Taking any business from one stage of growth to another requires knowledge, skills, and mindset. Growing from one to five stores requires a completely different strategy from scaling your retail store counts to double digits. In other words, what got your business to where it is today, won’t get it to the next level. So how do you grow a retail concept from 5 stores to double digits?
To answer that, we caught up with a handful of retail experts and entrepreneurs. We asked them to share insights on the unique challenges that medium-sized businesses face when scaling their retail footprint.
Let’s dive in.
Craft a long-term vision
Vision is always a key driver of success. So when scaling your store count to the double digits, it’s important to have a crystal clear idea of what you want the business to look like in 5, 10, or even 15 years.
This will drive you and your team towards your desired outcomes. In addition, a strong — and shared — vision will keep your organization aligned so everyone is working towards the same goals.
As Scott Maloney, senior partner and founder at Crain & Company explains, many mid-sized businesses grapple with “aligning top-level strategy with an increasing number of units that have some level of independent function.”
To address this, Maloney says businesses should have a clear, long-term plan in place and keep the various components of the company tightly aligned.
“It is a sophisticated challenge to grow an enterprise footprint into double-digit locations and units. Far and away the best piece of advice retailers should heed is to take the time to align growth ambitions to strategic planning to operational triggers,” he says.
Maloney adds that businesses shouldn’t expand simply because it’s convenient or opportunistic to do so. If you’re going to grow, make sure you do it in a way that aligns with your vision.
“Too often companies grow opportunistically — for example, opening a new location because there was a deal on the building. At a larger scale, it is critical to think about expansion programmatically and with a view towards a well-articulated 5+ year plan.”
Having a long-term vision and plan also keeps your short-term moves in check. Scaling in a sustainable way may require you to sacrifice immediate gains. Which is why it’s so important to have a strategy for the next several years.
“My number one advice for retailers who want to grow their locations is to sacrifice short-term financial benefits in favor of long-term growth,” says Jim Donnelly, CEO of Restore Hyper Wellness + Cryotherapy.
“Put every penny you can afford back into the business so that you can recruit the best people, integrate the best systems, and utilize the best technology,” he adds.
Identify and groom leaders in the business
Growing from 1 to 5 stores is more about learning systematizing, delegating, and managing teams. Scaling your retail operations even further requires you to start thinking about leadership.
“For a business with 4-5 stores, the store managers usually report to and interact with the owner or partners,” explains David Adams of SirusDigital. When a retailer expands to 8 or more locations, the business grows “beyond the capability of the owner to directly manage each store’s leader.”
Adams continues, “At that point, the owner must delegate supervisory responsibility to their reports and further separate the vision from the day-to-day operations. In order to address this challenge, owners need to identify and groom individuals who will become that supervisory manager long before their growth necessitates it.”
Doing that can mean different things, depending on your business.
According to Adams, finding and grooming leaders could mean identifying “an especially skilled unit manager early who can be developed into the supervisory role.” In some cases, it could entail training a senior manager to oversee even more locations.
“Ultimately,” he says, “there needs to be a plan for this type of structural organizational change and it needs to be considered while still in the mid-sized business phase.”
If you’re thinking of further expanding your business, recognize the fact that you can’t do it alone. Look to your staff members, identify those with potential, and start grooming them for growth.
Ensure that your software can handle your growth
Before growing to a double-digit store count, review your existing business software and tools. Ensure the tools have the features and capabilities you need to efficiently manage your operations.
“My number one piece of advice for retailers who want to grow their locations to the double digits is to ensure your software systems are future-proof,” remarks Shannon Vissers, a retail analyst at Merchant Maverick.
“Most business software claims it can scale up. But, a lot of programs aren’t really made to support very large businesses and can become glitchy when implemented on a large scale.”
To that end, evaluate your current solutions. What tiers or subscription level is your business currently on? Can your solution provider support more stores, users, products, and customers? If so, how much will it cost?
These are some of the general questions you should be asking when revising your current solutions.
As for the types of software that you should look into, we recommend thoroughly evaluating your:
Inventory management system
Managing inventory for 1 to 5 locations is vastly different from doing it for 10, 20, or 50+ stores.
