Launching a souvenir shop, or gift shop, may not be the sexiest business venture that a prospective entrepreneur can think up. However, it can be a great way to make money.
Americans take 2.29 billion domestic leisure-based trips every year, during which they spend much more freely on souvenirs and gifts than they ordinarily do. By taking advantage of travelers’ penchant of pulling out their credit cards to buy trip mementos and gifts for friends and family back home, a shrewd small business owner can turn a healthy profit. Particularly for those based in a tourist town–or willing to relocate to one–opening a souvenir shop can do gangbusters.
While there’s real potential for success, establishing a souvenir shop takes careful planning and foresight. Otherwise, you could end up with a store full of tchotchkes collecting dust that nobody wants to buy. In this guide, we’ll examine the qualities that make a good souvenir shop owner and go step-by-step through each aspect of getting the business off the ground.
Is a souvenir shop business right for you?
Running a souvenir or gift shop business doesn’t require a specific educational background or a particular set of credentials, but some are more cut out for the business than others. Here are some of the qualities that make a good souvenir shop owner.
You have a knack for sales.
A background in sales, or a natural talent for selling things to people, is a useful quality in this business. Likely, most of your products are things that people can live without, so being able to convince folks to buy your goods goes a long way. Know your products, their uses, and who they make great gifts for.
You have relationships with local artisans and craftspeople.
Any shop can sell a swath of products bought wholesale. However, stocking crafts and pieces of art made by local artisans will set your shop apart from the rest. Attend local art showings and browse Etsy to seek out local craftspeople in your area and ask if they are interested in supplying your store with their work. Showcasing unique regional goods is a great way to make your souvenir shop one-of-a-kind.
You are flexible and learn from mistakes.
Don’t be afraid to learn from initial missteps: if certain products aren’t popular with customers or the general theme of the shop isn’t working as expected, shift gears and provide a different set of gifts and souvenirs. The sunk-cost fallacy is real.
Souvenir shop business statistics at-a-glance
- In 2018, souvenir, gift, and novelty shops in the United States earned $17.83 billion in sales.
- Consumers aged 35 and older are much more likely to buy gift items from souvenir shops than those in younger age groups.
- There are over 55,000 souvenir, gift, and card stores in the United States that employ over 162,000 people.
- The top 50 souvenir shop companies account for 40% of sales in the industry.
Sources: Statista, Dun & Bradstreet, IBISWorld
Opening a souvenir shop business step-by-step
1. Select a location
Location is an important consideration in opening a souvenir shop and where you choose to position your business will impact future decisions that must be made.
For prospective entrepreneurs located near one or more major tourist attractions, anchoring your business in close to proximity to them is sure to boost sales. However, even if you live in an area unfrequented by tourists, you can still build a successful souvenir business by catering to the target market in the region.
2. Refine your business idea
There are two main categories of souvenir and gift shops: those with a strong association with the region or a local tourist attraction, and those that don’t.
If your souvenir shop belongs to the former category, it’s wise to emphasize your local ties by stocking products and memorabilia with a regional flavor that reference the sites tourists are flocking to see.
Contrastingly, souvenir shops that open in a quiet area unfrequented by tourists should opt for a different marketing strategy. Here are some ideas:
- A seasonal holiday gift shop offering a supply of Halloween, Christmas, New Year’s, and Independence Day gifts during the appropriate seasons.
- A boutique centered around a certain product or craft, such as candles, apparel, soap and bath supplies, or candies and treats.
- A novelty gag shop with a focus on products that will make people laugh.
3. Calculate your expenses and purchase equipment
After choosing a location and deciding on a business model, its time to draw up an expensive sheet, buy the necessary equipment, and stock your business with inventory.
Here are some of the major expenses to consider:
- Renting a commercial space – This is one of the biggest expenses since renting out a commercial facility can cost up to several thousands of dollars a month. Try to balance convenience and location with price, and be sure to stay within budget.
- Shelving and display cases – If your goods are stocked in an attractive manner, rather than just thrown haphazardly on a shelf, folks will be more likely to purchase gifts from your store.
Presentation is everything: nobody expects to pay top dollar for a t-shirt crammed into a large bin with a bunch of other products. Show pride in what your shop has to offer by investing in quality shelving units and display cases to house your wares.
- T-shirts and apparel – People like to advertise the places they’ve been, so clothing items are some of the most high-selling goods in any souvenir shop. Be sure to stock a wide variety of clothing and accessories, from funny shirts and hats to classier, more upscale apparel.
