How To Start a Clothing Boutique: The 2022 Playbook

Posted 14 June 2022 in Uncategorized by wholawholesale

Have you been dreaming about starting your own clothing boutique? Now is a great time to start taking action.

According to the latest RESEARCH BY IBISWORLD, the clothing retail industry in Australia is well on the way to recovery after the pandemic. Now that brick-and-mortar stores have reopened, industry revenue is expected to rise by 0.7% in 2021-22. Despite the possibility of further lockdowns and other restrictions, clothing retailers look forward to a period of growth thanks to an increase in consumers’ disposable income.

That said, clothing boutique owners face plenty of challenges, from competing against big retailers to adapting to the increased demand for online shopping. Launching your own clothing business can be extremely rewarding – and with a lot of planning and careful execution, 2022 could be the year you finally make your dream happen.

To help you get your thoughts and ideas in order, we’ve created an 11-step guide to opening a clothing boutique in Australia. We cover everything from differentiating your business from the competition to sourcing fast-selling fashion products, attracting customers and pricing for profit. Let’s get right into it!

Whola is a wholesale marketplace that makes it easy for fashion boutique owners to buy hot-selling inventory in just a few clicks. Shop the newest styles from our 100+ unique Australian brands. SIGN UP NOW.

SHOULD YOUR CLOTHING STORE BE ONLINE OR OFFLINE?

Before you start planning your clothing business, you need to make an important decision. Do you want to sell clothes online or offline?

It’s impossible to say whether opening a brick-and-mortar boutique is better than launching an ecommerce store: each has its own advantages and disadvantages. Which one works better for you will depend on factors like your lifestyle, your startup budget and your goals as an entrepreneur.

For example, an online store is less expensive to launch than an offline one. It offers a lot of flexibility, allowing you to work from anywhere. Not being tied to a physical location also means that you can expand your scope and reach more customers by offering international shipping. In addition, an ecommerce store lets you easily collect customer data so you can run retargeting campaigns to boost sales.

On the other hand, an offline store has the advantage of a physical space that acts as your primary marketing asset and draws customers in from the street. It allows you to build a loyal customer base by providing a personalised in-store shopping experience. And, you’re also likely to experience lower product return rates than you would with an online store where customers don’t have the ability to try things on.

You should also consider what we learned during the past year. If you open a brick-and-mortar store, you may need to shut down during further lockdowns and discount products to clear out stock once you can reopen. Ecommerce stores are more resilient: in fact, boutiques that pivoted during the pandemic and started offering products online had an easier time maintaining their revenue due to the rise in online shopping.

Read more in our guide to ONLINE VS OFFLINE CLOTHING STORES.

11 STEPS TO STARTING A CLOTHING BOUTIQUE AND SETTING YOURSELF UP FOR SUCCESS

1. CHOOSE YOUR NICHE

Any successful fashion entrepreneur will tell you that there’s no point in starting a generic clothing store. Instead, you need to find something to specialise in: something that you have a realistic chance of becoming the best at.

And the only way to do that is by identifying a market niche that’s popular but also specific enough to only appeal to a select group of people instead of the masses. This will allow you to target customers who have particular needs and are looking for just the right store to fulfil those needs. Furthermore, it will allow you to reduce the number of competitors you’re up against.

There are hundreds of trending clothing niches to choose from that can be profitable options for a new clothing business. You can carve out a niche based on demographics such as age or gender; clothing size; fashion sense; lifestyle and hobbies; or ethics and values. Sustainable garments, plus-size clothing and handmade jewellery are all good examples of trending niches.

But how do you know if the market niche you have your eye on will actually work? Ask yourself the following questions and, if the answer is yes, you’ve found your niche:

Are you passionate about it?
Is there a demand for it?
Does it solve a problem?
Can you do it better than your competitors?
Have you tested it?

To learn how to answer each of these questions in detail, check out our guide to FINDING A NICHE FOR YOUR CLOTHING STORE.

2. IDENTIFY YOUR TAM, SAM AND SOM

Despite how they sound, TAM, SAM and SOM aren’t little hobbits that are going to accompany you on your journey to becoming a fashion entrepreneur. They’re acronyms for three metrics used in marketing to describe the market you operate in.

