Cost of Opening a Retail Store

May 14, 2016 | By | 1 Reply More

opening a retail store businessHow much will it cost you to start the retail store of your dreams? Getting this number right can help you gauge whether you can really afford to start and successfully run a retail store. Unlike a home business, starting a retail business requires significantly more capital, more so if you want to locate your store in a high-traffic area.

Given the significant investment that a retail business requires, it is critical to properly plan your business finances and line up your financing sources. Get a solid and realistic idea of how much it will cost you to open your own retail store. Unplanned costs can deplete your startup resources, derail your scheduled opening, force you to cut back on other plans essential to the success of your retail store, and put your business at risk before you even open your business.

Start by making a list of all the expenses that you need to pay to get your retail store up and running. Below is a list of expenses needed to open a retail store. You can use this as a guide and as a starting point for creating your own list of expenses:

Rent and operating costs

  • Rental lease security deposit
  • Rental payment in advance
  • Utilities security deposit (electricity, gas and water)
  • Bond (up to 6 months’ rent in advance)
  • Insurance (fire, theft, etc)

>> RELATED: Start-Up Expenses of a Shoe Retail Store Business

Business setup expenses

  • Professional and legal fees to set up entity (if hiring lawyers or incorporation agents)
  • Business license application costs
  • Merchant account fees and expenses (for accepting and processing credit cards)

Location improvement costs

  • Interior design cost
  • Construction/Remodeling costs (materials, flooring, painting, carpentry, etc. )
  • Handyman and labor costs
  • Store fixtures and leasehold improvements such as restroom upgrade, heating, air conditioning, etc.
  • Displays, showcases such as slatwall towers, gondola shelving, glass or wood shelves, racks, bookcases, display tables, slotted standards hardware and accessories, dump bins, floor displays, cardboard counter displays, wall mount, among others
  • Displays for your specific merchandise such as eyeglass and sunglass displays, greeting card racks, literature displays
  • Mirrors, including display mirrors and fitting room mirrors
  • Curtains for fitting rooms
  • Cash counter
  • Regulation compliance such as emergency lights, smoke detectors, sprinklers, emergency exits, alarms, disabled access.
  • Back office furniture, shelving and fixtures
  • Customer seating areas (if to be provided)


  • Startup inventory

Merchandising expenses

  • Hangers for clothing
  • Mannequins and clothing forms (for clothing stores)
  • Necklace display (for jewelry products)
  • Price tagging gun, tagging fasteners, tagging gun replacement needles
  • Price tags and merchandise tags
  • Sale labels
  • Size labels
  • Discount price tags, stickers and guns
  • Shopping baskets and carts
  • Fitting room accessories

>> RELATED:: Are You Thinking About Opening a Store for Business?

Miscellaneous operating expenses

  • Liability insurance
  • Association fees and dues
  • Office and cleaning supplies or labor cost
  • Sales receipts

Employee costs

  • Salaries and wages
  • Payroll-added costs

Technology and equipment

  • Specialized point of sale systems and POS software such as credit card and check processing machines, bar code reader, cash drawer, cash register
  • High speed internet including routers
  • Fax machines
  • Telephones
  • Computer
  • Security equipment such as surveillance cameras, entry alerts, security mirrors, counterfeit detector pens, fire extinguishers
  • Other signs such as exit sign, store hours sign, open/close sign, restroom sign
  • Other equipment such as drink fountains, microwave oven for employees


Public relations

  • Cost of grand opening
  • Media and public relations
  • Advertising around the grand opening.


  • Unplanned expenses
  • Miscellaneous fees

It is important that you have resources for unplanned expenses. You need to anticipate that there may be hidden costs that you have not realized – and that could prove substantial enough to impact your ability to execute your plans and start the store.

Here are some potential hidden expenses that you could face:

  • Plan carefully your rental or lease payments, which are paid in advance (sometimes up to 6-months’ rent in advance).
    Professional and legal fees to write agreements and navigate statutory approvals
  • Shop fit-outs may take longer than planned, which means you may be paying rent but not earning anything from the store yet because you are not yet open for business!
  • Staff needs to be trained prior to opening
  • Critical regulatory approvals and compliance checklists may take longer than anticipated, which could delay your shop opening.
  • Cost of carrying inventory

You need to have the resources and cash flow to start your retail business on the right foot and give it its best shot to succeed. By getting a firm grasp of how much money you need to start your retail store, you can plan properly and give your retail business the best chances for success.

Recommended Books on Opening a Retail Store Business:

George Rodriguez

George Rodriguez is a writer for An entrepreneur with experience in running several businesses, he writes on various topics on entrepreneurship and small business.

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Category: Business Types, Startup Expenses

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