- Toys and stuffed animals – Any souvenir shop worth its salt should stock a wide range of products geared towards kids. It’s likely that its parents dragging kids to your souvenir shop rather than vice versa, so offering products that will delight children is a wise choice that will boost sales.
- Souvenirs, gifts, trinkets, knick-knacks, etc – Fill your shop with any small gifts and mementos that you think will sell and jibe with your business model, including coffee mugs, keychains, postcards, wallets, novelty licenses plates, and more. The possibilities are endless, and these items are usually cheap to buy in bulk, meaning you’ll turn a healthy profit.
4. Acquire funding, choose a business entity, register your business, and obtain federal and state tax ID numbers
Refer to our How to Start a Business Guide for instructions on how to complete these essential steps.
5. Obtain the necessary licenses and permits
As a gift and souvenir retailer, you’ll likely only need one or two licenses and certifications, depending on local requirements. Here are a few of the permits and licenses you may need.
- Resale permit – A permit allowing a retail store to buy goods wholesale and resell them to customers. A resale permit isn’t required in every state, so contact local officials for confirmation.
- Local business license – Certain municipalities require businesses to obtain a special business license to open up shop in the area.
- Liquor license – A bottle of the local wine or spirit makes a great gift for a tourist to take home to a friend or family member, and stocking these products can earn the seller a healthy profit.
However, you need to get a liquor license in order to sell alcoholic beverages. Compared to obtaining other licenses, the process for acquiring a liquor license can be pretty intense, with a background check, fingerprinting, tax clearance, and more, but it’s definitely worth the effort.
6. Buy insurance coverage
Insurance coverage is an essential means of protection for any business, even a souvenir shop. In fact, if you have full-time employees, you are required by the federal government to have two types of insurance, while a couple of other types are strongly encouraged, or possibly required at the state level.
Here are the forms of insurance you should consider for your souvenir shop:
Required forms of insurance for all business with employees:
- Workers’ compensation: Covers medical costs and disability benefits if an employee is injured or becomes ill on the job.
- Unemployment insurance: Provides benefits to workers after a loss of job through no personal fault.
Recommended forms of insurance for all businesses:
- Professional liability insurance: Covers losses as a result of property damage, medical expenses, libel, slander, and negligence claims.
- Commercial property insurance: Covers property damage to business-owned properties and possessions as a result of fire, theft, or storm.
- Disability insurance: Provides short-term benefits for employees suffering an illness or injury. Required in certain states such as California, New York, and Hawaii.
7. Market your souvenir shop business
Although souvenir and gift shops commonly attract foot traffic, i.e., tourists headed to or from a popular tourist attraction, it also pays to invest in local advertisements around town and develop a well-established online presence.
Here are some key steps for promoting your souvenir business:
- Create a website. Register a domain name for a company website (You can use domain.com, Bluehost, GoDaddy.com, or Namecheap.com). Hire a web designer to develop the website (or learn how to build an online store). Be sure to include detailed contact information on the site.
- Open social media accounts. Register accounts on the popular social media services (Twitter, Facebook, Instagram)
- Register a Google profile. This will allow you to add pictures of your business, respond to positive customer reviews, and address customer concerns.
- Respond to online customer feedback. Register accounts on business review platforms such as Yelp and TripAdvisor. This will allow you to write thank-you notes in response to glowing reviews and address negative reviews.
- Take out ads on billboards and in local publications. It still pays to increase visibility by buying ads in local newspapers and on highway billboards.
Souvenir shop business resources
- Lipco: Wholesale Gifts & Souvenirs – A trusted wholesale souvenir and gift shop supplier. Many of their high-quality products have a frontier, Native American, or American wilderness theme.
- Americana Souvenirs & Gifts – A wholesale distributor specializing in Americana. The company offers Revolutionary War, Civil War, Amish Country-themed merchandise appropriate for souvenir shops with a similar focus. They also do screen printing and embroidery.
- Fun Express – A wholesale distributor offering an extensive selection of toys and novelty gifts perfect for any souvenir shop. Customers may be eligible for free shipping.
- Souvenir Wholesale Distributors Association – Founded in 1973, the SWDA represents the business interests of distributors, retailers, publishers, and others in the souvenir and tourist product industries. Check their site for the latest industry news and upcoming events.
- Etsy – An online marketplace where talented folks sell their handmade crafts, jewelry, and clothing items. For the souvenir shop owner, the e-commerce site is also great for networking: you can use Etsy to seek out local artisans and offer to stock their items in your shop.