TAM, SAM and SOM each represent a different subset of the market in terms of the potential annual revenue that you could earn from them. They’re used to help you gauge the size of the market and set realistic revenue goals for your business.

Here’s what the acronyms mean:

TAM or Total Available Market represents the total market demand for a product. It’s the market you could capture (i.e. the maximum annual revenue you could generate) if you had, for example, the only women’s boho clothing boutique in the world with no competition.
SAM or Serviceable Available Market is a subset of your TAM based on factors like geography, pricing or business model. It’s the market for the products you sell that’s realistically within your reach. Sticking to our example from above, your TAM is the demand for women’s boho clothing in your area that you could capture if you owned the only such boutique in town.
SOM or Serviceable Obtainable Market is a subset of your SAM that you can realistically capture considering your limitations like resources and competition.

There are two different ways to calculate your TAM, SAM and SOM: bottom up or top down. There’s an easy-to-follow breakdown of the process HERE.

Having a clear picture of your TAM, SAM and SOM is vital because it allows you to set realistic expectations and define a roadmap for your business. It helps you figure out your positioning and gives you an idea of whether you’ll be able to grow your business in the future.

Furthermore, TAM, SAM and SOM are great metrics to incorporate into your pitch when seeking funding for your venture, as they help investors assess your business’s upside potential. But more on that later.

3. FIND YOUR DEFENSIBLE COMPETITIVE ADVANTAGE

Once you know the slice of the market that you’ll be addressing and capturing with your fashion store, you need to find what’s called your “competitive moat”.

Also referred to as a defensible competitive advantage, your competitive moat is what sets you apart. It’s something that your competitors don’t have or can’t easily replicate. It’s something that’s truly, truly unique to you.

For example, your competitive moat can’t just be “we carry the best brands” or “our customer service is impeccable”. These are things that your competitors could easily claim about themselves, too. It needs to be something that differentiates you completely and is “defensible” in the long run.

For instance, your competitive moat could be your brand, which inspires trust and loyalty among your customers. Or, it could be your social media strategy, which requires your personal touch, experience and skills.

Knowing what your defensible competitive advantage is and focusing on it will help you outrun your competition and build the clothing business you’ve always dreamed of having.

4. WRITE A BUSINESS PLAN

This is a step that you don’t want to skip, no matter what. You might feel like you’ve got it all figured out in your head and you don’t need to write a business plan. But trust us, everyone who’s ever said that has regretted it a few months into launching their business.

Having a retail business plan is essential because:

It helps you figure out whether your business idea is viable.
It acts as a strategic tool to help you succeed (know your competition, establish milestones, understand your customers, forecast your costs and revenue, etc).
It can help you convince investors of your business’s viability and secure funding.

Your business plan should contain a description of your company; your mission and vision; your business objectives; a description of your management team; a market analysis; a marketing, operational and financial plan; among other things.

It’s critical to have a business plan so all the actions you take can work towards the goals you set in it. This way, it’ll be easier to stay on track and not get distracted by things that you think are important but aren’t actually helping your business.

Naturally, your business model – or how your clothing store will generate profit – should be at the heart of your business plan. Your business model describes your store’s position in the fashion retail value chain as well as how you organise your relationships with suppliers and customers. We’ll talk more about it in step 7 where we discuss how to build a product sourcing strategy.

In addition, you need to give a lot of attention to your marketing plan, as this will determine how you drive traffic to your store – whether it’s foot traffic to a physical boutique or visitors to an online store. Similarly, your financial plan should be well-thought-out and detailed as this will help you understand how much you need to sell each month and how to price your products.

5. SET UP A LEGAL BUSINESS ENTITY

As with any business venture, opening a clothing store requires registering a legal business entity.

