Canadian Retailer - Store 2014 - 42

MYSTORE RETAILER'S GUIDE VOL. 10. 4: OPERATIONS

Though there are risks to opening a second location, there are opportunities, too.
LOUISE DIRK'S ADVICE ON ADDING STORES

* Beware the risks of growth: "I would suggest that growth
can be lucrative but can also be a double-edged sword. Be
cautious," says Dirks. Risk multiplies with each store the
retailer opens because the cost of rent, wages, goods and
marketing must multiply. "These costs can quickly become
disproportionate to the income," she warns.
* Monitor the business constantly: "Retailing with multiple locations is exciting and can prove to be rewarding, however, it
comes with its share of stress and hardships," says Dirks. She
says her business constantly monitors wages, inventory levels
and marketing in relation to income and cash flow. She points
out that new stores necessitate new hires, and total company
wage costs can quickly become too high relative to income.
* Balance money and inventory: Retailers who pursue profit
through expansion need to become astute at managing
inventory. Dirks says that inventory management is crucial to
success because money can easily become tied up and disrupt
cash flow. "When product does not sell, the risk becomes
larger. More product can quickly culminate to a larger loss
and eat away the profits from other money makers," she says.
* Market smartly: Some independents can get away with
minimal marketing because they build their business
on knowing their community. With second locations,
marketing becomes a requirement, and retailers need to
become well-versed in how to devise marketing campaigns
that, says Dirks, "spread the word, bring in new clientele and
create large volume sales quickly." For many marketing-shy
retailers, this aspect of expansion can be an area to seek
support. "If the campaign is not successful, it can lose a lot
of money quickly and deplete cash flow, doing the opposite
of its intended use," says Dirks.

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"Prepare for the ups and downs
of buying and selling, always
have a positive outlook and roll
with the punches."

- LOUISE DIRKS
Gravity Pope

Growth

Gravity Pope first opened its doors in Edmonton in 1990 as an import store. That store
bred a second store in Calgary in 2000. The
expansion that followed happened quickly,
with a Vancouver store opening in 2004, a
focus on apparel and an online store (with free
worldwide shipping) launched in 2007 and a
massive "mini department store" opening in
Toronto in 2012. Today, the independent store
is a multimillion dollar enterprise that carries
more than 300 brands of footwear and apparel.
Louise Dirks, CEO of Gravity Pope, says that
expanding the business from one store to two
stores creates the opportunity for what every
retailer wants: growth. Two stores offers larger
market share, which leads to a more diverse
product offering.
"It also sometimes allows the ability to
source product direct from factories at better
pricing," she says, adding that growth, "also

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