Outlines how to startup in fashion as a business, including all the steps you need to take before and after opening to ensure business success.
If you want to set up your own business as a fashion retailer, you will find out here step by step what you have to pay attention to when setting up your fashion business in order to start as legally, effectively and sustainably as possible.
Fashion as a business: Industry insights
The fashion market is one of the largest branches of industry. It claims around a fifth of the entire business world, and the trend is rising. The increasing verticalization, online trading and, last but not least, demographic change as an external influencing factor contribute significantly to growth. Above all, the two first-mentioned factors also ensure a significant redistribution of the entire market share and pose fundamental structural changes for the fashion industry. Vertical fast fashion chains are slowly taking over the market and are displacing established top dogs (regional or local specialist retailers) as well as independent, small-scale specialist retailers. We will show you how you can place and establish your own fashion business in the fashion market despite the dominance of large chains and online retailers (Ebay, Amazon, Zalando).
Fashion as a business: Personal requirements
In contrast to the baker, who has to show a master craftsman’s certificate to open a bakery, there is no need to have completed training in retail to open your own fashion store, even if this would of course be an advantage. Because without a completed training in retail, you are not allowed to train apprentices, for example. So lateral entrants can prove themselves in the fashion market, but a knack for fashion – that is better said right away – is not enough to secure a sunny spot in the highly competitive market. Basic business knowledge should definitely be acquired before setting up a company. In addition to specialist knowledge, some personal skills are also essential in order to assert oneself in the market: perseverance,
Clear profile of your fashion business
Often, aspiring boutique owners have a clear picture of the store’s interior and cute little details, but not a clear concept of the range and target group – it’s a bit like the wedding dress and the wedding. Once the brides have their wedding dress, everything else seems secondary. To avoid this mistake, ask yourself the following questions in advance:
- Which target group do I want to address? (Age, solvency, clothing size)
- What should my range include? (elegant, sporty, second hand)
- Which price segment do I want to serve? (Middle price ranges have over half of the market shares)
- What does my fashion store have that other fashion stores don’t?
A business plan creates an overview
Angelika got off to a good start with her shop for Italian women’s fashion and almost completely recovered the investments in the first year. However, this success did not fall into her lap – it is the result of careful planning. In order for you to succeed in entering the fashion market, we recommend writing a meaningful business plan. It will help you to develop your idea into a viable business model that you can really make a living from.
What should be in a complete business plan?
In your business plan you answer all the important questions about your start-up:
- Where do you sell which goods to whom and at what prices?
- What is special about your offer? What makes your store unique?
- How strong is the competition and how do you stand out from it?
- How do you want to reach and keep your customers?
- What are your costs and how high could the sales be?
- How much money do you have to put into your start-up at the beginning?
- Where should this money come from?
- How long will it take you to get your investments back and repay your loans?
Your business plan is the ultimate reality check and protects you from nasty surprises. At the same time, it is the basis for your financing: Your financiers also want to see that your start-up project is not based on dreams, but is economically feasible.
Fashion as a business: location is half the battle
Before starting your own business with a fashion store, you need to consider some important external conditions:
- Clientele: The walk-in clientele is essential for your business. Pedestrian precincts or the proximity to large shopping centers are recommended. A location analysis is often worthwhile . Are there up-and-coming trendy districts in which you can settle down? It is essential to have the purchasing power data determined in the immediate catchment area in order to be able to guarantee the profitability of your fashion business in the long term.
- Competition: While surrounding businesses in other industries stimulate business, competition is stifling business. So make sure that there are no or few comparable model shops nearby.
- Infrastructure: Transport connections, parking spaces and wide sidewalks are an important influencing factor.
- Rental costs: If the above conditions are met, a high rental price is of course waiting for the future boutique owner. But it is better to rent an expensive shop that is well located and has a high sales potential than a cheaper shop that is poorly located and hardly generates any sales. Here, too, you should invest again, then profit. Getting to such a shop is of course also an art and requires a lot of negotiating skills and above all patience. Months can easily pass from the idea to implementation, so you should have a long-term, timeless concept ready so that you can strike at the right moment. By the way: The average minimum shop size in specialist shops is around 100 square meters (BBE 2012).
Establish supplier contacts early on
Without suppliers, no goods. Without goods, no fashion store. As a newcomer to the industry, it is very difficult to get access to suppliers because the competition is very fierce. So make sure that you can find suitable and above all inexpensive suppliers before the opening. Negotiate delivery times, discounts, return rights, payment modalities, etc. together. Make sure that the suppliers you use comply with environmental standards. According to the latest study, over 70 percent of consumers consider it important when buying clothing that it is produced sustainably (Slow Fashion Monitor 2016).
Fashion as a business: registration
As the founder of a fashion retailer, you have the status of a trader. This results in the following obligations for you:
- You have to register a business
- You have to pay business tax
Therefore, you now have to register your trade with the trade office. Visit or llog onto the website of the trade office of your city or municipality and fill out the form provided for the trade registration.
