Retail spending has remained strong through the economic ups and downs and is expected to increase over the next five years. However, while the costs of establishing a permanent retail location can be steep, you may spend up to $275,000 or more, with leases spanning three to 10 years. Alternatively, mall carts, kiosks and temporary spaces can be an easier way to get your foot in the door with a lot less risk. The upfront investment for a kiosk or a cart ranges from $2,000 to $25,000, depending on your preference.

TYPICAL MALL CART SETUP

Today, carts and kiosks are a $10 billion industry and flexibility is an advantage to staying small. License agreements for carts and kiosks are shorter and are usually renewed every quarter to one year depending on the location. This arrangement makes it easy for entrepreneurs to "come in, try it out for a month, and if their product isn't working, shift to a new product line or close up shop and move to a new location.


These temporary locations can also work well for seasonal businesses that only need to be open for a limited time per year. For example, a specialty candy shop may open just before Christmas, remain open through Valentine's Day, Easter and Mother's Day, then close for the remainder of the year. The most popular site for a temporary operation is a busy mall, but many operators are also finding success in airports and other transportation facilities, at sporting events, and at other creative venues limited only by their imagination and ability to strike a deal with the property manager.


"The least expensive option is to rent [a cart] for a short time and see how it goes because rent cost can range from $600-$1800 per week. However, whether you choose to lease or buy a cart depends on your product and location. In malls, you generally lease a cart from mall management. The cost of leasing depends on the season and mall traffic volume but is usually at least $800 per month for space and a cart, and can get very high in a good location. Some malls charge a percentage of your sales in addition to monthly rent, about (15%).


"Kiosks start higher than carts, usually $10,000 + and additional start-up costs depend on your merchandise. Items such as jewellery and crystal require a greater investment than, say, hot dogs. You can get a good deal on used carts, but use caution, "People buy a cart they think is cute only to find out they've purchased someone else's headache," which ends up costing more to modify than it does to buy a new cart". In cart sales, location is everything. however, here's your first decision: Do you want a permanent or temporary location that allows you to move from event to event?


With a permanent mall location, you don't have to worry about purchasing a cart, moving it or battling bad weather (unless it's an outdoor mall). You can build a clientele and predict how business will go and how much product you'll need. On the downside, rent may rise. If mall sales slump, you'll suffer.


Focusing on Your Target Audience

Choosing a location really comes down to one key element: "It starts with identifying who your target customer is. You want to locate close to where those customers are".


Once you've found your target customers, "visit those areas and see what the traffic pattern is." In addition, you need to check with the property managers of your target location regarding such issues as product approval and display issues, security, operating costs, cash flow, staffing and lease length. (For a mall, you'll want to speak with mall management in charge of carts and kiosks. For a public place, contact the city or county to see if a cart is allowed and what permits are required.


List of questions you'll need to consider:


What type of storage is available? While kiosks have some storage space, tenants can buy more at an additional charge. Do you plan on leasing during the holidays? Rent goes up considerably during that time (November-December).

How long a lease do you want to sign? Malls offer agreements that last anywhere from a month to a year. After you've balanced out cost issues and decided on lease term, then it's time to set a move-in date. "[Location] is always based on availability".


You'll also need to obtain a Vendors Permit (PST) and a GST Number and you will have to have proof that you have purchase $2,000,000.00 of liability insurance.


While considering all these issues, one of the smartest things you can do is trust your instincts. "Go with your gut,", "If you have a good feeling about a location, it's probably going to be a pretty good place for you to start."


Make No Mistake


Beginning retailers make a lot of mistakes. Here are five of the biggest:


Not doing a reality check. Do you have the temperament it takes to succeed in retail? "One of the biggest mistakes people make is thinking that retailing is going to be one way, and their experience turns out to be very different," and "They're not realistic about the challenges." Retail is a lifestyle choice. Can you hack it? It is recommended that you work part time in retail environment for a few months to find out before you start your business.


Failing to research. Surprisingly, many beginning retailers don't develop a business plan or a marketing plan. However, when prospective vendors come to us and say 'This is the research we've done, this is why we feel this product will sell and why we'll be successful in this location,' it gives us a greater comfort level [in talking further].


Creating clutter. In retail, you're branding from day one. If your product displays have no rhyme or reason, customers have no reason to stop and shop. "The biggest mistake a cart or kiosk retailer can make is not putting [out] enough merchandise". Something that's well-displayed and colorful, and catches your customers eye.


Competing with big-box retailers. Face it, as an independent retailer you'll never beat WalMart on price. But a lot of small retailers fall into the price trap of trying to compete with the big boys, a big mistake! Instead, focus on your edge as a small retailer: customer service and a unique consumer experience.


Choosing the wrong location. The rental rate may be great, but if the location doesn't draw people, you might be in trouble even if your product is good. Where are shoppers seeking your type of product going? What types of big-box retailers complement your product and will drive traffic your way? One no-cost way to find out is by sitting in a mall and watching the traffic flow. "If you decide you want upscale people, look at where they're already shopping and how you'd get that market".


Rules and Regulations:


With shopping center leases, you're customarily charged for maintenance of common areas and for the mall's marketing efforts. Find out what the mall's plans are for any structural alterations or remodelling, resurfacing the parking lots, or replacing the roof. These can be devastating assessments for a young business.

Still Interested in a Mall Cart or Kiosk?


If you are a qualified individual who can represent a high quality product, please apply to Swisa Beauty Canada Inc via email at: info@swisabeauty.ca or call us at: 1 905.829.0119