How to start up a shoe shop

Shoe sales are very seasonal so an independent shoe shop needs an effective buying strategy to avoid having to discount significant amounts of stock. Check out our practical guide for help with starting and running your footwear business.

• Research your target market
• Decide what to sell
• Establish your customer profiles
• Selling on eBay and Amazon
• Decide which services to offer
• Promoting your business
• Price Your Products
• Buy an existing business

Research your target market

Estimating demand

It's very important to find out whether there is a demand for a shoe shop in your area. Firstly, check out the competition. Count how many outlets are already selling shoes in your area. As well as large footwear chains and independent specialists, remember to include sports shops, outdoor leisure shops, clothes shops, variety retailers who also sell shoes and supermarkets. Try to establish what types of shoes these competitors are selling. You may find an unfilled niche that your shop can fill.

Competition may be less fierce in smaller towns and villages where there are fewer major retailers and specialist chains, but of course, the customer base will be smaller than in a large city. The nature of your area will influence the type of shop - if there are schools nearby, it might be worth stocking children's shoes. If the population is mainly older, you should bear this in mind when choosing the type of shoes to sell - such as comfort ranges or sturdy outdoor footwear.

You will also face competition from online retailers wherever you locate - this is becoming an increasingly popular sales channel.

Shop location

Generally, for a retail outlet such as a shoe shop, it is important to have as much passing trade as possible. If you are planning to set up in your local town or city then ideally you should try to locate your shop as close to the centre as possible. The cost of doing this may be prohibitive, in which case you might consider setting up in a suburban shopping precinct. These have the benefit of a fairly large number of customers visiting them each day as well as more affordable premises costs. Alternatively, a market stall may be a cheaper way of securing a good location.

Also, check out local crime rates - you don't want to have to cope with excessive levels of shoplifting, break-ins and theft.

Why will customers choose your shop

You need to make sure that enough customers will choose your shop rather than other existing outlets. You should check out the competition to see:

• what range of shoes and related items they offer
• whether they offer additional services such as repairs
• what prices they charge
• what their opening hours are
• what type of customer they attract
• whether the premises and fittings are modern and smart
• how helpful their staff are

This might indicate that there is a gap in the market that you can exploit. Specialising in a particular type of footwear will help to distinguish your shop from its competitors.

Check out future developments

Check that there are no immediate plans to open a large clothes or shoe retailing outlet in your proposed area, or to build new road systems which mean that local traffic - or pedestrians - will bypass your shop.

Find out what people want

It is becoming more and more difficult for a small, independent shoe shop to survive in the face of competition from national chains, supermarkets, department stores, internet and mail order companies and other non-specialist outlets that sell footwear. It is very important that you make sure that there is a market for the range of footwear and other items you intend to stock. You could carry out some surveys of the people in your local area to find out:

• what sort of shoes they would like you to stock - for example local employers might be looking for a source of protective footwear for their staff
• if there is a demand for a shoe repair service or for any other services - for example a bespoke shoe making service
• what they think of your proposals in general
• what, if anything, they don't like about the existing shoe shops in your area

Research current trends, plus legal and tax issues

• Shopping in shoe shops
• Legal issues for shoe shops
• VAT rules concerning shoe shops

Decide what to sell

The range of footwear that you sell will depend on what type of shop you intend to run. Your research may have identified a niche in the market that your shop can fill. For example, you might specialise in upmarket designer footwear. Stocking sizes, brands and colours that are difficult to obtain elsewhere could also attract customers to your shop.

Rather than specialising in a particular type or brand of footwear you might decide to sell mainly budget priced shoes - but bear in mind that you will face stiff competition from the multiple footwear chains, from both their outlets and their websites, as well as from supermarkets. Alternatively, you may stock a wide range of styles and prices to cater to everybody.

The types of footwear you stock might include some or all of the following:

• men's town wear, work and casual shoes and boots (sales of men's shoes are increasing as men become more fashion conscious)
• women's town wear, work and casual and comfort shoes and boots
• sheepskin and faux fur boots
• children's shoes and boots
• sports shoes, including running shoes, football boots, cycling shoes and so on - sports shoes have become particularly popular as they are comfortable and have become acceptable in both work and social situations
• protective and safety footwear
• slippers and house shoes
• sandals, flip-flops and light casual or summer footwear
• specialist footwear, including remedial and even theatrical or dance shoes

Most of your income is likely to come from the sale of shoes and other items of footwear, but you might also consider selling a number of other items. For example:

