Start a clothing store: a concept, a location and stock that sells

Most people who want to start a clothing store begin with the rails: the brands, the window, the feel of the place. Suppliers and banks begin elsewhere. Brands take orders months before the season and often want payment on delivery, rent runs whether customers come in or not, and whatever does not sell at full price costs margin at the end of the season. Those forces decide whether a clothing store survives its second year, more than the window does. The amounts below are in euro; the logic works in any currency.

The clothing industry in figures

Fashion is a slow-growth market. McKinsey expects the global fashion industry to post low single-digit growth in 2026 again; 46% of the executives it surveyed expect conditions to worsen and 25% expect them to improve (source: McKinsey, November 2025). The same research expects resale to grow up to three times faster than the market for new clothing through 2027 (source: McKinsey, November 2025). Second-hand is a competitor, or a part of your range.

Margins in retail are thin once all costs are paid. In the EU average for retail trade as a whole, the operating result before depreciation was 6.5% of revenue in 2020 and 4.6% after depreciation, with staff costs at 11.9% (source: Firmfocus, October 2026). Survival is better than many founders fear: of US retail establishments opened in the year to March 2015, 61.7% were still operating after five years and 44.2% after ten (source: US Bureau of Labor Statistics, December 2025). These figures cover all kinds of shops, so use them as a frame, not a forecast.

Choose a concept that stands for something

A store with "nice clothes for everyone" competes with every chain and webshop at once. A concept gives customers a reason to come to you. Common directions:

• Curated boutique: your selection of brands for a clear customer; taste and advice are the product.
• Specialist: one need done well, such as larger sizes, workwear or durable basics.
• New and second-hand: a mix that answers the resale trend.
• Franchise or shop-in-shop: a ready concept and buying power in exchange for fees and less freedom.

Test it with four questions: for whom, for which occasions, at which price level, and why they would come to you rather than to the chain or the webshop on their phone. If the last answer is "because we are nicer", keep working. If it is "because we fit trousers properly and repair them for free", you have a concept.

Location and rent

For a clothing store, location is part of the marketing budget. A busy high street brings walk-in customers and high rent; a side street works only if people seek you out. Look at the neighbours: stores that attract your customer help, and empty units tell you something about the street.

Rent is often the largest fixed cost after staff, so negotiate the lease length, break clause, rent increases, fit-out contribution and rent-free months as well as the price. Budget the fit-out with a separate line for working capital.

Buying and stock: open-to-buy, sell-through and markdowns

Buying is the core skill of a clothing retailer, and three terms keep it under control.

The open-to-buy is your buying budget for a period; it makes you start from what you expect to sell instead of ordering on enthusiasm at a trade fair. Sell-through is the share of the units received that sold in a period, such as a season. Markdowns are the price reductions that clear stock; you will need them, so plan them.

• Basics and fashion: keep a core of basics you reorder all year, and limit items that must sell within one season.
• In-season buying: keep part of the budget open for reorders of what sells.
• Supplier terms: ask about minimum orders, payment terms, returns and consignment, where you pay only for what sells.
• Weekly figures: track sell-through per item and size, and act early.

Online and in store

Your customers shop online: in 2025, 78% of internet users in the EU bought goods or services online (source: Eurostat, February 2026). Not every clothing store needs a full webshop from day one, but customers must find you online, see what you sell and know when you are open. Many stores start with social media and click and collect, and add a webshop later. Online returns are a cost of their own; the guide on starting an online store shows how to calculate them.

Rules for clothing retailers

Clothing must carry a label that says what it is made of, and in some markets more. Brands usually handle the labels, but if you import or sell an own label, the duty is yours.

Two newer EU rules concern unsold and discarded clothing. The Ecodesign for Sustainable Products Regulation prohibits the destruction of unsold apparel, clothing accessories and footwear. The ban applies to large companies from 19 July 2026 and to medium-sized companies six years after the regulation entered into force in July 2024, while micro and small enterprises are exempt (source: EUR-Lex, June 2024). The revised Waste Framework Directive requires member states to establish extended producer responsibility schemes for textile and footwear products by 17 April 2028; producers, the businesses that first make these products available in a country, will pay towards collection and recycling (source: EUR-Lex, September 2025). Importers and own-label sellers should check how their country implements it.

Registration, licences, insurance and financing

A clothing store rarely needs a specific licence, but you still register the business and check local rules on signs and use of the premises; see business name and licences. Insure stock, contents and liability, and consider business interruption cover, because water damage stops revenue but not rent; see business insurance. Stock ties up money before you sell anything, so combine supplier credit, a bank loan and own money in a financing plan.

Worked example: what a small clothing store earns

Elena opens an 80 square metre store in a mid-sized town, selling durable everyday clothing with a free repair service. Elena buys at 40% of the full retail price, an initial margin of 60%, and orders two seasons a year.

Fictitious Firmfocus example. Amounts excluding VAT. Fixed costs: rent €30,000, staff €36,000, energy €5,000, marketing and online €10,000, software, card fees and packaging €7,000, insurance and accountant €6,000, depreciation of the fit-out over six years €7,500, interest €2,500. Financing: €50,000 own money, €70,000 bank loan, €24,000 supplier credit.

The initial margin of 60% becomes 52.9% after markdowns. In the plan, Elena earns €40,000 before tax, exactly the amount needed to live on, with nothing left for a bad season. With the same buying budget and ten percentage points more sold at full price, profit rises by €12,800 a year. That comes from fewer one-season items, more reorders and earlier markdowns, not from more customers. Before signing the lease, Elena checks the cost structure against the industry figures.

Small or larger start

Pitfalls

• Buying too much in the first season: without sales history every order is a guess, so keep budget for reorders.
• No markdown plan: waiting too long with reductions leaves you with winter coats in March. Plan when and how far you mark down.
• Rent that the street cannot carry: calculate the revenue the rent requires before you fall for the building.
• Invisible online: customers who cannot find you online rarely find the store.

Other industries are compared in Starting by industry, and the overview Start a business covers every step around it.