Here are the steps to take (Disclaimer: The below is for informational purposes only and is not meant to provide tax or legal advice. Please consult your tax and legal advisors before making any decisions):

Choose a business structure. In Australia, you can pick from four different structures: Sole trader, Company, Partnership and Trust. Keep in mind that as your business grows, your taxes may be lower as a Company than as a Sole Trader.
Apply for an ABN (Australian Business Number). This is an 11-digit number that the government will use to identify your business. Note that in Australia, online businesses must register for an ABN, too.
Choose a business name. Make sure you think this through and pick a name that you’ll stick with. Use the same name for your website URL, social media handles, logos and other marketing materials. Consistency is really important as it will help your customers recognise your brand.
Register for the right taxes. To avoid any legal trouble, you need to make sure your business is registered for the taxes you need to pay. For example, you should consider registering for GST (Goods and Services Tax) as this allows you to claim the GST on all the purchases you make.

If you’d like more information, check out the Australian government’s GUIDE TO STARTING A BUSINESS and have a look at their STARTING A BUSINESS CHECKLIST.

6. ASSESS YOUR STARTUP COSTS AND DRAW UP A BUDGET

This is the part that many first-time entrepreneurs dread the most. It’s when you need to ask yourself: How much is all this going to cost me, and how am I going to pay for it?

Your startup costs will be very different depending on the type of business you’re starting. While starting an online store is relatively cheap, it’s likely that you’ll need to invest tens of thousands of dollars to open a physical boutique. You can find cost estimates in our COMPARISON OF ONLINE VS OFFLINE CLOTHING STORES.

When creating a budget, remember to include:

Shipping. Our top tips? Negotiate a contract with a reliable provider like Startrack, Australia Post or Direct Freight. Don’t use Sendle or aggregator sites – they’re cheaper but they take too long to deliver packages and your customer satisfaction will suffer.
Marketing. This is an expense that first-time store owners often forget to budget for. A rule of thumb for online stores: whatever you’d spend on rent for a physical store, spend that on marketing. Our MARKETING COURSE has lots of practical information on how to budget for marketing expenses.

If you don’t have the funds or don’t want to empty your savings account to start a business, you may want to consider applying for financing. Unfortunately, government grants are extremely hard to get. Here are some alternative financing options to explore:

SHEEO: An organisation that supports ventures led by women and non-binary people.
CLEARCO: A company that provides funding for fast-growing ecommerce brands in Australia.
PROSPA: A company that provides small business loans of up to $300K.

However, if you don’t want to raise funds, you just need a little push to help you get started, Whola can help. Our Buy Now Pay Later feature is now live, offering Whola customers the ability to inject new styles today and defer payment for 30 days.

Whola is the only fashion wholesaler in Australia that offers this service. Using BNPL, you can expand your range, attract a new clientele with new product categories, or just smooth out your cashflow for less stress in running your business. APPLY HERE.

7. BUILD A PRODUCT SOURCING STRATEGY

Another major decision that you need to make is how you’re going to SOURCE PRODUCTS FOR YOUR CLOTHING STORE. This will determine your business model, which needs to be at the centre of your business plan.

There are several product sourcing methods to choose from, and fashion store owners often use more than one:

Using a fashion wholesale marketplace like Whola.
Sourcing products from individual wholesalers.
Working directly with fashion labels.
Working with agents or sales reps.
Signing up for targeted emails or lookbooks.
Finding new labels and products at trade shows.
Discovering brands and products on social media.
Going directly to manufacturers in China.
Dropshipping.

However, not all of these product sourcing methods are equally effective. Some have clear advantages over others.

For instance, nowadays, dropshipping is a common business model for online clothing stores. It sounds very appealing because it doesn’t require store owners to have any stock: when an order comes in, the store just passes it on to a third-party supplier who ships the order straight to the customer.

However, you should be aware of the drawbacks of dropshipping. You may be tempted to go this route because of the lower risk and lower costs, but consider that:

The best AUSTRALIAN CLOTHING BRANDS don’t do dropshipping – they don’t need to – so you won’t be able to offer in-demand labels that your customers really want.
A lot of dropshippers work with offshore suppliers and more often than not their stock is not on trend for Australia.
Having to rely on someone else to fulfil orders and handle returns prevents you from providing a good customer experience.
Handling returns of faulty items can be complicated and expensive.