• shoe care products, including polish, waterproofer and whitener
• laces, insoles and even DIY repair kits
• accessories, including shoehorns, polishing sponges and odour preventers
• belts, handbags, brief cases, wallets, saddlery and other leather goods
• ties, socks, gloves, tights and stockings and so on
• sunglasses, costume jewellery and hats

Seasonality

Shoe shops tend to be busiest during December, although summer is a busy period too, with sales peaking around July. At these times of the year make sure that you have enough stock to cope with demand. It's usual in the footwear trade to order stock in advance, so plan to ensure that your stock reflects the season: it is no good trying to sell flip-flops in winter when many of your customers will be looking for sturdier footwear or evening shoes for the Christmas party season. Most shops will stock a summer range and a winter range at appropriate times of the year. Sales may be affected by unusual weather - a very cold autumn may stimulate sales of winter footwear, while warm weather at this time of year has the opposite effect. Similarly, very poor summer weather affects sales of sandals and light summer shoes.

It is common to hold seasonal sales and promotions - sales are traditionally held in January, although a summer sale may be held in August to shift surplus summer stock.

You might decide to discount slow-moving ranges regularly to make room for newer stock.

Establish your customer profiles

Your market

Your customer base will be influenced by the extent to which your shop specialises - you might, for example, focus on upmarket women's footwear, including designer labels. Your market research will have helped you to identify any gaps in the market and the type of customer you can target. Most of your customers will be members of the public shopping specifically for shoes, or who just happen to be passing your shop - so a good window display is very important. This applies to your website too if you make online sales. Make sure potential customers can easily find what you sell and whether their size is in stock.

In some jobs where there is a risk of injury to workers' feet employers are obliged by law to provide protective footwear for their employees. If you sell protective footwear your customers might include local factories or construction and engineering firms who need such shoes for their workforce.

Special offers and discounts

Shoe shops traditionally hold sales during the year, usually in early summer and in January and these provide an excellent opportunity to clear out old stock. There has been an increasing tendency in recent years to hold sales almost all year round because the market has become so competitive - and because poor weather often hits sales during traditional peak periods. The Black Friday discounting promotion in November has recently been introduced but some retailers think that this then affects sales in the peak December period.

Shoes can go out of fashion very quickly; if you are unlucky, you can find yourself with money tied up in shoes that nobody wants. Regular discounting of items can be an effective way of shifting stock although if your periods of discounting are too frequent, you may find that customers simply wait for these rather than buying shoes at the full ticket price.

As well as seasonal sales, you might decide to try occasional special offers. For example, you might give your customers a discount if they buy more than one pair of shoes at a time, or perhaps provide free shoe polish or insoles with certain shoes or trainers. Many shops also give discounts to staff, regular customers, family and friends. Check out the local opposition for ideas and keep a close eye on any special offers you do make to be sure that they are working for you. Remember that promotions like these might encourage extra sales, but they will also affect the amount of profit you make on each sale.

Selling on eBay and Amazon

Selling online can be an excellent way of reaching new customers and boosting your sales. But setting up your own ecommerce website can be expensive and you may not be sure at the beginning whether the value of the sales you'll make online will justify the set-up costs.

As an alternative, trading on eBay or Amazon lets you get a feel for selling online but with much lower start up costs. And you may decide to keep on selling through eBay and Amazon even when you have your own online shop.

Getting started

You might already have your own personal eBay account that you use to buy items for yourself and to sell things that you don't need any more. But if you're trading as a business on eBay you're legally obliged to make it clear in your listings that you're a business seller. This means that you'll either need to register a new business account or upgrade your personal account to a business one. There's guidance in the eBay Seller Centre on the definition of 'trading' if you're not sure whether you need to register as a business seller.

Similarly, with Amazon you can use an existing account or create a new one when you register as a business seller.

If you're not already running a business and you intend to start selling things on eBay or Amazon - perhaps just in a small way to begin with - then you'll need to notify HM Revenue & Customs (HMRC) that you're trading. There's guidance on the Gov.uk website that gives an overview of what counts as trading and what counts as self employment. It also gives details of your tax and record keeping obligations.

Decide whether to have your own virtual 'shop'

Having your own virtual storefront will give your business a valuable online presence and will allow you to display all your products together in one place.

When you sign up to sell on eBay, you have the option of setting up an eBay Shop. This allows you to create your shop using an existing template or to customise it to your own design. You don't have to choose the eBay Shop option straight away - you may decide it's best to wait until your monthly sales build up to a certain level and then upgrade.

