How and when to get a retail space

Many artisan businesses begin by creating and selling physical products.  Over time, these businesses evolve, potentially expanding into a physical retail space. What may begin as selling at a single craft fair can develop into a full-fledged retail venture. While some are familiar with the traditional routes to retail, such as consignment or wholesale, there are alternative paths to obtaining retail space. In this article, we'll explore four ways you can establish a retail presence.

Pop-Ups

Pop-up shops remain a popular choice, especially as retailers recover from the pandemic's effects. If you're an emerging artisan considering retail space, pop-ups offer an excellent way to experiment. They often entail shorter leases than traditional retail, reducing costs. Pop-ups also enable you to build brand awareness and provide customers with a hands-on experience, similar to what they'd encounter at a craft fair.

To further mitigate risks associated with pop-up shops, consider using them for purposes beyond direct sales. Use the opportunity to conduct market research with potential customers. Allow them to sample new products, ask questions, and provide feedback to help refine your brand. Engaging with people in person allows you to observe their non-verbal reactions, providing valuable insights.

Co-Retailing spaces

Co-retailing spaces bring together multiple shops under one retail roof. These spaces provide the infrastructure and support services needed to operate your shop, including staffing and managing cash registers. Artisans pay for their designated space within the shop or boutique. While this concept has existed for individual retail stores, there are now retailers expanding with multiple co-retailing locations. One example of these is Painted Tree.

Painted Tree Boutique originated as a vintage market in 2015 in Bryant, Arkansas.  They identified an opportunity to offer co-retailing spaces. They've refined their strategy by renting different-sized spaces, making it an accessible entry point for artisans. Space can start as small as a shelf. A variety of different sizes are available based on an artisan’s needs. In this model, the store manages all sales, sales tax remittance, and promotional activities to drive customer traffic.

Local artisans can also oversee restocking their space within the store, allowing for the chance encounter of prospective customers during restocking. At the end of the month, Painted Tree calculates payments for sales, deducting rent and fees. Leases are typically for a year, providing ample time for customers to discover your products and build your brand.

An intriguing aspect of this model is the potential for expanding your retail presence into multiple locations across various states. Artisans can ship their products to individual stores, with store staff handling restocking. Once you've mastered this model's profitability, you can continue expanding your presence. Painted Tree, for instance, currently operates 30 locations, with more in the planning stages.

What makes this approach unique for consumers is that each store offers a delightful treasure hunt experience. When we shopped in one store, we found an array of treasures, from beef jerky to candles to home decor. This distinctive retail experience is worth considering for your business.

Renting your own space

Having your own space can lead to the flexibility you need during different seasons of your business. For Layl McDill, the journey to owning her own space started with a simple desire. “I wanted to teach more classes in a space of my own. At first I was just setting up a table in our retail space. Eventually I realized that classes were an important part of my business plan.”

This realization led to gradual changes to set the space up with dedicated workspace for classes. 

Over time, renting a space helped Layl and her husband decide to purchase their own space. 

The building they acquired was carefully designed to provide ample room for a studio dedicated to classes. It became the space where Layl could not only teach but also sell her work. 

Although the first location they rented on a bustling street attracted substantial foot traffic, the newer studio was somewhat concealed. Here, the focus shifted from being a traditional retail space to a multifunctional studio that was always ready for sales, offering flexibility in when transactions could occur.

Another factor influencing Layl's choice to own her space was her desire to minimize the need for extensive travel to art fairs. The initial setup was advantageous as her husband also operated his business within the same space. This allowed her the freedom to not be present all the time, as they maintained a space open to the public during regular hours.  

As her children grew up she had more capacity again for art fairs. “I have gone back to doing more art fairs. They are such a great way to meet customers in a setting where there is lots of buying energy.  But I still maintain our classroom and retail space.”

Buying your own building

We also talked to Lanae Rhoads, founder of Mix Cosmetiques. Her business is making custom cosmetics and skin care products. She hosts classes as well as selling products. We asked her how she knew it was time to get her own space. It really came down to seeing that the profitability of her business was being impacted in multiple ways by not having a space of her own. She shared:

“I first decided to rent a space when I could see community spaces and pop up fees were costing more than it would to rent.” Paying too much for those fees was affecting her profitability. “I also started to lose bookings because we couldn't find a space that could accommodate the schedule the group doing the booking had decided on.” 

“When I was teaching at Whole Foods/Local Folk School/Community Ed and the classes were filling up but I was only being paid $20 per hour of teaching when students were paying up to $85 to take a class from me (I still teach at these places as a form of advertising, but less often).”

Similar to Layl’s journey, Lanae has embarked upon buying a building. What prompted this decision?

“I live in a place where it is very hard to find good places to set up a retail location. The rent is fairly high and tends to be triple net (which means that I am responsible for everything including fixing any systems that break). If I am going to replace plumbing or air conditioning then I would like it to benefit me rather than my landlord or the next person who is going to lease the space. 

Almost as soon as I had leased my first space I needed to expand because I couldn't host parties as large as people were requesting. We looked for 2 years for a good location to rent and nothing large enough at a price I felt was reasonable presented itself.”

As she looked into renting larger spaces, she noticed that the cost of payments if they purchased a building was almost the price that would be paid in rent. And then an opportunity presented itself. “We’ve been able to purchase in an up and coming, desirable location for a very rock bottom price because the building is unusable as is. We are going to put hundreds of thousands into renovations. But that will also leave us with 3500 square feet of space to lease to other tenants!

I'm not sure we would have gone the purchasing route if it hadn't felt like the investment would pay itself off almost as soon as we made it. The down payment on commercial real estate is steep.  We're fortunate to have access to another investor as well as state and city grant funding.  We are also pursuing an SBA loan which lowers our down payment so that we can keep working capital. There is help out there for small businesses! It just takes time away from my business to pursue it occasionally, but through that I have made many connections that will benefit my business in the long run.”

In summary, artisans have unique journeys when it comes to getting a retail space, with various options like pop-ups, shared spaces, renting, or buying. They constantly find new ways to improve and adapt. Both new and experienced artisans can find motivation in these stories to create their own path in the ever-changing artisan retail world. These journeys reflect creativity, determination, and the entrepreneurial spirit, much like their craft.

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