Product line expansion is a key growth strategy in retail. You have customers. What can you offer that will sell more to them? You want to attract new customers with new products. Successful implementation requires some intelligence, as we need to introduce new products thoughtfully to boost revenue.

Clothing

One new department that is doing well with my clients is clothing. It can be a profitable venture, with strong margins and consistent demand. Many find it offers an attractive opportunity to diversify their product range. Our studies show that clothing outperforms gift items in terms of profitability. Clothing is now experiencing significant growth.

Let us use it as an example of how to introduce a new line into your shop.

Clothing isn't simply about stocking random garments. It requires planning, so let's dive in.

Understanding Your Local Market

Defining Your Target Market

Successful clothing retail now depends on clearly understanding who you're selling to. Focus on specific customer segments that align with your local demographics.

Consider these key factors when defining your target market:

Age

Different age groups have distinct style preferences and shopping behaviours.

Gender

Will you focus on menswear, womenswear, or both?

Income level

This determines price sensitivity and expectations for quality

Lifestyle

Active, casual, professional, or fashion-forward

I find that making up a fictional persona helps. Let's say you identify three types of people and make them as detailed as possible to help you visualise them and identify their needs.

For instance,

• Professional women aged 45 who value quality items and comfortable, modern-style clothes. She is willing to pay for durability and versatility. Call her Debby.
• A retired 65-year-old male. Call him George. For him, clothes do not need to be fancy; they just need to be cheap.
• A 21-year-old woman named Lisa works in the local shopping centre and spends a lot on clothes.

Now ask yourself what George, Debby or Lisa would buy in your shop.

When conducting your competitive analysis, focus on:

Product ranges

What types of clothing are they buying? What you are looking for are gaps in your area.

Price points

What price points do they have in your area?

Customer demographics

Who shops there? Observe age groups, style preferences, and spending patterns.

Store layout and displays

How do they present their merchandise? What seems to attract attention?

You are trying to look for weaknesses and gaps that you can fill. The gaps do not have to be big.

For example, winter is coming up. There seems not to be much catering to cheap winter hats. You can get very cheap polyester beanies from Kmart, but not much is available if people want something made of warm wool. Maybe look into your new line for beanies, baker boy caps, bucket hats, etc..

Identifying Multiple Market Segments

Consider targeting several complementary market segments rather than focusing on a single customer type. This approach provides more stability and growth potential for your business.

Aim to identify at least three potential market ideas:

For each potential market, assess:

• Size of the potential market
• The commitment you need.
• Competition
• Alignment with your business values and capabilities

After identifying these segments, you can evaluate which offer the best opportunities and gradually narrow your focus to the most promising markets.

Finding Your Niche

Creating a Specialised Offering

The key to standing out in retail is specialisation. Rather than competing directly with department stores or chain retailers on everyday items, focus on developing a unique niche that addresses specific customer needs. A well-defined niche helps customers understand what makes your clothing selection special and gives them a reason to choose your store over alternatives.

Seasonal Strategy Example: Winter Headwear

Your example of winter headwear illustrates an innovative seasonal approach. As you noted, winter brings predictable demand for warm accessories, creating a natural opportunity to introduce a focused clothing category.

When implementing this strategy:

Start with variety

Offer different styles (beanies, newsboy caps, berets) to determine what resonates with your customers.

Quality

Select a price point; do not be afraid to be expensive. In my experience, the top and bottom are very hard to get into.

Consider timing

It is probably too late for seasonal items like winter wear, as winter is almost here.

Suppliers

Finding reliable suppliers is crucial for retail success. Clothing platforms like AliExpress can be good starting points for sourcing products. I suspect many majors, like Kmart, use them a lot. You can, too.

Supplier reliability

Check reviews, what do people say about their communication responsiveness

Product quality

I think you will do better with mid-range quality

Marketing support

It would help if they had some display materials

Delivery timelines

Very important, when can you get the goods? You must ensure sufficient lead time.

Minimum order quantities

This is often a problem when getting excellent prices. You need enormous quantities, but you don't initially want these. Make them an offer, say for 10. They can only say no. We have all heard that before in business, so I doubt it will hurt that NO.

Effective Merchandising Strategies

Creating Compelling Displays

How you display significantly impacts sales. Effective merchandising creates visual interest and helps customers envision how items look when worn.

Dedicating Proper Space

When introducing the products to your retail business, allocate sufficient space to create an impact. A few scattered items won't generate excitement.

Leveraging Social Media

If you sell products like clothing, you should be on social media. You need

• High-quality product photography that the supplier can give you.
• Give yourself a local presence, with pictures of you wearing these clothes.
• Share new arrivals as they come in
• Highlight real customers wearing your products

Ongoing Management

The sad fact is that most experiments fail. No matter how much you plan, you will have failure. You do not want to end up tying up capital in slow-moving stock.

Implement these inventory best practices:

• Use your point-of-sale report to update your sales figures
• Which items sell quickly at full price?
• What feedback do shoppers provide?
• Why are items brought back? What sort of problems do you have?
• Ruthless culling of products that do not work.