With Amazon, you'll automatically create your own storefront regardless of the package you choose. You won't be able to customise it very much but you will be able to add your name and logo and provide some information about your business.

How much does selling on Amazon and eBay cost?

Before you start selling on Amazon and eBay it's a good idea to find out how much you'll have to pay in fees. Depending on the items you sell and the method you choose for selling them, your total fees can be quite substantial. And while some of the fees you pay will be linked to the number of items you sell each month, others are likely to be fixed costs which you incur even if you don't sell anything.

Both eBay and Amazon give you the option of selling as a business seller without paying any fixed monthly fees, although it's usually more cost-effective to choose a subscription-based package unless you're only selling a small number of items each month.

The eBay website has a fee illustrator tool and a fee calculator that will help you compare the fees for different selling methods and get a good idea of how much your actual per-item selling fees are likely to be.

The Amazon website gives detailed fee guidance, including some examples of pricing for their subscription and non-subscription packages.

Managing your listings

Uploading your inventory to eBay or Amazon and managing your listings can be a time consuming task, particularly if you're planning to sell many items.

Both eBay and Amazon offer useful listing tools, some of which are free and others that you'll have to pay for.

Promoting your items

Because there's such a huge number of items for sale on eBay and Amazon at any one time, it's very important that you do everything you can to stand out from the crowd.

Always make sure that your listings include accurate, spell-checked descriptions and that your photos and other images show the items that you're selling in the best possible light.

You might want to take it a step further and use the various marketing tools provided by eBay and Amazon such as search optimisation, cross-promotions and paid-for advertisements.

Your reputation

As an eBay or Amazon seller your online reputation is extremely important. All sellers have a feedback score based on actual customer feedback and this is the main measure that future customers will use to check that you are trustworthy and reliable.

So you'll want to keep your rating as high as possible by providing an excellent level of customer service and fast delivery at reasonable prices. Make sure you always respond promptly to customer queries, deal with returns efficiently and keep an eye on your stock levels to avoid your listings showing an item as being in stock when it has sold out.

Be aware that packing up orders and sending them out can be time consuming, but it's important to stay on top of the job to make sure that the right items get delivered in good time to the right people. Very many parcel delivery services now offer bulk shipping tools that integrate with your eBay or Amazon account and these can greatly simplify the process of arranging and tracking your deliveries.

If you're selling on Amazon you might also consider using the Fulfilment by Amazon service, where you send Amazon your inventory and they do all of the picking, packing and shipping as well as providing customer service.

More information

The eBay and Amazon websites have a great deal of useful guidance to help you get started as a business seller and to expand your business as demand for your products grows. Both also have lively seller community forums where experienced sellers are often happy to answer questions.

Decide which services to offer

As a specialist, it's very important to offer a high quality, friendly and knowledgeable service. This will help to differentiate your shop from its competitors. For example, you might consider taking a course in shoe fitting. Having a qualified fitter will lend your shop extra credibility and might help you to build up a reputation for fitting children's shoes, or helping those with unusual size feet or other special shoe requirements.

You may also be able to gain an advantage by offering extra services. Any service which is not available elsewhere will help to bring in customers. You could consider offering:

• a bespoke made-to-measure service (as an agent for a specialist manufacturer)
• shoe cleaning and repairs (either carried out in-house or subcontracted out to a specialist)
• key cutting and engraving, which are traditionally carried out by heel-bars

Don't forget to advertise the fact that you offer specialist services - either on your website or in your shop window. Make sure any promotional material or adverts carry details too.

Promoting your business

The right image

It's important that your shoe shop projects the right image to customers. Everything about the way your shop looks and feels should be designed to attract new customers and to encourage existing customers to keep coming back regularly.

It's a good idea to make the outside of the shop as attractive and welcoming as possible. Try to make sure that signs are professionally made, clean and in good condition. Use colours, lettering and design that you feel put across the right image - for example a shop specialising in children's shoes should look different to one selling only expensive adult designer shoes. Bear in mind that things like the condition of the paintwork can make the difference between a shop that looks like it's up and coming and one that looks old and run-down. Keep your windows spotlessly clean and well lit.

Make sure that your window displays are attractively laid out and changed regularly. It can be a good idea to use signs in your window or outside your shop to draw attention to new ranges or special offers. You could also consider having an external display rack of shoes to attract passers by, but make sure that shoes don't fall off and look untidy.

