Retail Layout: A 6-Step Guide to Effectively Design a Store
Overview In the last chapter, we covered why your retail location matters. Now that you’ve…
Sean ThobiasDecember 6, 2023
Welcome to the first chapter of our comprehensive retail business guide. You’re in the right place if you want to transform that fantastic business idea into a thriving retail venture.
Starting a retail business is an exciting journey filled with potential. Still, before you take that leap, there’s a crucial first step you can’t afford to overlook: market research.
Market research is crucial for a retail business’s success. Failing to invest ample time and effort in market research is a leading cause of companies struggling and ultimately failing. It can significantly impact decision-making, differentiating between wise choices that propel your business and poor ones that harm it.
This guide will take you through market research’s pivotal role in your retail business’s success. We’ll present five compelling reasons why it’s vital. We’ll also give you practical tips for effective market research to give you an edge in building a successful retail business.
Let’s get started.
Market research is when a company studies if a new product or service will work by talking to potential customers. This business strategy helps the company determine its main customers and what those customers think about the product or service.
You can conduct market research yourself or hire a third party. These specialists can use surveys and focus groups, among other methods. Usually, the people who help with the research get something in return, like product samples or a small payment for their time.
Market research is a process that involves two main types — primary and secondary research. These two types help gather a wide range of information from various sources, forming the core of market research.
Primary research means getting new information directly from people or sources for a specific reason. We do this using surveys, interviews, observations, or focus groups. Primary research is beneficial to gain insight into creating buyer personas and segmenting your target market.
You can split primary research further into two groups: exploratory and specific. Let’s break down each one:
On the other hand, secondary research means using information already gathered from different sources and is available to the public. It can include data from government censuses, reports from trade associations, poll results, and research from other businesses in the same market. Secondary research is beneficial when you want to study your competition.
Market research is vital for businesses like yours. It’s not just a routine task; it’s a strategic necessity. This strategy is crucial because it forms the foundation for intelligent decisions and seizing profitable opportunities. So, let’s examine why market research matters to business owners like you.
Market research is crucial for your business because it helps you better know your potential customers. Companies that focus on their customers tend to be 60% more profitable, so market research is a crucial step for your success.
By collecting data about your target audience, such as their age, interests, and behavior, you clearly understand who they are. This information is like a treasure map for creating effective marketing strategies and customizing your products to match what they like.
For example, you want to start an online fitness coaching service. Market research reveals that your primary customers are busy professionals aged 30 to 45. They value convenience and want workouts tailored to their needs. With this information, you can create coaching programs that fit these specific preferences, increasing your chances of success.
Market research helps you discover hidden or overlooked opportunities in your industry. For instance, let’s say you’re in the coffee business. Through research, you might find a growing demand for high-quality, sustainably sourced coffee beans in your area. By recognizing this niche, you can specialize in sourcing and selling such beans, setting your coffee shop apart from others in your crowded market.
Competitor analysis is a vital part of crafting successful business strategies. When you conduct market research, you can evaluate what your competitors are good at and where they might fall short. This knowledge can guide positioning your offerings and designing your marketing campaigns.
Plus, it lets you pinpoint areas where your products or services can shine brighter than your rivals. Understanding your competition through market research sets the stage for strategic advantage.
Risk is a significant factor in business, which companies work hard to minimize. One of the most effective ways to do this is by ensuring actual demand for a product before diving in. The truth is, many products don’t make it in the market. In fact, according to some experts, as many as 95% of new products fail.
Given the high stakes, it’s crucial not to rely on mere intuition when creating a product. Instead, invest in comprehensive market research to assess whether a product concept can succeed. Market research helps develop products that meet and exceed customer expectations. Reducing risk and increasing product success go hand in hand.
Market research is a powerful tool that helps companies make intelligent decisions based on facts, not just instincts. Relying solely on gut feelings can lead to risky choices. With market research, you have a reliable compass guiding your every move. It’s like having a GPS for your business strategy, helping you navigate toward winning and keeping your ideal customers.
This valuable research provides concrete insights that make decision-making much more manageable. Whether figuring out how to price your products, planning marketing campaigns, or developing new products, having trustworthy information at your fingertips dramatically lowers the chances of costly blunders. So, think of market research as your trusted ally in the business world, always ready to steer you in the right direction.
Effective market research involves several vital steps to gather valuable insights and make informed business decisions. Here are six essential steps for conducting market research:
The first step is setting clear goals for your business and research. Ask yourself, “What do I want to achieve by doing this market research?” Be specific about the problem or goal you want to tackle. It could be things like figuring out what customers like checking how much demand there is for your product, seeing what your competition is up to, or finding new chances for growth.
Once you’ve figured out what you want to discover in your research, the next step is to plan how to gather the needed information. Previously, we mentioned two main data collection methods: secondary and primary research.
Which one you choose depends on your research goals, budget, and timeline. If you have limited resources and need quick answers, secondary research might be the way. However, if you want specific information not already out there, you’ll need to do primary research.
Once you’ve decided that, you’ll also need to consider how many people you’ll include in your study and who they are. Your sample size should be a good representation of the target audience you’re studying.