As a result, you’re probably better off carrying your own inventory and BUYING WHOLESALE CLOTHING FOR RESALE from reputable CLOTHING WHOLESALERS like Whola.

Whola is an online B2B fashion marketplace where you can shop 100+ unique Australian brands whenever, wherever you want. Our labels have no minimum order and can be purchased in small packs from 3 units.

Thanks to this, you can buy into new styles without the headaches of dropshipping or having to indent (the old school way of fashion buying 6 months before the season). This is especially important when you’re first starting out and still getting to know your customers’ tastes. SIGN UP TO WHOLA NOW and start stocking your store with fast-selling styles.

8. BUILD AN ONLINE STORE

Since the pandemic, more people shop online than ever before. So even if you’re thinking of opening a physical store, you may want to consider building an ecommerce boutique and offering your products online, too.

If you don’t want to spend thousands of dollars on web design, you can build an ecommerce website yourself with a simple online store builder. These tools have hundreds of beginner-friendly templates, so you don’t need any experience in web development to use them.

There are lots of different store builders to choose from, but based on ease-of-use, we’d recommend:

SHOPIFY: Shopify is arguably the most well-known online store builder, with over 1,700,000 businesses using it worldwide. It doesn’t have a steep learning curve and offers fantastic tools for beginners who have never built an online store before. Shopify allows you to optimise your website for mobile shopping (which is increasingly important!) and has hundreds of free and paid themes (store layouts) to choose from.
BIGCOMMERCE: BigCommerce offers equally diverse features and is just as easy to use as Shopify. It also has a great library of themes that fit many different types of stores and niches. It’s a great alternative if you’re not a fan of the Shopify interface.
WIX: Wix can be used to build any kind of website, not just ecommerce stores. It’s extremely versatile and offers lots of different templates to choose from. Wix has a drag-and-drop tool that makes it super easy to customise your store.

Once you’ve chosen a store builder, you’ll need to:

Choose a web hosting provider.
Pick a unique domain name (this should contain your business/brand name for consistency).
Choose a store layout or theme.
Add pages like the Homepage, About, FAQ, Contact, Policies (returns, shipping, etc) and product pages (with images and product descriptions).
Choose a payment provider and connect it to your online store.

Going into detail about each of these is out of the scope of this article. If you want to know more, Shopify has an easy-to-follow guide on HOW TO BUILD A WEBSITE.

And, if you’re looking for inspiration, check out the beautiful online stores of these Whola partners:

9. COME UP WITH A PRICING STRATEGY TO MAXIMISE PROFITS

Another crucial pillar of your business plan is your pricing strategy. This will determine how much money you’ll make.

Here’s how to build an effective pricing strategy in a nutshell:

Figure out who your ideal customer is. The best way to do this is by doing some market research and CREATING A CUSTOMER AVATAR FOR YOUR FASHION STORE.
Put yourself in your customer avatar’s shoes and imagine how much they’d be willing to pay for a particular clothing item.
Work backwards from there, deducting your retail margin to calculate how much you should be paying at wholesale. Only purchase from wholesalers who sell the items you need at or below that price.
Don’t short-change yourself. When you’re just starting out, it’s tempting to price below RRP (Recommended Retail Price) to try and get a competitive edge. However, it’s not a sustainable strategy. RRP is set to allow retailers sufficient margin to grow their business (including expenses like marketing, rent and staff). If you price below it, you won’t make enough to sustain your business in the long run.

10. CREATE A MARKETING PLAN

Marketing is a huge part of your retail strategy – and how you do it depends on whether you run an online or offline store. While brick-and-mortar boutiques have a window display and curbside signs to entice customers to walk in, online stores need to invest in online marketing to attract people to their websites.