Fashion as a business: Marketing – Invest, profit!
Remember: Every advertising issue is an investment in the future of the fashion business.
As is well known, nothing comes from nothing. Your shop, ie the entire inventory of furniture, decorative items, color concept and even the clothes themselves, must by no means be run-of-the-mill. It is your personal figurehead and ultimately decides whether the till (no ordinary till, a retro till, of course) rings. The uniqueness of your shop must stick in your mind from hour 0.
A perfectly normal catering for the debut? The press certainly does not report about it! Without a DJ, celebrities, ball pit or other crazy ideas, you can wait a long time for your first customers.
When it comes to promotions, it is important to have short-term measures ready, as the fashion market is incredibly fast-moving and trends germinate every 6 weeks as quickly as they disappear again in fashion nirvana. At best, hire an external advertising agency for this area who will be at your side professionally and, above all, flexibly. The debut has to be celebrated again on a regular basis. Lure your customers into the sales rooms with special promotions and special prices and build up a solid customer base.
Advertising in trendy fashion magazines (see below) or collaborations with so-called influencers who place your label and your products inconspicuously on social networks are now a must-do when it comes to marketing. The word of mouth then does the rest. At Christmas, the (external) marketing department really has to work hard. Because the Christmas business – that’s no secret – makes up around a fifth of the entire annual turnover.
Fashion as a business: Your website is your electronic business card
Another important factor for the success of your fashion boutique is your website, your electronic business card. Around 35 percent of stationary retailers have their own online shop (destatis 2015). The homepage must be structured, clear and transparent, the same applies of course to your shop. Let yourself be inspired by various online shops and get the “best” out of it. Why do something completely different when things are going well with the competition? Caution: cheating is allowed, plagiarism is taboo! You can assemble the basic structure from existing store concepts, but you have to take care of the individual mark yourself.
Useful tips for your website:
- With your individual fashion homepage you show your own personal taste. Think about which fashion style you want to sell and set up your shop and your fashion homepage accordingly. Ask yourself the question: is my fashion more puristic, timeless, urban, hip or classic. Use this concept to design your fashion homepage.
- Practical tip: Have appealing, good photos of your store! The customer wants to feel good and like to come to you for advice. The customer can better imagine the atmosphere in your store through photos
- And: think about whether it is better to design the page in English or in German. In the fashion world in particular, it is advantageous to use English. That’s young and hip!
- While we’re on the subject of “hip”: Facebook, Twitter and other social media networks are always popular with fashion fans. Nowadays, online shopping is becoming more and more important in business. It is therefore advisable to set up an online shop on your fashion homepage. You also make yourself less dependent on walk-ins!
- Nevertheless, you shouldn’t forget that on a fashion homepage there should always be directions from Google Maps so that you can be found quickly and easily.
- The specialty and individuality of a fashion shop is of course in the offer. That is why it is important to present the collection. If necessary, also under the various headings “Women” and “Men”. Put the most amazing, chic products first – after all, you want to shine in the spotlight!
In addition, you should definitely integrate a contact form for your customers and prospects.
The newsletter is an inexpensive and at the same time effective advertising medium. It can reach many customers at the same time and inform them about upcoming promotions and new collections. A monthly, if not two-week rhythm keeps the regular customers happy. Here, too, caution applies, as the newsletter may only be sent at the express request of the customer.
The uniqueness factor
How do you make your fashion boutique particularly unique? Right, by breaking away from the mainstream, founding your own label and making it fit for the mainstream. It is an advantage here if your fashion business is already established and has a broad customer base. Training to become a tailor or similar is also an advantage here, as is knowledge of trademark and patent law and, last but not least, good networking in the fashion industry.
Prepare for returned items
The apparel industry’s online retail is on the rise. However, the returns study carried out by KPMG also proves that online retail is not just a blessing but also a curse for retailers:
- More than three quarters of online retailers received returns with damaged goods
- Every 5th return in the online textile trade is worn, dirty or without a label
- With a 35 percent discount, online retailers have to offer damaged returned goods on average.
- 44 percent of the returned textiles can no longer be sold at the original price
- 15 percent of the online retailers surveyed complain that the current right of withdrawal is unclear
Future of the fashion market – KPMG study 2025
The KMPG study on the future of the fashion market, or Fashion 2025 for short, predicts a clear decline in stationary fashion retail stores. According to the study, however, one should not expect a “desertification of the inner cities”. The chances for stationary retailers are comparatively good.
For this, however, a “courageous commitment, the rapid implementation of innovative ideas and sometimes painful investments in new concepts and positioning as well as an attractive company appearance, efficient online-offline networking and future-oriented process optimization” are essential.
This is the only way that brick-and-mortar retail can maintain its long-term opportunities in the online age. Overall, self-employment as a fashion retailer or boutique owner represents a certain risk, but an equally great opportunity