More than 70% of the hardware shops around the world close their door within 2 years because of inefficient planning and financial problems.
But do not get us wrong, the hardware industry has a lot of value and potential. Since it is also easy to enter this market, the competition is always strong
You will need to know all the trade secrets to enjoy the benefits of a sustainable hardware shop.
Here are 10 secrets that you must know to start and maintain your hardware shop.
1. Know Your Niche, Customer & Market
Figure out the trends and the prices of the industry that is now dominating the scene. Try to be in sync with that.
Doing a SWOT analysis will help you find out what your competitors are out to gain. Customizing your shop also helps in attracting customers, use Inkjet Labels to create high-quality labels to make your shop look more premium and authoritative.
These five questions will act as a guide for your research-
1) Considering the market potential, which area would be best for you to start a hardware business, and who are your target customers?
2) What is the number of competitors you are likely to face?
3) What amount of investment you want to make for getting a spot in the market?
4) What are the major lackings of the competitors and how can you use them to your benefit?
5) Does the future look profitable?
2. Select The Perfect Location
While choosing the perfect place, always keep in mind that it should be in a crowded community where hardware is used daily for households and commercial buildings.
You also have to analyze whether or not the community where you are hoping to open up shop has the purchasing power.
Small satellite cities can be a good place to start if you have a small investment.
3. Stay Ahead Of Your Competition
To avoid dealing with competition at the start, first, you need to set up shops, particularly in a newer estate to have fewer competitors in that area.
Another good way to stay ahead of the competition is to build a good relation with competitors and the market.
To achieve this you need to follow certain steps-
1) Offer discounts on heavier hardware components such as cement, steel bars, steel rods, etc.
2) Create a trustworthy relation with the customer and give them some benefits like allowing them to order via phone call, giving them home delivery free of the delivery charge, etc.
3) Try creating a one-stop-shop, where your customers can find all the necessary products in one shop.
4. Find Out The Products That Sell Fast
The most common products that you should always have in your store are cement & white cement, rods, nails, steel bars, roofing nails, door hinges, flooring tile, and plumbing material.
Although cement, rods, and steel bars sell fast they also have a low-profit margin. Start with common items then expand to more expensive ones.
5. Be Dynamic When Marketing
You can not just sit in your shop and wait for customers. Hire a salesman to scout upcoming and nearby construction sites.
Offer discounts on the two most common items which are steel bars and cement. Most of your customers will buy them in bulk. Try offering the best possible price and make money from other products.
There are tons of DIYers out there and using social media like Pinterest and Instagrams marketing tools would be your best way to enter that market.
6. Management Responsibilities
It is possible to run your hardware shop even if you have a separate 9-5 job. For that, you will need trustworthy employees to run your business. But you will need to work extra hard to keep track of your shop’s performance.
You should conduct stock-taking every week to analyze which products sell fast and for safety purposes as well. Weekly stock-taking is bound to reduce any possible theft.
7. Keep Your Store Updated According To Need
While cement and rods are necessary other products can make your shop unique.
In the freezing winter, decorate your shop with attractive, useful, and tools of different types for cleaning snow.
In spring, have all the necessary items for spring cleaning, gardening, and fence painting.
Plan and make sure you bring the products on time to stay ahead of the competition.
8. Offer Rewards To Your Customers
Customers love the word “Free” which is why offering loyalty programs can make your customers loyal as well.
Create a point system or have offers that allow your customers to spend a certain amount of money to receive a free tool. You have to be creative for this.
9. Always Be Technologically Updated
Use the retail point of sale systems to revolutionize the customer experience. This enhances the credibility of your business and makes the customers feel secured.
Use software for better inventory checks. This saves time and resources you can utilize elsewhere.
Have online order and delivery services and always stay updated about retail technology.
10. Realistic Cost Breakdown & Profitability
You can set up your shop if you have an investment of about $100,000. This includes your initial rent, beginning inventory, initial maintenance, interior design, and display set up, initial deposit, and insurance.
Your insurance and rent will vary according to your location. However, do not spend more than 30% of your revenue on the rent and the insurance should not be over 10% of the value of the total business
The inventory will likely cost you around $60,000-$70,000. Your insurance should cover any liabilities of the inventory.
Your operating profit will be around 1.5% to 7% depending on the season, sales, and amount of tools you have in your shop.
Final Thoughts
Consider all these effective tips to start and maintain a sustainable hardware shop and slowly expand your business to rise to the top.
