What are the Factors that need to be considered in Starting a Retail Business


The following are some of the factors to consider when starting a retail business:-

(i) The Location will depend on nearness to the market i.e., to the likely customers for the type of goods the retailer intends to sell and also on the availability and rent of suitable premises in that area. Some retailers prefer to take advantage of a locality where other similar retail shops already exist while others prefer to set up shop in a locality where there is a need for such a shop.

The location will again depend upon the type of organisation, e.g. a large departmental store should be situated in central locality.


(ii) The type and size of organisation is another important factor. The following chart gives the various types of retailers.

(iii) Capital is the first factor to be considered in starting retail or any other business. How much capital is required will again depend on many other factors such as the size of the business, the type of interior and exterior decoration required, whether the retailer can get his supplies on credit or cash basis, whether other retailers in the neighbourhood sell to customers on credit or cash basis and whether the shop is to be situated in a rich, medium class or poor locality.

(iv) The retailer will have to find of build suitable premises in the locality h has selected. The rent of the premises should not be too high as it will take away a large portion of the profits.

The premises will again depend on the type of organization e.g. a department store will need large premises with a number of floors while single shop will only require an area covered by one or two rooms on the ground floor. In retail business window dressing is very important for attracting customers and the facilities available on the -premises for such display will also be a guiding factor.

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