Business at its most basic: Putting up a retailing store (part 1)

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Wednesday, 15 June 2011 - Last Updated on June 15, 2011

Sari-sari_store2So you want to go into business. And so you know next to nothing  how to go about it. Well, then, you might want to consider a retailing business.

In many ways, retailing is the simplest and easiest business to set up and manage. At its smallest scale, retailing requires little capital and minimal manpower, technology and managerial skills.

People in general prefer to buy consumer items from small retail stores because they are accessible, are usually open from very early in the morning up to very late at night, and usually provide personalized service, including credit otherwise known as palista or pautang.


Sari-sari store concept

Among retailing establishments, the sari-sari store is the most common. In densely-populated, middle and lower-income communities; there is one in every block and street corner.

Most sari-sari stores are run inside the shopkeeper’s house and are extensions of the household – often a hole in the wall. Commodities are displayed in a large screen-covered or metal-barred window in front of the shop.

As its name implies, the essence of such a store is variety.

Candies, milk, canned goods, instant noodles,  chips and other snack items, and cigarettes are often displayed while cooking oil, salt, eggs, and sugar are often stored in sacks or baskets or cans. A sari-sari store is also the place to run to if a household runs out of cooking staples like sibuyas, bawang, paminta, toyo and suka. If you need common medicines like aspirin, biogesic or decolgen, chances are it has these on stock, too. Many sari-sari stores are also equipped with refrigerators or iceboxes for soft drinks, beer, or bottled water.

Lately too sari-sari stores have become retailers of Smart, Globe, and Sun e-load, which—as if you didn’t know – has become a basic commodity in these parts.

A sari-sari store often is sparsely equipped. Very exceptionally does it have a delivery van or cash register. Financial recording techniques are also minimal. There is usually only one or two who tend the shop – the owner, the owner’s spouse, one or other of their children, or the housemaid or kasambahay.

In some rural communities, the sari-sari store serves as some sort of watering hole or tambayan. Benches and shade are provided in front of the shop so that women may trade neighborhood news, men drink liquor, and children buy soft drinks and snacks.

The sari-sari store of old used to be more open places, with wide open counters for transacting business.  It is one of the signs of the dificult times that store owners have taken to putting screens or metal bars to secure the place.

 

Sari-sari store variants

If you are not so keen about owning a sari-sari store, you might op for one of its variants.

The grocery store is of course a bigger and more sophisticated version of the sari-sari store. It handles a wide variety of merchandise often displayed in racks, shelves and counters. A security guy might stand on guard by the door, one or two employees man the cash register, and another couple monitor and replenish the stocks on the shelves.

There is the roadside stand, which sells produce of farmers, commercial home gardens and other producers mostly in busy highways where buses can make brief stop overs.

A store on wheels sells inexpensive consumer items on the road. Retailers keep moving from one place to another following the routes of roads where there is heavy flow of pedestrians.

There are, of course, the house-to-house sellers, vending either on foot, or pushing a cart or pedaling a bike with a side car — shouting their wares. Here, the seller carries only a limited quantity and assortment of goods as he or she goes from door to door. A variation of this is office-to-office peddling, offering a variety of goods to office workers, usually on easy, installment terms.

Specialty shops, on the other hand, carries a wide assortment of only one line of merchandise. You can choose from among  pet shops, toy shops, flower stalls, linen shops, garment (including ukay-ukay) shops, mobil phone stores, hardware stores, school supplies shops, and sporting goods outlets. You can also specialize in selling vegetables, fruits, fish, or kakanin.  And yes, bakeshops and panaderias may be considered a specialty shop too.

 

Locate your store strategically

The typical small sari-sari store does not have much choice on this matter – it is located right where the owner(s) live. And that’s that.

But bigger retail establishments need to put a lot of thought to where their outlets would be located. It is said that a storeowner is already half successful, if he sets up shop in a good place.

First of all, study the neighborhood you plan to locate in. Is the neighborhood starting to get run down? Are the residents moving away? Or is the neighborhood new and on the way up? Determine the purchasing power of the residents. Do they own cars and upscale homes?

