The average sneaker shop can make over $120,000 profit yearly or even more all things being equal. The fact that all sneaker stores are not expected to make the same amount yearly means that certain factors can determine how much they can make.
A sneaker store business is a retail outlet that sells different types and sizes of sneakers, and related fashion accessories. The truth is that a sneaker store business has a very minimal entry barrier hence it is a business that can attract anyone interested in selling sneakers.
Revenue and Profit Breakdown for a Sneaker Store
A well-positioned sneaker retailer in a busy urban area or shopping center can sell between 100 to 500 pairs of sneakers, especially on weekends or during special promotions. While a sneaker store in less busy areas might average between 10 to 50 pairs of sneakers per day.
What is the Profit Margin of a Sneaker Store?
The profit margin for a sneaker store business to a large extent is dependent on the business model the sneaker store adopts. A retail sneaker store business generates a profit margin of approximately 20 percent to 30 percent.
However, a wholesale sneaker store that also engages in the distribution of sneakers has a profit margin of approximately 35 percent due to the lower cost of goods sold. Equally, an online sneaker store has a profit margin of approximately 27 percent to 32 percent.
The bottom line is that a sneaker store has the potential to increase its profit margin if it knows how to get sneakers at good prices and sell them at premium prices.
Apart from that, a sneaker store with the right marketing strategy can also mark up their prices in such a way that it will help them increase their profit margin.
What is the Average Selling Price for a Pair of Sneakers?
In most sneaker stores, a pair of sneakers sell for between $80 to $150. However, it is important you know that the cost of a pair of sneakers will vary based on market segment and demography. There are 4 different market segment for sneakers:
Price Range of Sneakers Based on Market Segment
1. Budget-friendly Sneakers sell for $40 to $60 per pair
These are mainly basic sneakers worn for everyday use by low level staff in restaurants, bars, factories, grocery stores, clinics, etc. Amateur athletes also start out with these type of sneakers.
2. Mid-range Sneakers sell for $70 to $150 per pair
This type of sneakers are usually suitable for casual wears and serve a wide range of use ranging from sports to entertainment activities such as parties and events. Brands that offer such sneakers include:
- Adidas
- Nike
- Puma
- Reebook
- Converse
- Hoka
3. High-end of Premium Model Sneakers sell for $150 to $300 per pair
This type of sneakers are usually limited editions or collaborations. Some of these sneakers come equipped with advanced technological devices such as fitness trackers, GPS, and sensors; and they can be synced with the wearer’s smartphones to serve many purposes.
4. Luxury Sneakers sell for $300 to $1000 per pair
Luxury sneakers are usually designer models bought and worn simply to make a statement, define your taste or keep as a collection. Sneakers that fall into this category are those of luxury brands such as:
- Balenciaga
- Gucci
- Christian Louboutin
- Prada
- Versace
How Many Sneakers Do You Have to Sell to Make $120,000 Profit Yearly?
If your sneaker store is in the mid-range market segment and the average price per pair of sneakers you sell is $80 with a profit margin of 20% per sneaker, then you would need to sell approximately:
- 21 pairs daily = $1,680 daily
- 144 pairs weekly = $11,520 weekly
- 625 pairs monthly = $50,000
Total Annual Revenue = $600,000 (approx.)
With a total annual revenue of approximately $600,000 and a 20% profit margin for your sneaker store, you should have a gross profit of $120,000. To get the net profit or actual profit, you need to deduct your salary, taxes, bills and utilities, and other expenses.
How Much Can a Sneaker Store Owner Make Yearly as Salary on a Gross Profit of $120,000?
As a sneaker store owner running a business that brings in a gross margin of $120,000; you can pay yourself an annual salary range of between $30,000 to $70,000 without affecting the growth of your sneaker store. However, your salary should only be determined after taxes, rent, utilities and other expenses have been accounted for.
Now let us discuss some of the key factors that influence how much a sneaker store business make yearly and their profit margin.
7 Factors That Determine the Income of a Sneaker Store
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The Type and Brand of The Sneakers You Are Selling
First and foremost, the amount of money you can make selling sneakers will be determined by the types of sneakers you are selling.
You know that a sneaker store has the option of selling only new sneakers, only used sneakers or both old and new sneakers. So also, a sneaker store may decide to only sell high-end sneakers from notable brands.
No doubt, a sneaker store that sells only high-end sneakers from notable brands will make more money because high-end sneakers are expensive.
Such sneaker stores must have what it takes to attract people with high purchasing power if indeed they want to generate sales regularly.
So also, a sneaker store that only retails used sneakers will make less money than a sneaker store that retails only new sneakers or a combination of new and used sneakers.
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The Marketing and Promotional Strategy of the Sneaker Store
If a sneaker store can adopt top-notch marketing and promotional strategies, they are going to generate good revenue from the business.
