“Growth” is a word used in a variety of business-related contexts. Usually, you’ll see growth used as a positive term—but not all types of business growth are necessarily helpful to a retailer’s bottom line. Growth patterns that prioritize short-term gains over long-term success, for example, are neither healthy nor sustainable.
Many new business owners don’t fully understand how to run and grow a profitable retail business. In fact, only 47% of new retail businesses remain in operation following their first four years, according to the Statistic Brain Research Institute. Knowing how to balance new initiatives with a solid operational structure, and internalizing a few key concepts and principles, will allow you to grow your business strategically over time and help it become one of the ones that succeeds.
You might think that to grow your business, you need to make sure it’s always expanding. That’s not necessarily the case. Depending on your business setup and your personal goals, you might want to focus on maintaining your existing model rather than seek explosive growth.
Understanding the principles of profitable growth, no matter your individual situation, is vital to a successful retail business. Otherwise, you’ll eventually start seeing declining returns over time, as the market landscape shifts and costs rise.
Here, we’ll look at how to grow your business in a healthy way. We’ll start with a high-level overview of the building blocks of profitable growth. Once we define what we mean by growth, as well as a couple of other key concepts, we’ll examine some core principles: leveraging automation and scaling, identifying your company’s core value proposition, and effectively balancing operations and projects. We’ll also dive more deeply into these topics later posts in the series.
How to grow your business: What is ‘growth?’
“Business growth” refers to any pattern of consistent increases in business revenue over time. Simply put, any time your numbers are going up, your retail business is technically experiencing growth. This can happen within a short time frame, in response to a special activity or event, like a marketing campaign or public relations push. It also can occur in a more strategic ongoing way.
Strategic growth from a retail perspective primarily occurs by increasing the number of products being sold, increasing market share, or some combination of the two.
Some examples of long-term tactics used to grow a retail business include:
- Adding a new product or product line
- Offer additional size options for a single product. If you sell face cream, you might add a larger size option for people who want to stock up, or a sample size for customers who want to test the product before purchasing a full-size jar.
- Add a new variation to your existing product line. Instead of selling just red shirts, you might start offering blue shirts in the same style.
- Create a new product that fits within an existing line. If you sell scented beeswax candles, you could add a new scent option.
- Create a new product line to complement an existing one. Start offering quirky pens to go with the quirky notebook you already sell.
- Create a completely 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 as an event venue in the evenings when the shop is closed.
- Increasing market share for existing products
- Run a marketing campaign targeting your competitors’ customers, encouraging them to try your brand
- Optimize your product to fill a gap your competitors’ products currently don’t
- Expand your existing market by reaching into a new demographic
The best way to figure out what option will work best for you is through market and audience research. Look for the preferences or products that fulfill the following criteria:
- Your customers want it
- It currently doesn’t exist within your industry
- It does currently exist in your industry but you can put a unique spin on it