What does your store sell that differentiates it from competitors? Creating a profitable niche business starts with identifying a product or service that enhances a customer’s lifestyle or solves a problem. It requires more than following the latest trend or stocking up on hot-selling products. What you sell must appeal to the shoppers in your market. Whereas some product categories can be bestsellers online or in some regions of the country, it may not make sense to stock them for your customers. Before investing time and money into developing a plan, it’s best to ask a few questions to determine how easy or difficult it will be to reach the people you need to buy what you’re going to sell.
- Who is the ideal customer for the product?
- Can I gain access to the customer without spending a lot of money?
- Is there a demand for the merchandise—is it an underserved or neglected market?
- What are the margins—is there a high potential to make a profit?
However, the business can’t be successful if only a few people are interested in buying what you plan to sell in the long term. The potential market must be large enough to justify the investment and have the potential to grow continually.
Why a Niche is a Good Idea
While some owners prefer to focus on selling merchandise, typically found in home improvement stores, a well-executed niche is an opportunity to expand into new territory. It can benefit your company on multiple levels, increasing profitability and keeping your business relevant.
- Differentiate your business from competitors
- Elevate your store’s brand within the community
- Build a loyal customer base eager to purchase the products
- Generate traffic and increase ticket size
Tips to get started
Start by identifying an available product or service you know something about and would feel comfortable selling, then break it down into subcategories. Secondly, consider how the product could solve a problem the target audience is experiencing. Thirdly, do your research and find out what products customers like that may not be readily available or would make life more pleasant.
For example, you may consider selling hard-to-find decorative hardware and unusual fixtures if you have a store in a community with older, historic homes. Perhaps you are in a community filled with pet owners, and the nearest pet store is miles away. It might make sense to sell brands of cat food and toys that aren’t sold at the local grocer’s. The margins for cat and dog food are typically fifty percent—toys and bones are even heftier at 70 percent margins.
It’s essential to do your research in advance. In reality, most independent retailers are near big box stores, which can be stiff competition in price. However, independents can diversify their product assortments locally and reverse course quickly if something needs to be fixed. Checking out competitors can help you build niches centered around specialized varieties consumers want to purchase at a premium price.
Develop a business plan
Every business needs a roadmap to follow. Since a niche is a store within a store, it requires a defined path to be successful. Use what you’ve learned about the target customers to establish a pricing model and methods to communicate with them about the new assortments offered. Go all out to market the business and reach the people most likely to buy. Social media, email, and videos posted on your website can be inexpensive ways to connect.
Consider the plan a modified version of the business plan currently in place to operate the business since it will share the same resources. Specific niches, such as grilling, may require the services of a staff member who has in-depth knowledge of the features and benefits of the various merchandise. If spices and sauces are also sold, they should be familiar with flavors and techniques used during manufacturing to be more relatable to shoppers.
Customers value authenticity and products they feel are distinctive. Niches help keep inventory fresh and enable businesses to tap into trends that are meaningful to customers. Selling eco-friendly products, premium pet foods, energy-saving merchandise, and outdoor living assortments result from customers’ demand for products that reflect their lifestyles. It’s up to retailers to listen and respond accordingly.