Where BIGFOOT would shop!: 2011

Tuesday, August 9, 2011

Start up Expenses for a shoe retail store

Start-Up Expenses
How much does it cost to start a shoe retail store? There are no hard and fast rules in setting the price tag of a shoe store business. Your start-ups costs will be influenced by a number of factors, including:

Size and design of the store
Location
Target market
Inventory selection
Level of marketing

Given the factors above, the price tag can be anywhere from $20,000 to as much as several hundred thousand dollars!
Using the common start-up expenses of a retail shoe store listed below, create a worksheet with your projected costing for each item to get a clear idea of your start-up expenses:
Store Construction and Design

Store construction/remodeling (flooring, painting, carpentry, etc.)
Interior design and decorating costs
Fixtures and Leasehold Improvements (fire alarms, restroom upgrade, heating, air conditioning, etc.)
Installation costs (lighting, etc)
Displays, showcases, shelves/racks, sales counters and sales registers
Back-office furniture, shelving and fixtures

Occupancy Costs

Lease payments/Rent
Utilities and other deposits (telephone, water, electricity/gas, cleaning)
Insurance (fire, theft, etc.)

Fees and Permits

Legal fees
Licenses and permits
Professional fees
Merchant account fees (for accepting and processing credit cards)

Promotion Expenses

Store signage
Advertising and promotion for launch
Visuals

Operating Expenses

Opening Inventory
Bags and boxes with store logo
Gift wrapping supplies (if gift wrapping is offered)
Cash (reserves and on hand)

Administrative Costs

Office Supplies
Sales receipts
Cleaning supplies (window cleaning, trash cans, mop)
Miscellaneous

Employee Costs

Salaries and wages
Payroll-added costs

Equipment

Computers, copy machine
Point of sales systems (Credit card and check processing machines, bar code reader, cash drawer, cash register, POS software, etc.)
Fax machine
Security cameras and equipment including fire extinguishers
Sales floor equipment (baskets, bags, shopping carts, customer seating areas, specialty lighting)
Mirrors
Other signs (Exit, restroom and store hours signs)
Other equipment (drink fountains)

Miscellaneous

Unplanned expenses
Miscellaneous fees

Gross Profit MarginIt is important that you have a good idea of the expected gross margin of your retail store. Gross margin is the difference between net sales and cost of goods sold; it is what is left over after deducting cost of sales from sales and converting that to a percent. For example, if the sales of your shoe store are $150,000 and your cost of sales are $78,000 then your gross margin is $72,000 and that converts to 48 percent (100*(72,000/150,000)).
According to the Annual Retail Trade Survey of the Bureau of Census, the annual gross margin as a percentage of sales for shoe retail industry is 42.6% in 2002. This is relatively high compared to food and beverage stores with 28.5 gross margin, gasoline stations at 19.3 and electronics/appliance stores at 27.8.

otal Fixed ExpensesAs you operate your store, you will be incurring fixed or ongoing expenses. Below are estimated fixed expenses that your store may incur (estimates can be below or above your actual costs):

	Monthly Estimate	Annual Estimate
Rent (2,000 square feet at $3,000/month)	$3,000	$36,000
Utilities (light, heat, air conditioning, phone)	500	6,000
Wages (2 clerks at $8/hour for 20 hours a week)	1,280	15,360
Payroll tax (estimate at 10%)	128	1,536
Fees and accounting (licenses, permits, accounting)	175	2,100
Insurance (liability and loss due to fire, etc.)	600	7,200
Loan Payment (assume that $50,000 was borrowed at 10% interest per year)	1,062	12,744
Advertising	500	6,000
Miscellaneous Expenses (office supplies, janitorialor cleaning services, etc.)	200	2,400
Sub-Total	$7,445	$89,340
Owner’s salary/compensation	$3,500	42,000
Total Fixed Expenses	$10,945	$131,340
Gross Margin		42.6%
Sales Required (Total Fixed Expenses / Gross Margin)	$25,692.49	$308,309.85

Given the above projections, you will need to sell the following number:

Sales of $856.42 per day if open 7 days a week
At an average price of $59.95 per pair of shoes, that means around 14 to 15 pairs of shoes sold per day

Choosing Your Merchandise
The type and quality of your merchandise will shape the image of your retail store. Customers will come and patronize your store due to the quality of your inventory (among other reasons such as customer service). Your inventory can also spell the success or failure of your business: choose too much of a shoe style that no one wants to buy, you may be staring at the death of your business.
Below are some suggestions on how to best choose your inventory for your shoe business:

Check your sources and ask how their shoes are manufactured. Stay away from those that manufacture their brands from sweatshops and other politically hot buttons. Carefully review the companies that you are dealing with, including consumer complaints and lawsuits (use the Web to research).