For example, if you’re researching a product for young adults, your sample should mainly include young adults. You should also consider things like their demographics (like age and gender) and their buying habits and attitudes if those are relevant to your research. These decisions will help you get the best and most valuable data for your study.
Once you’ve planned your research, it’s time to gather data. In marketing research, you’ll mainly collect quantitative data, which means numbers and facts, instead of descriptive information.
Quantitative research happens mainly online through emails, texts, social media, or websites. If needed, you can also use traditional methods like postal surveys or face-to-face interviews, especially for the older demographic and people without internet or smartphones. Companies can get quantitative data from their contacts, online traffic, or by working with a panel provider who can find the right people for your study.
You can typically use focus groups, interviews, or ethnographic research for qualitative research. However, online qualitative research, like video surveys, is becoming more popular.
When collecting data, ensure it’s fair and doesn’t try to influence the answers. Avoid questions like, “Do you think we should charge more for extra services?” These kinds of questions can sway the responses. Instead, ask open-ended questions (where people can answer freely) and closed-ended ones (like multiple-choice) to get a clear picture.
The next step in market research is analyzing your findings. Today, we use advanced computer software and automated tools for this. You decided which research methods and data analysis to use during the design phase.
First, tidy up and organize your data to prepare it for analysis. Once you have all the necessary information, it’s time to dive into data analysis. Instead of focusing on single data points, look for trends in the data. Avoid trying to find patterns based on your assumptions before collecting the data.
Here are some quantitative techniques you can use to make sense of your findings:
It’s okay if your initial assumptions turned out to be incorrect. We test instead of relying on assumptions when making crucial organizational decisions. Accepting the results is more beneficial than attempting to manipulate the data to fit your preconceived notions.
Now that you’ve researched and crunched the numbers, it’s time to share what you’ve found with stakeholders. This step ensures everyone, even those who weren’t part of the research, can get what you’re saying.
Why is presenting your analysis to stakeholders necessary? Valuable findings often form the basis for effective business decisions. However, incomprehensibly presenting these findings can render them useless. Therefore, it is essential to communicate these findings clearly and effectively to maximize their impact and inform the decision-making process.
Keep your message clear and to the point to ensure it gets across. You can use reports, presentations, or pictures to show your learning. Images can be convenient because they can tell a story that words alone might miss. Think about who you’re talking to. Are they people inside your company, investors, or your team? Tailor your talk to them. And don’t forget to use charts, graphs, and plain talk to make your data easy to grasp. That way, everyone can see the big picture and make better choices for your business.
Once you’ve gathered your market research, it’s time to put it to good use in your business. After all, the reason you did all that research was to make your business better. Now, let’s take some action.
Start by turning your research into practical suggestions. Think of it like getting a roadmap for your business. These suggestions can be about anything, like improving your products, finding better ways to market them, or even redesigning your packaging to make it more appealing.
Take these suggestions and make them part of your business plan. That means integrating them into how you run your business, promote your products, and develop new ones.
Running a business is dynamic, and the market can change fast. You must watch what’s happening in your industry to stay on top. Keep an eye out for trends and shifts in what customers like. When you notice something new, be quick to change your plans. Being adaptable helps you stay competitive and keep up with the market’s changes.
Below are some strategies that you can use in your market research. These strategies, meticulously tailored to the retail landscape, provide the insights needed to navigate this ever-changing terrain successfully. Let’s delve into these strategies individually, ensuring you have a clear roadmap to drive your retail business forward.
Surveys are great tools for retail businesses. They help you gather essential numbers and information from many customers. You can use different types of surveys, like online, in-store surveys, or email surveys. Surveys are perfect for discovering what your customers like, how satisfied they are, and how they like shopping.
Here are other reasons why surveys work best for retail stores:
A focus group is when you gather a small group of people that represents your target audience. You share your ideas and ask them questions about your product, service, or business. This group should include people who already buy from you and those who might buy from you. It’s essential to have this mix of perspectives to get the best feedback.
Focus groups are one of the ideal strategies for getting qualitative data because:
This strategy involves talking directly to one customer at a time. Customer interviews provide valuable insights into your shoppers, helping you make smarter business decisions.
This strategy allows you to:
Observe customers in their natural shopping environment to understand their behaviors, needs, and pain points. This method involves watching and interacting with customers to gain firsthand insights.
This strategy works best for retail businesses because it allows you to:
A valuable market research approach involves deploying undercover researchers as customers to your and your competitors’ stores. This strategy allows a firsthand assessment of store operations and customer experience.
This strategy suits retail business because it allows for:
This first chapter stresses the importance of market research in launching a successful retail business. Market research matters because it helps you understand customers, identify market gaps, assess competitors, minimize risks, and improve decision-making.
In the next chapter, we’ll dive into creating an effective business plan. It will include the elements needed and the different types of business plans for you to use.
Impact Insight Team
Impact Insights Team is a group of professionals comprising individuals with expertise and experience in various aspects of business. Together, we are committed to providing in-depth insights and valuable understanding on a variety of business-related topics & industry trends to help companies achieve their goals.