Ep. 175 Growing vs. Scaling a Retail Store

“Growing” and “scaling” are so often used interchangeably, especially in business contexts. I wanted to know what these words truly meant, so I read countless articles about the definition of growing versus scaling a retail store. Ultimately, I still felt confused and was left without a clear answer. 

Attendees at my Virtual Conference asked about the difference between growing and scaling on the first day of our weekend together, and I’m so thankful they did. It gave me the motivation I needed to finally determine the answer to this question—both for myself and for all of you! 

I dug deep, did some more reading and research, and finally had an a-ha moment. Let’s look at what the true definitions of growing and scaling are and how those apply to indie retail businesses.

What Growing Versus Scaling A Retail Store Really Means for Indie Retailers

For a long time, I believed that scaling for indie retailers meant opening a second or multiple locations. However, it DOESN’T mean that. 

According to Harvard Business Review, “Growth means adding revenue at the same pace you are adding resources; scaling means adding revenue at a much greater rate than cost.”

Put another way, growing versus scaling a retail store comes down to how quickly your revenue grows compared to your costs. If your revenue is growing faster than your costs, you’re scaling. 

Unfortunately, that means that adding a second location is NOT scaling. There’s a substantial increase in expenses and resources with every new location! So while adding more locations is a way for retailers to grow, it isn’t how retailers scale.

Does all of this mean an independent retailer CAN’T scale? No. But it’s definitely not the norm. 

Four Ways Brick and Mortar Retailers Might Scale

While scaling is definitely trickier than growing a retail business, it is possible. Here are four example scenarios where an independent retailer might be able to add revenue faster than their expenses.

1. Having Your OWN Designs/Products Manufactured

Let’s say you hand-make some of your items. As demand starts to outpace your capacity to make your items, you find a manufacturer who can create your products more efficiently and economically. 

You’re able to meet the increased demand, start offering wholesale alongside your regular retail sales, and fulfill thousands of orders.  

2. Creating Evergreen Content

Let’s say you have a brick-and-mortar store and you’re a content creator. Perhaps you have a digital course that you sell on an evergreen basis (meaning it’s all automated and you sell it year-round). Having a product that you can sell regularly without huge investments of your time or resources is another option for scaling a retail business.

3. Selling Niche Products Online

If you’ve found a product that customers love and that you know how to market via social media and ads, you can definitely scale your retail business. What you earn from selling a niche viral product can easily outpace any expenses you might have for your eCommerce software, website, and your cost of goods. 

4. The Well-Oiled Retailer

Opening multiple locations isn’t scaling…EXCEPT when the owner has optimized their business and they have a really well-oiled machine! We’re talking franchise level. They’ve mastered systems for hiring, selling, buying, displays & merchandising, and everything in between. 

It’s possible that this type of retailer can scale a bit, but I would have to see their numbers to prove this is the case. I don’t know of any retailers in this category yet. If this is you, please reach out to me on Instagram! 

Most Independent Retail Businesses Will NEVER Scale (And That’s Ok!)

Nexea’s visual comparison of growing versus scaling a retail store brought me the most clarity on this topic. Take a look: 

The visual on the left side is a representation of growing businesses. It shows a BIG initial investment and additional investments along the way paired with increasing costs.

On the right is the representation of a scaling business. There’s one BIG initial investment, with costs slightly increasing over time. Revenue grows MUCH faster than the costs.

When I considered brick-and-mortar retail business models, the definition from the Harvard Business Review, and this graphic…I realized that scaling is something most micro indie retail businesses can’t and won’t ever do.

All of this to say: most indie retailers will grow, but very few will scale. And that’s ok! 

It’s not a reflection on us. It’s just a reality of the type of business we run—one with LOTS of expenses and overhead. 

What I find most powerful about this information is the KNOWING. It’s just like the information I shared in episode 169. Once you have the knowledge, you can make decisions based on it rather than guessing. Knowledge is power (and a great motivator!). 

Sometimes, I take information like this as a challenge. One of my first thoughts after understanding the difference between growing versus scaling a retail store was, “Oh yeah?! You can’t tell me I can’t scale! Watch me!” And my brain was off to the races, scanning for ideas that would help me scale. 

While you may never scale your indie retail business, you absolutely can work less, profit more, and grow. 

Resources

• Midsize Companies Shouldn’t Confuse Growth With Scaling (Harvard Business Review)
• The Difference Between Growth vs Scaling (Nexea.co)
• Episode 169: The Shocking Brick and Mortar Metric for Retail Businesses
• Take the Savvy Shopkeeper Quiz for your free shopkeeping journey roadmap, including curated resources and podcast episodes to help you work less, profit more, and grow. 
• Free resource: Open a Brick and Mortar Store Checklist

Timestamps

• [04:27] What Growing and Scaling Really Mean for Indie Retailers
• [06:30] Four Ways Brick and Mortar Retailers Might Scale 
• [10:32] Most Independent Retail Businesses Will NEVER Scale (And That’s Ok!)