Retailiatory Strike

Don't let the big boxes win without a fight. There's plenty of room for start-ups to make their mark in retail.

In a world dominated by big-box retailers, it's easy to feel like David battling Goliath if you want to start an independent retail business. "Why bother?" you think. "I'll only get crushed." But your small size could save your business these days. "[Many big boxes] aren't as invincible as they once seemed. They've gotten so big and bloated," says Bob Phibbs, a Long Beach, California, small-business retail consultant and author of You Can Compete! The Retail Doctor's Tools to Doubling Your Sales. Another plus: Consumer spending and retail have remained strong through the economic ups and downs. Retail sales in 2001 totaled about $3.5 trillion, according to the U.S. Census Bureau, which compiles retail statistics.

Shopping today is about time and convenience, says Tom Buxton, president and CEO of The Buxton Company, a retail market research firm in Fort Worth, Texas, that represents more than 500 clients, including FedEx, Kinko's and Pier 1 Imports. "Successful retailers are focusing on lifestyles," he says.

Look around, and you'll see retail being integrated everywhere, from hospitals and revitalized downtown districts to new malls and trendy urban mixed-use centers that provide a sense of community by combining retail shops with residential and office space in compact acreage. There are already more than 400 mixed-use developments around the country, and the number of these projects on more than 15 acres that were under construction or completed increased 37 percent last year, according to New Urban News, a publication that covers planning and development trends.

The costs of establishing a permanent retail location, however, can be steep. You may spend up to $100,000 or more, with leases spanning from three to 10 years. Carts, kiosks and temporary space can be an easier way to get a foot in the door with a lot less risk. The upfront investment for a kiosk or a cart can range from $2,000 to $10,000, according to Patricia Norins, publisher of Specialty Retail Report, a quarterly trade publication for specialty retailers. Today, carts and kiosks are a $10 billion industry.

Flexibility is another advantage. License agreements for carts and kiosks are shorter and are usually renewed every month up 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, they can shift to a new product line or close up shop and move to a new location," Norins says.

Here are a few entrepreneurs who used a single kiosk location as their launching pad into permanent space--and growing retail success.

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Chris Penttila is a Washington, DC-based freelance journalist who covers workplace issues on her blog, Workplacediva.blogspot.com.

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This article was originally published in the December 2002 print edition of Entrepreneur with the headline: Retailiatory Strike.

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