Here are some quick tips to get you started:

Add your store to Google My Business. This way, customers can discover your store in Google Maps and Search, as well as leave ratings and reviews. In fact, you should ask satisfied customers to write a review for you on Google – social proof helps to establish trust and get new customers.
Don’t underestimate the power of SEO. If you run an online store, a great way to drive organic (free) traffic to your website is by focusing on SEO (Search Engine Optimisation). Make sure you fill your website pages – especially your homepage and your product pages – with relevant keywords that your ideal customers type into search engines. SEO is an art of its own: read this DETAILED GUIDE BY CRAZY EGG to know more.
Test the waters on social media. A great way to gauge what type of content your customers find engaging is to share “inspo” images on your social media even before launching your store. Once you’re in business, don’t just post images: experiment with different content types, using new features like Reels on Instagram. This will help you take advantage of the algorithm and get your content in front of more people.
Build a personal brand. People like to interact with people – not companies. Building a personal brand on social media can help you engage your followers by being more relatable, approachable and credible – in other words, more human. If you don’t mind putting yourself out there, building a personal brand can be a great way to boost your social media following and drive traffic to your online store.
Work with influencers. In the age of social media, influencer marketing can be a hugely profitable strategy for clothing stores. It’s a good idea to start by hiring nano or micro-influencers (1,000–10,000 and 10,000–50,000 followers respectively) with high engagement rates whose authentic recommendations are trusted by their followers.

That’s just the beginning. Our MARKETING COURSE has lots of actionable advice on how to get started and achieve big wins with online marketing – we recommend you check it out!

11. FIND YOUR TRIBE

Last but not least, it’s absolutely essential to find a community or a support network you can rely on.

The entrepreneur’s journey, however exciting, can get lonely at times. There’s nothing like connecting with a group of like-minded individuals to boost your mood and reignite your passion.

For example, if you’re a solo female founder, seeking the company of other women in business will help you in countless ways. You can share your experiences and exchange best practices; support each other in solving specific business problems; even strike up mutually beneficial partnerships.

Two of our favourite communities for female founders in Australia are LADY STARTUP and LIKE MINDED BITCHES DRINKING WINE. Join now and you’ll never be alone on your journey as a fashion entrepreneur!

NOW YOU’RE READY TO START YOUR OWN CLOTHING BOUTIQUE

Once you’ve made it through all of the above steps, you’ll be well on your way to becoming a successful fashion entrepreneur. Here’s a quick recap:

Choose a popular and profitable clothing niche.
Calculate your TAM, SAM and SOM.
Identify your competitive moat.
Write a detailed retail business plan.
Set up a legal business entity.
Calculate your startup costs and create a budget.
Come up with an effective product sourcing strategy.
Build an online store using a DIY store builder tool.
Figure out your pricing strategy.
Create a marketing plan.
Connect with other entrepreneurs and grow your network.

Keep in mind that, while you may feel overwhelmed and even get stuck sometimes, you can absolutely do it. All it takes is hard work, determination and lots of problem-solving. Don’t forget to have fun along the way!

FREQUENTLY ASKED QUESTIONS ABOUT HOW TO START A CLOTHING BOUTIQUE

HOW DO I START MY OWN CLOTHING BOUTIQUE?

Starting your own clothing boutique requires careful planning and lots of hard work. Firstly, you need to carve out a market niche and establish what sets your business apart. Next, you need to write a detailed business plan, including marketing, operational, and financial strategies. And finally, you need to register your business and ensure legal compliance.

HOW MUCH DOES IT COST TO START A CLOTHING BOUTIQUE?

The cost of starting a clothing boutique depends on the type of business you want to start (physical or online). Opening a brick-and-mortar boutique can cost tens of thousands of dollars, while launching an ecommerce store costs much less, especially if you build your website yourself with a tool like Shopify.

WHERE CAN I BUY CLOTHES FOR MY BOUTIQUE?

There are many ways to buy products for your clothing boutique. The most convenient and effective way is to use a B2B wholesale marketplace like Whola. We carry more than 100 unique Australian labels with no minimum order quantity that you can buy in small packs. There’s no better way to buy exactly what you need when you need it.

IS OPENING A CLOTHING STORE PROFITABLE?

Opening a clothing store can be extremely profitable, but there are a few things you need to get right. For example, you need to have an effective marketing strategy, build a pricing strategy with the right margins and find ways to source products that allow you to increase your revenue.