Throughout the history of the world, fashion has always been in high demand. As styles evolve, millions of people will clamor to get their hands on the latest fashions. With this increasing demand for the newest styles, business-minded individuals have seized the opportunity to bring fashion to the masses by opening clothing shops.
So, how many clothing shops are there? There are currently 158,931 clothing shops in the United States alone, per Ibis World. That’s not taking into consideration the massive number of clothing retailers, either. Is the clothing market too crowded? Better yet, is a clothing shop a good business idea in today’s financial climate?
Opening a clothing shop is a good business idea, although it does present challenges. While larger states have an oversaturated market and there has been a 1.9 percent decline in small clothing businesses, you can still find success in the right community while working with the right demographic and keeping your expenses low.
What are some of the most influential reasons you should consider when starting your own clothing shop, and what are the costs to you? What issues could affect your clothing shop, and what is the investment future for your business? Read on to find out more about the benefits and pitfalls of opening your own clothing shop.
How many clothing shops are currently in business?
If you are looking into starting a clothing shop, one of the first factors to consider is whether the market is saturated in your area. There are 158,931 small clothing stores currently open in the 19,450 incorporated cities located within United States. On average, that’s approximately eight small clothing shops per city.

At first glance, this may seem like the clothing market is much too crowded. However, California (3,266), Texas (2,705), and New York (2,566) have the highest concentration of clothing shops, which is to be expected due to their large populations.
But don’t think that this is a negative aspect of starting your own clothing business. While the number of clothing shops lingers around 160,000 in the United States, the population of the United States is around 335 million. That leaves each one of those clothing stores to serve a whopping 2,100 customers annually.
According to Statista, the United States spends about $25.9 billion dollars in one month alone. That leaves on average a clothing shop responsible for taking in $161,875 each month. When you’re considering that most smaller clothing retailers make between $23,000 and $141,000 a year, according to NerdWallet, there’s a lot of room to improve.
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What challenges can you face when starting a small clothing shop?
Now more than ever people have a veritable plethora of choices when it comes to shopping for clothing and apparel. We now live in a digital world, where we conduct the majority of our transactions online rather than in-person. While this may sound quite convenient, it has caused brick-and-mortar locations to lose sales, and possibly risk going out of business in the process. In fact, the amount of clothing purchased online may surprise you. According to Digital Commerce 360, roughly 46 percent of all clothing purchases are conducted through an e-commerce platform such as Amazon or through retail websites like Target and Walmart. More often, people are choosing the convenience and lower prices of buying their clothing online in lieu of frequenting small clothing stores.
Retail chain stores are yet another option available to the general public, and people are flocking to these stores in droves. While the general sentiment is that people usually prefer not to visit these chains, they are drawn to them because of their relatively low prices.
Per Statista, the average price for clothing at Walmart is $10.82, while Target averages $14.79 for their clothing merchandise. While these outlets may not offer luxury brands, budget conscious shoppers are speaking with their wallets now more than ever. Small clothing stores also have to have a much higher mark-up on their merchandise than retail locations, which can fluctuate from 55 percent to 62 percent, according to the Houston Chronicle. The reason that small stores pay such a large markup is that they do not have the buying power of the larger retail chains. Because larger chain stores are able to buy in bulk, they do not have to mark up their merchandise nearly as much as a small clothing shop.
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What is the cost of doing business for a clothing shop?

