General Merchandise Stores: Best Options and How to Get One

Here’s everything you need to know about opening a general merchandise store, the best options for store types, and how to go about securing financing for your business.

Types of General Merchandise Stores

1. Convenience Stores (C-Stores):

   • Target Market: Busy shoppers looking for quick and easy access to everyday essentials like snacks, beverages, and basic household items.
   • Key Features: Often located in high-traffic areas, open for extended hours, and carry a wide range of frequently purchased products.
   • Best For: Entrepreneurs looking to capitalize on foot traffic and serve local communities with basic needs.

2. Dollar Stores:

   • Target Market: Budget-conscious shoppers seeking affordable household goods, groceries, and miscellaneous items.
   • Key Features: Known for offering a variety of products at low prices, often around the $1 range, though modern dollar stores may have slightly higher-priced items.
   • Best For: Areas with a high demand for budget-friendly shopping, especially in lower-income neighborhoods.

3. Discount Stores:

   • Target Market: Shoppers looking for a combination of low prices and good value on a wide range of merchandise.
   • Key Features: Offer a mix of brand-name and private-label products at discounted prices, including clothing, home goods, electronics, and more.
   • Best For: Areas with high demand for value-based shopping without sacrificing product variety.

4. Big-Box Stores:

   • Target Market: Shoppers looking for a one-stop shop that offers everything from groceries to electronics to home furnishings.
   • Key Features: Large stores, often part of a national chain, offering a wide selection of merchandise across multiple categories.
   • Best For: High-traffic locations where you can serve a broad customer base, typically in suburban or urban areas.

5. Specialty Merchandise Stores:

   • Target Market: Customers looking for a more curated selection of products, often within a specific niche, such as electronics, toys, or clothing.
   • Key Features: Focused on a specific type of product or product category, offering more specialized inventory than general merchandise stores.
   • Best For: Entrepreneurs with expertise in a particular category who want to cater to a niche market with high demand for specialized products.

Steps to Start a General Merchandise Store

1. Market Research:

   • Identify Your Target Market: Research the demographics, shopping habits, and needs of the local community. Understanding the local competition, pricing strategies, and consumer preferences will help you define your store's niche.
   • Analyze Competitors: Investigate nearby stores to see what they offer, how they price their products, and what services or products they might lack that you can provide.

2. Business Plan Development:

   • Executive Summary: Clearly outline your business concept, goals, and target market.
   • Market Analysis: Use data from your research to provide an in-depth analysis of your target customers and competition.
   • Financial Projections: Include detailed financial plans, including startup costs, revenue projections, operating expenses, and cash flow management.
   • Marketing Strategy: Define how you will attract customers, differentiate from competitors, and build brand loyalty.
   • Operations Plan: Lay out how your store will operate, including staffing, inventory management, and supply chain logistics.

3. Location Selection:

   • Foot Traffic: Select a location with high visibility and heavy foot traffic. Strip malls, near public transportation, or in residential areas with easy access can all be good options.
   • Accessibility: Make sure the store is easily accessible with ample parking or convenient public transit options.
   • Zoning and Permits: Check local zoning laws and regulations to ensure your store can operate in your desired location.

4. Sourcing Products:

   • Wholesalers: Establish relationships with wholesalers who can provide a variety of products at competitive prices. For discount or dollar stores, finding bulk and discounted suppliers will be critical.
   • Private Label: Consider offering private-label products to increase margins. This works well for household goods, snacks, and personal care products.
   • Diverse Inventory: Offer a wide range of products to cater to various customer needs, but ensure the selection is balanced and well-stocked based on demand.

5. Store Setup:

   • Layout and Design: Create a store layout that is easy to navigate, with popular items placed in accessible areas to encourage purchases. A clean, organized, and visually appealing store can attract more customers.
   • Point of Sale (POS) System: Invest in a modern POS system that can track inventory, manage sales, and provide customer insights. Many POS systems now integrate with eCommerce platforms, allowing for omnichannel selling.

6. Hire and Train Staff:

   • Customer Service Training: Ensure that your staff is trained to provide excellent customer service. Happy and helpful employees can increase customer loyalty and repeat business.
   • Inventory Management: Train staff on proper inventory management practices to avoid overstocking or stockouts.

7. Marketing and Promotion:

   • Grand Opening: Plan a grand opening event with promotions to draw attention to your new store. Offer discounts or free items to attract initial customers.
   • Online Presence: Set up a website or social media profiles to promote your store, share deals, and engage with customers. Even if your store is brick-and-mortar, an online presence can boost brand awareness.

Best Financing Options for a General Merchandise Store

1. SBA Loans:

   • Purpose: The Small Business Administration (SBA) offers various loan programs designed to help small businesses with startup costs, inventory purchases, and working capital.
   • SBA 7(a) Loan: This is the most popular SBA loan, providing up to $5 million for business expenses with competitive interest rates and long repayment terms.
   • Requirements: A solid business plan, good credit score, and collateral. SBA loans also require extensive documentation, including tax returns, financial projections, and business licenses.

2. Term Loans:

   • Purpose: Term loans provide a lump sum of cash upfront, which can be used for a variety of business expenses, such as store setup, product sourcing, and marketing.
   • Terms: These loans typically offer fixed repayment schedules with terms ranging from 1 to 10 years, depending on the loan amount and purpose.
   • Requirements: A good credit score and business history are key. Some lenders may require collateral, such as business assets or personal guarantees.

3. Business Lines of Credit:

   • Purpose: A business line of credit gives you access to funds that you can draw from as needed. This is ideal for managing cash flow, handling seasonal variations, or covering unexpected expenses.
   • Terms: Credit limits are set based on your creditworthiness, and you only pay interest on the amount you borrow.
   • Requirements: A solid credit score, reliable business history, and a demonstrated ability to repay borrowed funds. Some lines of credit may require collateral.

4. Equipment Financing:

   • Purpose: If you need to purchase equipment for your store (e.g., shelving, POS systems, refrigeration units), equipment financing can help you spread the cost over time.
   • Terms: The equipment itself serves as collateral, making it easier to secure financing. Terms usually range from 3 to 7 years, depending on the equipment’s useful life.
   • Requirements: Lenders will evaluate your credit score, the type of equipment you need, and your business’s ability to generate revenue.

5. Merchant Cash Advance (MCA):

   • Purpose: If you have high credit card sales, an MCA can provide quick access to capital. In exchange, a percentage of your future sales will go toward repaying the advance.
   • Terms: Repayment is based on your daily or weekly sales, which can fluctuate depending on business performance. MCAs are often considered a last-resort option due to high fees.
   • Requirements: Steady credit card sales and a reliable history of business revenue. The MCA provider will primarily focus on sales volume rather than credit history.

6. Inventory Financing:

   • Purpose: Inventory financing allows you to borrow money using your current inventory as collateral. This is useful for stocking up on products, especially during peak seasons.
   • Terms: The loan amount is based on the value of your inventory, and repayment terms vary by lender.
   • Requirements: Lenders