Make sure that the inside of your outlet is clean, tidy and that shoes and any accessories you stock are arranged in a neat and orderly way. This will make it easy for customers to find what they are looking for. Look into ways of encouraging customers to buy as much as possible. For example, you could position accessories like handbags alongside matching ranges of shoes. Or you could put a rack of shoe cleaning products on the counter top next to the till and recommend them to customers when they pay for their shoes.

Don't forget that you and any staff you employ play a key role in shaping the image of your business. Customers will expect staff to be friendly, helpful and enthusiastic. You might encourage them to wear shoes of the type sold in the shop. This will let customers see how the shoes look when they're worn, and enable the salesperson to speak from experience about how comfortable and durable the shoes are.

Advertising your shop

It's essential to make sure that as many potential customers as possible know about the products and services you offer.

There are a number of things you can do to promote your business, for example:

• launch your own website, showing all the features that will attract customers to your outlet. Think about selling your footwear ranges online too - this is becoming much more popular with customers
• advertise on Yell.com and other similar online directories. You could also consider advertising in local print directories
• join the Independent Footwear Retailers Association (IFRA) and benefit from a listing in the IFRA online directory
• advertise in your local newspaper
• do a targeted mail-shot or leaflet drop
• sponsor a local event or sports team
• offer special discounts and free goods from time to time - for example a free cleaning product with every pair of shoes purchased. Advertise special offers prominently in your window, and consider using Facebook or Twitter to tell customers about what's new

Almost all types of advertising and promotion have a cost, whether it's financial, your own time and effort - or both. You need to make sure that the beneficial effects of your advertising efforts are worth the time and money spent on them. It's up to you to decide which types of advertising work best for you - sometimes this is down to trial and error.

Price Your Products

How will you decide on your prices?

Some suppliers recommend retail prices for their products. You might decide to stick closely to these, or to just use them as a guideline. If you do decide to price your stock below suggested retail prices it's wise to keep details of your actual selling prices. This will be helpful if HM Revenue and Customs (HMRC) ever makes a formal enquiry into your business affairs. Other suppliers offer no guidance on pricing, leaving it up to the retailer.

Getting the price right is very important. You must make sure that the difference between the cost price and the selling price is enough to cover all of your operating costs, including your own drawings.

Also consider the following points when setting your prices:

• what do your competitors charge for similar items? Don't forget that many customers will shop around for the best prices, so you may have to charge in line with your competitors
• will you aim to compete on price? It can be difficult to undercut the multiple chains and large non-specialist retailers that have massive buying power. Undercutting your competitors can be effective in achieving sales but your business may not be able to survive on slender profit margins
• do you really need to discount? People expect to pay high prices for designer labels and you may be the only shop in the area selling an exclusive brand of footwear

Think about how you'll move stock that isn't selling and what you'll do with items that are out of fashion. You'll probably discount items during seasonal sales, and you may decide to discount some items throughout the year if they're not selling well. Many footwear retailers prefer to offload items - even at low prices and sometimes below the cost price - rather than get stuck with them. Think about what percentage of your stock you're likely to sell at discount prices.

Buy an existing business

You might decide to buy an existing shoe shop rather than start your own venture from scratch. Buying a going concern can mean that:

• the premises, business equipment and shop fittings are already in place
• there are established customers
• the business can generate income immediately
• suppliers have been identified and relationships established with them
• the business has a reputation and a track record which can help if you are looking for finance
• staff are already in place
• there is a business website

However, look critically at any business that you are interested in to make sure that the price you negotiate with the seller is a fair one. Try to establish why the business is for sale - for example, is the owner keen to retire or is there another personal reason for selling up.

Your market research into the sector as a whole and the locality, in particular, will help you to establish whether or not the owner is selling because he or she can no longer generate enough income from the business. This may not necessarily deter you - many business people are confident that they can turn a failing business around. The important thing is to have established the current position so that the price you pay for the business is not too high.

Other matters to consider include:

• the state of the premises, fittings, equipment and so on. Will you have to spend money refurbishing or replacing assets
• the condition of any stock you are buying. Check this over very carefully before agreeing on a price. Bear in mind that footwear fashions can change quickly - make sure you're not paying for last year's fashions that will need to be heavily discounted or may even be unsaleable by the time you take over the business. Make sure too that any stock you buy fits in with the image you want your business to project
• existing staff rights
• how to retain key personnel once you've taken over
• does the business owe money that you will be responsible for
• if you are paying for goodwill, to what extent does this depend on the skills and personality of the seller

Ask your accountant to look critically at the business accounts for the past three years and discuss with him or her the selling price in light of what the accounts reveal. Make sure you budget for other professional fees such as legal fees and valuation and survey costs.