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How to Run a Clothing Business in the USA

Refreshing inventory, setting goals and harnessing visual media. We’ll cover ways you can run your clothing business to its full potential.

Clothing stores benefit from selling products for which demand is, frankly, enormous, and clothing businesses for sale are not scarce. To state the obvious – everyone needs clothes.

And yet, apparel retail is a challenging sector in which to operate, given fierce competition from big box retailers, both on Main Street and in e-commerce.

On top of advice from business advisors and fellow store owners, the following pointers should get you thinking about how to thrive in this competitive landscape.

Improving the business

The four Ps – product, price, placement and promotion – can frame your plan for conquering your niche locally.

Fast-changing consumer demand for clothing, both in fashion and seasonal terms, means inventory and suppliers, as well as prices, should be reviewed regularly.

Placement is also pivotal, with window displays demanding close attention to get shoppers inside your store. Thereafter a friendly greeting, prominent sales promotions and stock positioned intelligently (neckties adjacent to formal menswear, for instance) will maximize the chances of a sale, and indeed multi-item purchases.

Whether centered around Cyber Monday, Thanksgiving or Christmas, frequent special offers are important in fulfilling the ‘promotion’ cornerstone.

And establishing a virtual storefront has never been easier – whether through Amazon or off-the-shelf platforms like Shopify – and is particularly worthwhile if you’re in a low footfall location or low-demand niche.

Ongoing market research

Informing these decisions, market research should cover your local rivals, demographic and economic trends in your local area, and wider trends in the apparel sector.

When scrutinizing competitors, consider their location, product lines, pricing, branding, reputation, footfall, marketing operation, and what you can replicate, repurpose or avoid.

As for industry trends, consider how Adroll’s 2021 Fashion Ecommerce Trends Report, which spotlighted a pandemic-fueled rise of loungewear, might have influenced procurement decisions.

Fixtures and fittings

The aesthetics of your fixtures and fittings should be informed by your brand image – are you upscale, aimed at young people, or a vintage clothing, sportswear, womenswear or menswear specialist?

You’ll need things like hangers, signage, mannequins, shelves and racks, display cases and full-length mirrors.

You need to decide between a cash register, limited functionality-wise and typically costing between $100 and $400, and a point-of-sale system, usually costing up to $100 a month with hardware ranging between free and $1,500, and boasting a touchscreen and inventory management functions.

Managing inventory

Subject to fast-changing fashion, apparel retailers must frequently refresh ranges, as well as put clothes back on racks after customers have tried them on.

Inventory management is therefore harder than any other retail segment.

Make sure, therefore, that you and your staff are folding and organizing stock fairly frequently.

If you can afford it, it’s worth investing in an inventory management system to automate purchase orders and keep track of stock levels and pending orders.

They also flag bestsellers and poor performing items and which items are typically purchased in pairs, which can help you improve product pricing, positioning and procurement.

Easily attached to merchandise, meanwhile, electronic loss-prevention tags are an extremely efficient deterrent to shoplifters.

Premises costs

It’s tricky to strike the right balance between commercial rents on the one hand and location and floor space on the other.

You need to consider the difference between the price of store rent and the likely sales generated based on relevant variables. For instance, a prime, high footfall location in Manhattan costing $250 per square foot is unlikely to be worth it if you’re selling low margin, moderately priced items for which demand is modest.

Setting goals

Your goals must be constrained by the threats facing your business and its limitations – such as location, the standard of local competition and prevailing economic conditions – if they’re to be achievable.

These could include financial goals around revenues or operational costs, and strategic aims like revamping your store, boosting your social media following, or diversifying your product range within a certain timeframe.

Marketing your clothing store

Clothing is an inherently visual segment, so top quality images are vital and sites like Instagram, Pinterest, and – if you’re targeting older shoppers – Facebook are effective media for showcasing your apparel.

Aesthetics are central to your branding too. A website must be slick and striking and reflect your brand, whether it specializes in designer goods, loungewear or vintage clothing.

Also optimize your SEO and set up and manage your Google My Business listing so people can find and review it.

Fliers and posters placed in other local businesses can still have their place in the digital age, especially for older customers who seldom use the internet.

Financing your expansion

Retailers can use short-term loans, repaid at the end of terms lasting 12 months or fewer, to finance short-term needs such as new inventory, which must usually be refreshed seasonally even if existing stock is selling poorly.

Repaid monthly, long-term loans offer greater funds and lower interest rates for store revamps, refinancing or acquisitions, among other purposes.

Store owners with mediocre credit scores can increase their chances of securing a loan on reasonable terms by using fixtures and fittings or premises as collateral on a secured loan, or by securing a Small Business Administration (SBA)-backed loan.

Akin to credit cards, lines of credit only charge interest on the outstanding balance.

It’s worth finding information online about funding options, such as banks, business grants, credit unions and alternative lenders, in your state or city – see this example about Houston for example.

Staff considerations

Many small apparel store owners start out manning the store alone, drafting in assistance only on their rare days off.

Cash flow can be tight for startups in a sector besieged by online and big box competition, but when stores start to flourish they might need and be able to afford additional help.

Thankfully, retail staff are comparatively inexpensive to employ, with the typical US salary about $19-29k, whereas the mean salary in all occupations is about $53.5k.

This is partly because the job requires no formal education. There are training providers such as Retail Training Services, but in the short term, providing you have some retail experience yourself, you can deliver training yourself.

Although it’s not hard to find willing workers, motivated staff with excellent customer service and stock-handling skills are trickier to get.

So retain your effective staff with a competitive salary and imaginative perks like employee discounts for clothing (but beware the tax implications as laid out by the Internal Revenue Service (IRS).

Some things don’t cost you anything – giving plenty of notice about upcoming shifts and giving staff the occasional Saturday off, for instance.

Exit Strategy

Any competent retailer understands the value of planning a store’s launch carefully, but many overlook the long-term financial rewards of an exit strategy.

Retail is a precarious sector nowadays, so your plan to eventuallysell a business could account for how you’d accelerate your exit or mitigate the fallout should an economic downturn or opening of a nearby big-box competitor cause a drop in your fortunes.

Your exit strategy should also ideally:

· Set an approximate exit date

· Formulate a plan for maximizing your returns when you finally value your business

· Consider how to negotiate a business salewith potential buyers and how the deal structure might affect tax liabilities

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