Use this information to refine your product selection, adjust pricing strategies, and optimise your merchandising approach.

Conclusion

With careful planning and consistent execution, you can drive sales into your retail business.

Written by:

Bernard Zimmermann is the founding director at POS Solutions, a leading point-of-sale system company with 45 years of industry experience. He consults to various organisations, from small businesses to large retailers and government institutions. Bernard is passionate about helping companies optimise their operations through innovative POS technology and enabling seamless customer experiences through effective software solutions.

Running a shop can be a problem if you don't have much room.  This is a common problem as most of us have more stock than we can display. Don't let that hold you back! You can turn your shop into a sales machine by understanding your customers and applying clever design tricks.

Why Your Store Layout Matters

A well-designed store does more than look good. It caters to your target customers' needs, guides them effortlessly through your space, and highlights your best products. When customers feel comfortable and understood, they're more likely to find what they need, linger longer, and buy more!

Know Your Audience: The Key to Smart Layout Decisions

Before rearranging shelves, take time to understand your ideal customers. 

• Demographics: What's the age range, gender, and general lifestyle of your target shoppers? Guys are generally taller than women so that the items can be higher for them; for kids, the stuff must be right down low.
• Shopping Habits: Do they prefer browsing leisurely, or are they in-and-out shoppers? If they want speed, you need the items at the counter so they can come in, do the sale quickly and leave quickly. Also, do they tend to come in alone or with others?
• Pain Points: What problems do your products or services solve for them?

Your Secret Weapon: Your POS Data (and a Little Observation)

Your POS System can do much more than just be a simple cash register. It's full of clues about your customers and what they like to buy. 

Here's how you can use this data and watch what happens in your store to make smarter choices on how to arrange things:

Identifying Your Powerhouse Products

• Best Sellers Report: This tells you precisely what's performing well. Place these top performers front and centre for maximum visibility. 

Go to the top N stock report, which you can find in the Register reports.

We then put in a period, say the last two months; this will show you what is selling now, then when you have your list of best sellers nicely ordered by quantity, profit and sales.

Pay attention to the colors and sizes.

Think about using lights and signs to make them stand out more.

• Companion Sales Report: This report unveils items that are frequently purchased together. Placing them strategically throughout your store can boost sales. Think of how grocery stores place snacks near the drinks section.

Go to Sales-Register > Dissection Companion Sales by Period.

Try looking for an abnormally high number of products for other stuff that sells well with that department. It is beneficial as it can help you select a product to display prominently near a department. This is a well-known method of increasing incremental sales that all majors use.

You take items that sell well with the products of another department and place some of them in that other department's area. There is nothing wrong with a good seller having a few spots in the shop. 

Like this one, a stand of good sellers in a prominent position is always good.

As you can see here (green arrow), quite a few extra sales could be made by moving some other companies' chocolates close to Darrel Lea Chocolates. Darrel Lea may not like it, but ....

Another great use is more long-term. If grouped by department, you can get a feel of where you should position the display for the department. As you can see here by the green arrow, the books should be close to the stationery.

If people looking at your book can see your stationery, you may be able to make a few extra sales. 

These KPIs can give you ideas into which products to display prominently.

Traffic Patterns

Don't discount the insights you can gain by observing how customers move through your store. Are there areas that seem to get ignored? Do people get bottlenecked in a particular spot?  Are there areas that let the customer go too quickly? Use this information to fine-tune your layout.

Data-Driven Merchandising Strategies

Here are some practical ways to apply these insights:

• Highlight Bestsellers: Your top-selling items deserve prime real estate. Give them prominent shelf space, consider eye-catching displays, and enhance visibility with strategic lighting and signage.
• Promote Companion Products: Place items often bought together within easy reach.
• Seasonal Shifts: Adapt your layout based on historical sales data.
• Clearance Corner or Dump Bin: Designate a small "dump bin" area for heavily discounted items.  This is an excellent way of getting rid of dead stock.

More Tips for a Small-Space-Friendly Layout

• Embrace Vertical Storage: Use shelves, hooks, and racks to reach upwards.
• Let There Be Light: Good lighting makes your store inviting and highlights merchandise.
• Keep it Tidy: A well-organized shop feels bigger.
• Create an Illusion of more space: Light colours generally make a room feel bigger.
• Get Creative with Signage: Clear signage to advertise your products.

Case Study

• The Bookshop Upgrade: We had a client who sold books. He knew his customers loved to browse, so he arranged the bookshelves to create small, inviting nooks. He then put in a couple of comfortable chairs. This encouraged shoppers to linger and discover new titles.

Remember: It's an Ongoing Process

Trends change, and your customers' tastes evolve. Stay flexible, and don't be afraid to experiment!

The Bottom Line

By understanding your customers, using your data effectively, and getting a little creative, you'll create a retail environment that's welcoming, efficient, and drives sales – regardless of your square footage!