Part of what you should do if you want to earn more from your sneaker store business is to make sure you encourage people to help you use word of mouth to promote your sneaker store and also do a give back when your customers recommend your sneaker store to their family members, friends, and colleagues at work.
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The Location of Your Sneaker Store
A sneaker store situated in a high-traffic area such as near popular tourist attractions, shopping centers, airports, or campuses, is likely to attract more customers and generate higher revenue.
In a nutshell, if you want to make more money from a sneaker store business, then you must make sure you open the business in a busy location that has fewer sneaker stores.
Although, it will cost you more to secure a facility in a busy location or a major city center or mall, but the fact remains that it is easier to make more money from such a location.
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Additional Services and Product Offerings
We all know that a sneaker store business retails different types and sizes of sneakers, but the truth is that, when a sneaker store business offers additional services and products, it will increase the revenue potential of the business.
Interestingly, there are several additional services and products that a sneaker store business can offer, some may offer customization options (shoe painting, embroidery, or lace swaps), delivery services, repair services, and sneaker exchange services (exchanging used sneakers for old one with a fee attached.
Apart from that, a sneaker store can also retail products such as clothes, other types of footwear, and fashion apparel. Trust me, these additional services and products will help you attract new customers, and also help old customers spend more.
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The Pricing Strategy of the Sneaker Store Business
The truth is that customers will always look for a pricing model that favors them. So as a sneaker store business owner who wants to make more money from the business, you should carefully consider factors such as discount, or tagging your product with the best price available in your location.
Over and above, if you want to maximize profits from your sneaker store business, then you must make sure the pricing strategy you settle for strikes a balance between affordability for customers and generating sufficient revenue for the business.
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Excellent Customer Services Offering
It is as simple as this – if a sneaker store business deploys excellent customer services, they will continue to welcome repeat customers. So also, if they are known for poor and shabby customer service, they will lose customers to their competitors.
In essence, if you want to make more money from your sneaker store business, you must make sure you don’t only work on your marketing and promotional strategies (your front door) which will help you welcome new customers, but you must also work on your back door – that is your customer service approach, with that, you will be able to retain your new customers, and then convert them to loyal customers.
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The Level of Competition
A sneaker store business that operates where the competition is rife will struggle to make more sales when compared to a sneaker store business that operates in a location where there is no competition.
In recent times, online sneaker stores have been competing with brick-and-mortar sneaker stores. So, when mapping out strategies on how to be highly competitive as a sneaker store owner, you should also factor in the fact that you will be competing with eCommerce stores that also retail sneakers.
10 Ways a Sneaker Store Owner Can Cut Cost and Increase Profit Without Negatively Affecting the Store
Cutting costs in a bid to increase profit, without negatively affecting your sneaker store, requires a careful balance. Here are several cost-saving measures you can try out today:
1. Optimize your Inventory
A good way begin the process of cutting cost is to use data analytics to understand which sneaker models and sizes sell the most and adjust the quantity you purchase or restock, in order to reduce excess inventory.
2. You Can Start Buying Sneakers in Bulk
After determining your best-selling sneakers, you should proceed to purchase them in bulk. Doing this will help you achieve 2 things:
- You will get better prices from suppliers when you buy your sneakers in bulk.
- You will get to save money on logistics because the cost of transporting 50 sneakers from the suppliers location to your store is almost the same for 100 sneakers.
So instead of spreading your cost of logistics on 50 pairs of sneaker, you get to spread it on 100 pairs of sneaker, thereby reducing your cost per pair of sneakers. However, you must be very cautious to avoid overstocking on a slow-selling brand of sneakers..
3. Renegotiate with your Supplier
You can negotiate better delivery terms, more credit facilities with longer repayment time and lower prices especially for high-volume orders of sneakers.
4. Consider alternative suppliers
If tip 3 above does not work, then it is time to look for alternative suppliers that offer competitive prices for the same quality of sneakers.
5. Reduce Utility Costs
You should hire an electrician to help implement energy-efficient lighting, heating, and cooling systems in your sneaker store to lower utility bills.
Another way you can reduce energy cost in your sneaker store is to go green. You can achieve this by using energy-efficient appliances and lighting system.
6. Leverage Social Media
It is far cheaper and more effective to use social media platforms for marketing your sneaker store instead of more costly traditional advertising channels such as television, radio and billboards. All you need to do is create engaging content to attract customers at a lower cost.
8. Use Email Marketing
It is cheaper to sell to a return customer than to go chasing a new potential customer. This is the sole reason you should build and utilize an email list for direct marketing, offering promotions and updates to encourage repeat business.
9. Improve your Operational Efficiencies and Streamline Operations
You can achieve this by using software to streamline inventory management, sales, scheduling, accounting, customer relationship management and other operational processes to reduce labor costs.
10. Reduce Waste by Going Paperless
You can save cost in your sneaker store by eliminating the use of paper receipts, invoices and the likes. All paper issuances can be replaced by pdf and sent via email or phone.