Are Gift Shops Profitable?

When visiting somewhere new on family day trips, beach days or holidays, most people step into a gift shop. The gift industry is enormous and very competitive, and those starting out or thinking about investing will want to know how to make a gift shop successful. Are gift shops even profitable?

One gift industry, many kinds of gift

Given the close relationship between the gift industry and tourism, the profit potential of a gift store is likely to be dependent on location. Tourism exists everywhere, but tourist levels range from the odd passer-by in lesser-known spots to thousands of visitors every day. So there are some gift shops that, purely through placement, can never fail to turn a healthy profit; others will have to be resourceful to find ways of flourishing. 

If considering the potential of a shop, location is every bit as important as local competition. Seaside and lakeside towns are always worth considering, although tourism in coastal regions still varies wildly as some areas feature more heavily in visitors guides than others. Areas with particular historical or cultural interests will always attract visitors. This is true for coastal or inland regions, cities or towns.

Given that tourism makes up such a large portion of the gift shop trade, a key point to consider is how long the tourist season in a location will be. While some significant cities will attract visitors all year round, some locations will have a short tourist season and a long period of relative quiet.

Not only that but with any busy tourist season comes a flurry of other gift vendors eager to snap up the loose purses brought by the happy visitors. So judging the potential of an area is extremely important in determining whether or not your gift shop will be profitable. Competition and the size of the tourist market are two of the biggest keys.

Your gift shop identity

How much does it cost to open a gift shop? This can depend on how you wish to obtain a larger piece of the market. Stocking a different variety of gifts and theming your shop can also lead to more niche areas of the gift industry where there is less competition.

For instance, a merchandising strategy that allocates a worthy portion of its floor to, say, board gaming will benefit from tourism in summer but will maintain steady trade through those interested in gaming or any other special interest the shop caters to. 

The choices made around suppliers and product range are crucial to the success of the business. The quality and affordability of merchandise will be the foundation of your reputation and, by extension, the potential of the business. This is especially true in urban areas where you’ll likely be going up against established gift-selling brands.

There are a huge number of suppliers gift shops can call on, each with their own products geared towards a particular part of the market. Visiting trade shows and conducting thorough research can help you find the best products at the best value.

The markup for gift shop merchandise will tend to be quite good, but in many cases, the number of transactions made throughout the year will be lower than the average retail store. This means making the most of each sale without pricing yourself out of the market is a key part of your business.

If you make the right choices when creating the identity of your gift shop, the products you sell will not be available anywhere else in your area. Whether your customer is a cheerful tourist, hobbyist or even a curious local, they will be willing to pay the little bit extra you need to make your store that much more profitable.

Be ready for anything

No amount of tourism in the world would make your gift shop profitable without a world-class POS system to help keep up with the demands of modern retail. For many gift shops, a large amount of trade is made in short, seasonal periods of the year. Having a fast point of sale that keeps queues to a minimum, helps you keep a close eye on stock levels, gift-card and credit schemes, and access to the online market is a real must.

Epos Now’s specialized Gift Shop solution can help your store with every aspect of business:

• Know which merchandise are making you money and which are taking up valuable shelf space
• Detailed, flexible reporting on everything from products and categories to accounting information and customer spending
• Streamline your sales process with adjustable front till functions and credit card processing integrations.
• Stay on top of your stock control with a product matrix that records levels in colors and sizes
• Access the online market and make sales to gift lovers nationwide and beyond, all integrated to your POS
• Don’t miss out on a second of selling with 24/7 expert support by phone and SMS

The face of the business

Gift shops rely heavily on providing potential gift-givers with product information and good advice. Unlike some forms of retail, a large slice of your customer base may not know what they’re looking for when they enter the store.

Your team will need to be ready to be asked any number of questions. Epos Now’s product plus feature can provide additional information and images for any product. Still, even with that assistance your staff will need to be prepared to help find customers the perfect gift.

Good customer assistance and subtle sales strategies are a crucial part of the gift shop industry. Equipped staff with a friendly smile and gift wrapping skills can set your store apart when thinking about how to open a small gift shop in particular but should be part of all business ideas. 

Dedicated staff will provide attention to detail the business needs and will consider how to display merchandise in a gift shop and keep the business looking its best.

Exploring profitable expansions

Gift shops will always have great profit potential in holiday seasons but keeping a steady turnover year-round will require a broader appeal either to locals or a target market. The products you stock is a key way of growing your market, as well as selling online, but there are other things you can do to keep trade ticking over.

Bridging the hospitality gap

Many gift shops on the coast and by tourist spots combine two of the main tourist needs into one business, helping them purchase souvenirs and then sit and refresh themselves in a gift shop cafe.

The gift shop cafe is a common sight, and given the physical exertions involved in tourism they tend to be very popular. With a POS system that can categorize your business and work as part of a holistic system, it is not so difficult to run a business with two different revenue streams. The big advantage of the gift shop cafe is that you can allocate more of your floor space to the hospitality side of your business during a quiet off-season. 

A hand in every pocket

When attracting local trade, a gift shop that also provides for everyday needs will maintain its footfall whatever the weather, and keeping the footfall high will still lead to further gift sales which will always have a higher profit margin than products like milk and newspapers.

There are many different ways of giving your gift shop a USP, so exploiting the resources you have and making careful choices is essential to making your gift shop stand out. These are key points when considering how to run a successful gift shop.