One of the most significant deterrents to opening a clothing shop has to be the cost of doing business. Simply put, small businesses in the United States are affected more by these expenses than retail chains. If you couple that with the 35.7 percent decline in revenue that has plagues brick-and-mortar clothing shops over the past few years, it’s clear to see why small clothing stores are currently struggling to stay open. Three of the most impactful costs that are incurred by small clothing shops include the following:
- Wages (16.7%)
- Purchases (42.4%)
- Rent & Utilities (8%)
Another element that has hurt small clothing stores is their location. If your shop does not have an optimal location, you will not be able to draw in the foot traffic you depend on for sales. While the average expense for rent and utilities is approximately 8% on average, clothing shops is “prime” locations will be subjected to much higher rent and utility costs. Regulations and compliance also factor into those costs.
Why do clothing shops fail, and how can you combat those failures?
Clothing stores, like many other small businesses, take an incredibly high risk of failing. I’ll bet that some of you were unaware that only 40 percent of small businesses are profitable, while 30 percent barely break even. Sadly, only 47 percent of all small businesses are still operating after four years. In addition, a whopping 30 percent of small businesses actually take a loss.
The Boutique Hub has offered some insight into why clothing shops fail. The six primary reasons that most businesses fail are:
- Lack of leadership. Many businesses fail because their leadership does not guide their employees to success. You can combat this leading cause of failure by making sure that your business plan is organized well and you have a budget that you stick to. Make sure your employees feel valued and know that you are a leader who can continue to make your business grow.
- Lack of originality. One of your biggest assets of being a small clothing business is having the opportunity to function differently from your larger counterparts. While they can sell to a large demographic, they are not unique. Focus on what sets your business apart in your local community and you can bring in more customers just by supporting your niche or demographic.
- Lack of communication with customers. What can set you apart from the larger box stores or even online retailers? Communicating with your customers. You’re small enough of a business that you can directly talk to the people shopping in your store. Get to know them, what they like, what they want, and what they need, because you know retail giants like Walmart, Amazon, or Target aren’t doing that. One way to do that is encourage engagement on your social media or your website, and don’t just have people comment—actually listen to their advice.
- Lack of focus on budgets. Remember that revenue doesn’t necessarily equate to profit. Inventory management, mark-up, overhead, mark-downs, payroll, and taxes are just a few things to consider. The more you plan ahead, the better—stick to your business plan and your budget. They will do you well as you make major decisions for your business.
- Lack of financial control. They fall into bad habits like exceeding their marketing budget or over-extending payroll. Set realistic expectations and goals to grow your business slowly over time instead of trying to make it big overnight. Slow and steady wins the race, especially when it comes to making a profit.
- Lack of business development. They do not learn from previous mistakes. While you can’t always plan for certain things, if you don’t learn from your mistakes, your business will just continue to make them. Take what you’ve learned and apply it to your business decisions in the future.
Advice for Starting a Small Clothing Shop
While the reality of starting your small clothing shop is that you may struggle at first, there are many reasons why you should start your own small clothing shop, and not all of them are about the profit.

When you’re starting your business, you don’t need an advanced degree—just the passion for the business and a desire to do good for your customers. And while it can be difficult with inconsistent income, stress, and long hours, what it comes down to is that you own your very own clothing shop—which is exciting, rewarding, and allows you to tap into your creativity. While you can be facing challenges within your clothing shop that may not have even been mentioned in this article, remember that what drove you to starting your own business is your passion, excitement, and focus on creating a great small business for your community and your chosen niche. With the right drive, those disadvantages will breeze by you on your way to success.
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Related Questions
How profitable are clothing businesses?
In most cases, the profit margin for clothing businesses is between 4 percent for lesser-known brands and 13 percent for brands that are more well-known. While this is not a high profit margin, focus on your customers, keeping your budget line items low, and advertising on free sites like Facebook or Instagram can help bring more customers in to increase that profit margin.
Which clothing boutiques in the United States are the most successful?
There are a few clothing boutiques that have become success stories. Here are the five most successful clothing boutiques in the United States today:
- Blush Boutique Co
- The Kewl Shop
- Boutique Rye
- navyBLEU
- Glamazontay
To learn more about how to start your own fashion clothing line check out my startup documents here
Please note: This blog post is for educational purposes only and does not constitute legal advice. Please consult a legal expert to address your specific needs.

Meet Shawn Chun: Entrepreneur and Fashion Business Fan.
I’m a happy individual who happens to be an entrepreneur. I have owned several types of businesses in my life from a coffee shop to an import and export business to an online review business plus a few more and now I create online resources for those interested in starting new ventures. It’s demanding work but I love it. I do it for those passionate about their business and their goals. That’s why when I meet a designer or boutique owner at a craft fair, farmers market, retail location or anywhere else I see myself. I know how hard the struggle is to retain clients, find good employees and keep the business growing all while trying to stay competitive.
That’s why I created Fashion Business Boss: I want to help fashion business owners like you build a thriving business that brings you endless joy and supports your ideal lifestyle.