As Bryce Bowman founder at People First Planning puts it, “Retailers with fewer than five locations can manage inventory levels with very little structure. They frequently utilize one store as a warehouse, with employees helping to relocate inventory between stores as needed.”
But as the business grows, Bowman says that stock management becomes a lot more complex.
“When a retailer approaches 10 locations, they typically need a dedicated warehouse with personnel focused on fulfilling stock at each location. At this point, they should also invest in an inventory management solution that incorporates a warehouse management system. This provides the business owner with comprehensive views of stock levels at each store and the warehouse.”
If you’re planning to expand, your inventory management solution shouldn’t be an afterthought, adds Bowman.
“It’s much preferable to anticipate these needs and make these investments in advance of expansion. Often retailers are caught off guard with the complexity of a large number of locations. They suffer through inventory shortages before making these critical investments.”
More stores means more employees, which can make communication more complex. For instance, some employees or store branches may start coordinating in a way that’s not fully aligned with HQ. In some cases, team members from one store may use communication platforms that are different from the tools used in another.
These situations make it all too easy for miscommunication to arise. Information might slip through cracks and people may find it difficult to coordinate and keep other team members in the loop. It also means communication may be passing through channels that are less than secure.
For this reason, you need to invest in a solid internal communications platform for your business. If you have one to five stores, you may be able to get away with using disparate communication tools (e.g., email, chat, SMS, etc). But this setup won’t work when the number of your stores grows to 10, 20, 50, and above.
At the enterprise level, you and your teams should stick to a central communications hub. Announcements, documents, and other messages should be sent using one platform, to make it easy for the team members to touch base with each other.
Bindy’s platform offers secure chat, document sharing, and notifications. Aside from keeping your communication safe from those outside your organization, Bindy allows you to set internal security settings. This way as you grow, you can choose which teams have access to information.
A central comms platform also streamlines how information is accessed. If a manager needs to find specific documents, they shouldn’t have to dig through their inbox to do so. Your comms platform must make it easy for them to retrieve the info they need. As an example, Bindy offers SSO to minimize risk from poor password habits and streamline application access.
Your customers’ retail journeys may get more complex as you grow. For instance, you may start implementing services like buy online, pickup in-store. Or, you may decide to accept returns in all your stores, no matter where the items were purchased.
In such cases, customers will have multiple touchpoints with different stores and channels. You and your team must be able to keep up.
To that end, equip your business with a customer relationship management system that enables you to track each customer’s journey from one place. Contact details, demographics, and purchase histories should be easily accessible. This is so that associates from any store can assist shoppers in the best way possible.
Retail audit solution
Maintaining a consistent shopping experience becomes more difficult as you grow. That’s why you need to regularly inspect and audit your locations and ensure that they’re performing up to your brand standards.
To do that, you need a robust retail audit solution that makes it simple to schedule and conduct inspections. And once audits are completed, you must be able to assign tasks as well as track their status and progress. This way, you can ensure issues are resolved before they become liabilities.
Be selective with your store locations
Another challenge that growing retailers face is finding locations to expand to, says Meaghan Brophy, a retail and ecommerce analyst at FitSmallBusiness.
“As with any store, you will want locations with great street or foot traffic visibility. However, mid-size retailers also have the challenges of finding a location where there is consumer demand and brand familiarity, but also is far enough away from existing locations.”
Brophy’s advice? Take your time with understanding the lay of the land. Do your research, run tests, and study the market to figure out the best places for your stores.
“I would recommend taking your time with finding new locations by conducting thorough focus groups. If you also sell online, you can start running ads targeted towards shoppers in the neighborhoods you want to break into.”
Ready to scale your retail business?
Growing your business isn’t just about adding more locations — it’s about upgrading your existing systems, technologies, and ways of thinking. When you can keep your vision and strategy aligned with the many moving parts of your business, you’ll not only achieve growth, but you’ll gain long-term, sustainable retail success.
About the author:
Francesca Nicasio is retail expert, B2B content strategist, and LinkedIn TopVoice. She writes about trends, tips, and best practices that enable retailers to increase sales and serve customers better. She’s also the author of Retail Survival of the Fittest, a free eBook to help retailers future-proof their stores.