Product segmentation. Given your original vision for your retail store, think the types of shoes you want to offer. You may want your store to focus on women shoes, categorized as follows: casual, boots, sling backs and mules, outdoor and athletic, wedding, pumps and career shoes, etc. Now devise a percentage to allocate each category. For example, you may want to dedicate 10% of your inventory to casual shoes; 10% for outdoors; 5% for weddings, etc. You can also use this approach when thinking of brands you want included in your store.

Note that factors such as trends, weather and customer preferences need to be taken into consideration when determining the percentages for each product category or brand. For example, boots may occupy a very small percentage of your inventory for the summer, but orders for this type of shoes will increase for the fall and winter seasons.

Put a tracking system in place. It is critical to know which merchandises are moving from what categories/brands, and which are not. There are a number of inventory management software systems currently available, although its price may be too high for start-up shoe stores without deep capitalization. Instead, develop a system that could allow you to track the movement of merchandises. You can assign stock numbers that will include the following information: stock aging code (whether a number or letter) to help you know when the stock came into the store, retail price, item information (supplier, style, size, color), stock keeping unit (S.K.U. number) and other information you may deem important.

Key Success FactorsThe success of your shoe retail store will depend on a number of factors, foremost of which are as follows:

Clear image. You must create a particular image – and stick with it – in the minds of your customers. Are you a discount shoe store where branded shoes can be purchased at a discount? Do you offer the lowest prices in town? Do you have the widest selection? A clear market position conveys a clear and consistent company image.

Ability to control stock on hand. You need to put adequate stock control in place to reduce inventory costs and increase stock turns. Loss prevention is critical in any retail establishment, as theft and shrinkage represent lost dollars for the retailer. Have systematized procedures for doing physical counts of your inventory, as well as clear policies on employee theft.

Strong financial management. The ability to manage finances and control debt is critical for any type of business.

Selection of products based on market demand. You need to have a keen sense of predicting the market and knowing what customers want. Your success depends on offering items that the market wants.

Attractive product presentation. Success in retailing entails knowing how to maximize every square inch of the store and warehouse (if any). With good rental space getting more expensive, you need to carefully plan your space through effective use of floor patterns, location of merchandise, amounts of merchandise and use of appropriate displays. Store layout and product display induce product purchase and reinforce company image.

Well-trained and experienced work force. The quality of the sales force is important in the success of a retail store. Your sales employees are the face of your business, and you need to ensure that they provide quality customer service. One of the leading shoe retail chains, The Athlete’s Foot Group, even train their staffs to measure the foot's length, arch, and width of the customer to find the right shoe brand and style.

Sneakers have become collectibles to more than just Sneakerheads

Steve Leugers owns 186 pairs of sneakers. Elijah Bowe waited 24 hours outside Puffer Red's in Ypsilanti, Mich., to buy a pair of DMP Jordan IX's. Mike Daurio spends five to seven hours each day researching sneakers online.

They call themselves sneakerheads, and they are part of a growing culture that has elevated the once-prosaic athletic shoe to the exalted status of fashion statement, collectible and investment. Helped along by Nike and other sneaker makers, an entire network of Web sites, magazines, boutiques and competitions, along with a dynamic resale market, has sprung up to serve this youthful, Web-surfing crowd.

A couple of summers ago, the first International Sneaker Battle was held in Edison, N.J. Sneakerheads from as far away as Amsterdam competed for cash and trophies in categories ranging from "best rare collection" to "best Jordan pair." Celebrities like sneaker enthusiast Phat Joe and New York City radio celebrity Funkmaster Flex helped promote the event.

“It was a very cool atmosphere,” said Daurio, who organized the event. “Young kids hanging out, talking about sneakers, listening to celebrities.”

While no one can pinpoint the exact moment when sneakers became big business, many sneakerheads point to the release of the original Nike Air Jordan basketball shoe in 1985. The online store instyleshoes.com recently listed a pair of those original Jordans for $5,000.

But that price does not apply to a pair of beat-up Jordans gathering dust in the back of a closet. The highest prices are reserved for pristine, never-worn sneakers still in their original box. Used pairs sell for thousands only if they have been worn by NBA stars like Vince Carter or LeBron James.

New styles are now hyped in online chat rooms like solecollector.com and niketalk.com (which is not affiliated with the shoe company) and often sell out in stores before being offered for resale on the Web, sometimes with markups of 100 percent or more. Nike Jordan Spizikes--an amalgam of five past Jordan shoes--were released on Oct. 21 with a retail price of $175. Less than a week later, online shoe seller Vintagekicks.com listed a pair for $530.

Nike dominates the market, but other companies have grabbed sneakerheads' attention with hip-hop and urban-themed styles like the Reebok Boombox Flavor, the Puma Ludacris Clyde Stitch and the Adidas Superstar.

