Graduating from college in the middle of an economic recession did not stop Gina Vericella, now 26, from opening her dream clothing boutique in Bloomington, IL. Opening a small business in 2009 was a challenge, but one she overcame as she made enough money to open a second GiGi Bottega in Evanston, IL in 2011. “Things start to add up fast, so you really have to watch where you are spending your money, and that’s where the business plan comes in,” said Vericella, who also took out a $20,000 loan from the bank in order to open the Evanston location.
Construction at the Evanston store cost about $25,000, as Vericella wanted the contractor to completely recreate the 2,000-square-foot space. Another $15,000 went towards buying inventory for the second store’s opening. Buying new inventory is one of the Vericella’s biggest challenges when it comes to regulating the store’s cash flow. If a store is not on a terms agreement with a supplier, the owner must pay for items one week before they even ship out.
“It’s good to try to get on terms with a company because they’ll send it out, bill you, and then you have 30 days to pay it,” she said.
After buying an item of clothing at the wholesale price, Vericella said she usually doubles the price then adds one or two dollars to settle the item’s retail cost. While she tried having brands in the store that were a bit on the higher end, Vericella noticed her demographic was not interested in paying $70 or $80 for a top.
“I’ve kind of like streamlined my store because I’ve noticed people just like to pick up something fun and a little bit less expensive.”
Kyra Hurwitz, 19, said she has walked by the Davis Street location several times, but went in Saturday morning for the first time to try on some clothes. The Northwestern student said she liked the clothing but that the store did not have many items in her size.
“The price range throughout the store is really compelling, the clothes look a lot nicer than the price they are selling for,” said Hurwitz.
Alex Crevi, Vericella’s boyfriend and financial advisor, said there are two main costs that a business owner has to worry about: the fixed cost—rent, salaries, insurance, and utilities—and the variable costs, which in this case is the store’s inventory. The 30-year-old investment manager at Rothschild Investments said the clothing industry is shifting towards online shopping. Crevi said online sales only make up about 10 percent of retail sales for the store, but that it is an area that is growing fast.
“That doesn’t mean there’s no place for a physical store because that will be a prevalent thing for a long time, but the way the industry is going is definitely a lot towards online sales,” he said.
Although the Bloomington store was profitable during tough economic times, business for either store has not really picked up even as the economy gets better.
“Retail is a competitive landscape; business is steady, but not great,” Crevi said.
Vericella said some challenges facing the business in the next year include further developing her online sales as well as creating more awareness of the store. Maximizing sales has been a challenge for Vericella in the past two years. Rising cotton prices increased costs for clothing manufacturers. As a result, prices from her suppliers rose slightly in the past year, which she said affected the store’s profitability. Still, Vericella is hopeful for the future.
“I’m optimistic for the future,” she said, “It’s been a little up and down, but I’m confident too.”
Photo Credit: GiGi Bottega