as for example, packaging, labels, store decoration. That’s why you can have very big margins. You can purchase products at a low cost and sell them at high prices (and I can teach you how).
  • This business is quite easy to scale. I think it is one of the most scalable businesses in the world. If you can succeed with a store, then it is very easy to replicate this store elsewhere. Merchandise is easy to buy (there are a lot of wholesalers and manufacturers), and you don´t need specialized workers. In 8 hours (or less), you can train an employee.
  • The expansion may not require a large capital. You can franchise a fashion store very easily. You can share your success with other people who have capital but don’t have your know-how. This is a big advantage for people opening a fashion store with a small capital.
  • If you start your project with a realist forecast, you don’t need to buy large quantities of merchandise or expensive products. The problem is that most people buy too many products, too expensive, and the wrong products, that customers won’t buy.
  • Cash flow is easier to control than on most other businesses. You get paid when you sell. And some vendors can give you credit. And if you need immediate cash, there’s a lot of thing you can do to get money quickly (promotions, sales, etc.)
  • You can use your clients to promote your products, and they even pay for doing it. That’s the case when you put your brand’s logo in the garments.

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