But Nike sneakers far and away dominate the market. Nike helps transform sneakers into collectibles by releasing special designs in extremely limited quantities. Only 4,023 pairs of the Jordan Spizikes were released. Nike and rapper Eminem collaborated to produce 64 pairs of Air Max sneakers. Proceeds from the sale of both styles are going to charities, according to Nike's Web site.

The extremely limited additions have alienated some sneakerheads, who say that Nike is looking the other way while average collectors struggle to afford the styles they want. KeJuan Wilkins, a spokesman for Nike, declined to comment.

Nike has also increased sales by re-releasing earlier hit designs. “Retro” versions of Jordans, Nike Air Max running shoes and Nike Air Force 1 basketball shoes, from the 1980s and early '90s, have been big sellers. Hundreds of enthusiasts lined up for hours recently before the midnight release of the Jordan Retro V's--a remake of the 1990 Jordans--at a Foot Action store in Manhattan.

Limited production and dramatic increases in resale values have encouraged many sneakerheads to adopt an investor's mentality. “I buy three pairs of everything,” said Bowe, of Ann Arbor, Mich., who started his own online store selling custom shoes when he was 16. “One to wear, one to sell and one to save.”

Steve Leugers, of Cleveland, broke into the business by selling two pairs of sneakers on eBay. He founded uptempoair.com, an online store that specializes in Jordan clothing and shoes. He expects sales to climb to $3 million in 2006 from $300,000 in 2000.

Investors, however, are only part of the culture. “Some people would frown on that,” said Daurio, 22, who has a separate room in his apartment for his collection and makes an effort to wear every pair he owns.

Two years ago, Steve Mulholland, of Satellite Beach, Fla., started the Niketown Sole Collector Sneaker Competition in conjunction with Nike. The event, held in San Francisco, Chicago and other cities, was an invitation for sneakerheads to show off their collections for a chance to win a pair of one-of-a-kind Nikes.

“We wanted people to meet in a safe environment" and see great shoes, said Mullholand, who runs a Web site called instyleshoes.com and founded Sole Collector, a magazine devoted to sneakerheads that he says has a circulation of 100,000.

Mulholland eventually became disillusioned by the growing competitiveness and the subjectivity of the judging in the sneaker competitions and dropped out. “How do you judge a new shoe against a pristine Jordan '85?” he asked. He is now working on a new event schedule, which he will describe only as “not a competition.”

Another feature of the growing sneakerhead culture is the emergence of boutiques that specialize in limited-run sneakers. At Nostylgia, a boutique in New York, an urban motif of park benches and faux fire escapes serves as the backdrop for an eclectic mix of Nike skateboarding shoes, slightly used Air Jordans and limited run recent releases.

But buyers are cautioned that counterfeiting is rampant.

Sneakerhead.com, an online store and archive of sneaker history, lists several tips for identifying fakes. Most important, the site said, is that each shoe is assigned a unique style/SKU number by the manufacturer, which should be displayed on any Web site selling sneakers.

Some sneaker collectors see their collections as a forum for self-expression or an informal initiation into sneakerhead culture.

“Your shoe choice allows you to express your creativity,” Daurio said. “You want to have a pair that sets you apart. You can walk up to somebody with a pair you know are rare and start talking to them.”

In an effort to retain the maximum resale value and style points, some collectors have become over-the-counter chemists, devising methods to keep their collections in top shape.

“I use clear vinegar to take out scuffs from my Timberlands. Don't rub it or nothing. It could take out a Kool-Aid stain,” said Jason Pichardo, a worker at Nostylgia, who has been collecting sneakers for a year and owns 120 pairs. “For the clear part, if it's yellowed, I use Mr. Clean Magic Eraser. For white sneakers: Soft Scrubb floor cleaner.”

The sneakerheads all agree on one thing: Sneakers have taken over their lives. When asked what the general public should know about sneaker culture, Bowe said: “Stay away from it. It's too addicting.”

Sunday, August 7, 2011

Air Force 1 Bespoke Designer Paul Nguyen

nike-air-force-1-bespoke-paul-nguyen

Jordan Show Boxers

Designed for the greatest pound for pound champions worldwide.

Flash, sizzle and stunning intensity meet performance. Full grain leather and suede upper with patent leather simulated around the base for a one-of-a-kind brilliance, brawn and show. Slow recovery memory foam in the collar for customized fit and added comfort. EVA backed rand provides added support. Chrome stock-fitted Jumpman along with chrome lacing posts are stunning. Approximate 8" height for support and world class style. A double lasted phylon midsole with encapsulated Air-Sole unit in the heel really delivers. Solid rubber outsole with an integrated grooved traction pattern for ultimate performance and pivots. Exclusively by TITLE!

Colors:

Black/Black

Black/Royal

Black/Red