Study the location’s accessibility. How close is it from jeepney, bus, and tricycle routes? Are there adequate parking spaces nearby? Is the place well-lighted? Is the neighborhood peaceful?

Of course, you need to take a look at the competition. Which ones will be your biggest rival? How many stores look prosperous? How many seem to be just getting by? How many went of business and how many new stores opened within the past year or so?

 

Attract buyers

Even the smallest sari-sari store projects a certain “personality” or image that can either attract or repel.

There are stores so dimly-lit and dingy one hesitates to approach it.

A sari-sari store that appeals to customers is well-lighted, clean, and uncluttered, with its merchandise neatly displayed, preferably tended by a shopkeeper who is attentive, smiling, and helpful.

Surely, you have tried to buy from a store which seems unattended, where it took a minute or two of shouting “tao po, pabili po” before someone would languidly saunter in, asking  “Ano ang kailangan?” with dagger looks. Would you go back to this store next time you needed to buy stuff?

For bigger stores, there are more elaborate tips for attracting buyers, including paying attention to exterior design, interior layout, arrangement of merchandise inside the store, and putting up visually appealing displays.

 

Know what to buy and where to buy

There is an old saying among retailers: “Goods well bought are goods half sold.” Conversely, goods poorly bought are goods difficult to sell profitably. As a retailer, therefore, you have to give careful attention to purchasing so that you obtain the right goods at the lowest possible price. If you buy at a higher price than your competitors do, they will likely sell lower. And that may leave you with less customers.

In buying you may either go into group or ‘hand-to-mouth
’ buying.

Group buying has come about because suppliers normally do not give discounts or deliver to small-volume buyers. Some retailers have thus grouped together in buying the same goods from a common supplier. It would be a good idea for you to join such a group, if you can find one.

If, however, you have limited cash and no buying group to join, you have no choice but go “hand to mouth.” Well, this  will enable you to have small inventories which will result to a steady flow of new merchandise and fast turnover.  Furthermore, you will also reduce risks related to long-term stocks and commitment.

On the other hand, low-volume buying does not allow you to take advantage of big discounts from large purchases.  Plus, you take the risk of critical items running out of stock.

Knowing how much to buy is very important. To keep customers coming back to you, you need to have an item when they need it. That means maintaining a sufficient level of stock. At the same time, you cannot buy too much that your money is tied up in inventory.  Consider, too, fuel or transportation costs when going to and from the supplier.

Retailers usually buy from wholesalers, the nearer their stores the better.  Among the well-known wholesalers for many sari-sari stores are Puregold, Macro, Uniwide and SM Supermarket.  If you are dealing in toys, garments or novelty items, try Divisoria Mall, 168 Shopping Mall, and Tutuban Mall — all  in Divisoria.  For those planning to sell vegetables and fruits, there are bagsakan places (drop-off points) of produce at Cloverleaf Market  and — if you have steely nerves and boundless energy — in Divisoria markets in Asuncion, Padre Rada, and El Cano.  If you see yourself carrying fish and other seafood,  El Cano public market is also the place to go.  Or the Navotas Fish Port Complex.

According to a news report, there are 12 bagsakan terminals of produce from the provinces established by the Department of Agriculture n partnership with the local government units and market owners.  These include:  Commonwealth Market, Mega Q-Mart and Oriental Wet and Dry Market in Quezon City, Mutya ng Pasig in Pasig City, Muntinlupa Public Market in Muntinlupa City, Marikina Market Zone in Marikina City, New Pritil Market in Manila, KADIWA Center in Valenzuela and Carmona Producers’ Market in Cavite.  More bagsakan places are expected to be put up in days to come.

In time, however, as you build patronage of your store, expect some suppliers to approach you, offering their merchandise, delivered free of charge.

 

(To be concluded)


Photo”: Sari-sari store by nakanampucha!


The Small Enterprises Research and Development Foundation (SERDEF) is a resource hub for micro, small and medium enterprises in the Philippines. In partnership with the UP Institute for Small-Scale Industries, it conducts training, research, extension and development programs to promote small-scale entrepreneurship in the country. Check out its website at www.serdef.org.

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