If you want to have your business and are wondering about how to start a grocery store business in India, then you have landed on the right page.
Starting up a small grocery store in India is a lucrative business idea as the population is increasing and the purchasing power of the average person is rising, so a grocery store is a good business option.
With the boom in the economy and increasing spending power, people prefer to shop at those new age shiny grocery retail stores, where they are treated to large shopping aisles with products stacked neatly on the shelves in a complete AC comfort. The products for daily needs like dairy, cereals, pulses, meat, cleaning items, and more are arranged orderly with their price tags and salespeople on their toes.
So if you have a grocery store business idea to open a Kirana store or a new age shiny grocery store then keep reading to find out how to start up, manage, and grow one so that you make a reasonable profit on it and get good returns on your hard earned investment.business
Draw Up a Business Plan
Prior to starting up your grocery store, you must draw up a business plan for it. You must have deep knowledge of your customers and the competition that lies around you.
Your assessment of the market should be accurate and to achieve success in this business you must have an effective business plan. Spend some time in analyzing your customer base which will help determine your market size and their buying preferences. It will enable you to select the right place to set up your shop and determine the products you want to offer, set your pricing and selling strategy.
Factors which will influence your grocery shop business will include your customers’ background, their location, living standards, products they prefer to buy; when, how much, and how often of it they buy. It is the customer demand that impacts all aspects of your grocery store business and will lead to your success or failure in this business. At the start itself, you need to understand your customer requirements and source products according to their needs and requirements. Check out your competitors and try and see how your customers think of your products relative to your competitors.
You will need to keep in mind that this is a very low margin business and you will need to make sure that there is no margin for error while purchasing inventory. Having a good network with vendors is a huge asset and make sure that you don’t have a packed inventory of more than 20-25 days.
Also Read: 12 Things to Know Before You Become a Fruit Retailer
Target Market
A grocery store provides all the necessary requirements needed for running a household, so basically, your target market would be the entire neighborhood of the area you want to set up your grocery shop in which would be within 1 or 2 kilometers of reach. For accurate target market assessment, you must zero in on the best location for your small grocery store business, evaluate the potential of the location, and find the perfect customer mix for it.
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Select the Right location
The location of your grocery store is vital as the customer base differs from place to place and products used in urban areas would differ a lot from the products used in the rural areas. Also, the age group of people in your customer base would dictate the kind of products you will need to keep in your store.
Search for a prominent location at the center of town or at a busy market complex. With lots of people shopping there, you could get a good outcome. A good location is vital as it will ensure you have a good amount of footfall every day.
Also, if you are setting up one of the new age grocery stores or convenience stores, then you will need to spend a lot of money on air-conditioning, latest technology, marketing, and a lot more. You can have a blend of the best of these both and create the right mix for your clients.
Setup cost of the Business
Now that you have a grocery store business plan in mind and are in the process of setting up your business, it would be totally up to you to decide how much of financial expenses you will be incurring in setting up this business.
The grocery store business start-up cost would be influenced by many factors like the location of the shop and the rent you would need to pay, the inventory you need to buy, and how many salespersons you would be hiring.
Setting up your grocery shop would also involve buying furniture like racks, which are needed to display different products, a table with drawers, etc. You can set up a very basic grocery store in a local area with an investment of Rs 50,000. If you want to set up a modern convenience store or grocery store in an upscale mall or a central location with amenities like AC and many sales persons, then you will need to invest more than Rs 2 lakhs. If the amount is exceeding your budget, then you can always take a business loan from the banks.
Now, make sure you arrange all your products in a neat and systematic way, so that when you customers need anything you can promptly give it to them. You need to also keep a proper account of the inventory and the products being sold, maintain proper account books, and keep a sharp eye on the cash-flow, accounts, and stocks in your grocery store.
Also Read : 15 Best Business Ideas Under 2 Lakhs
Completion of legal Formalities and Obtaining Mandatory licenses
To set up a grocery store in India, there are legal formalities and licences that you will need to obtain. These include Food license, entity registration, shop and establishment registration, to name a few. As these are legal requirements, you will need to visit the license authority office to get the grocery store licenses to start a grocery store anywhere in India. Get in touch with a CA before you start your business so that you are properly guided in the legal requirements for setting it up.
Pricing of Goods
Before you start operating your grocery store, you will need to set the right price for the product, which will in turn influence the quantity of items the customer will buy, which has a direct effect on the revenue and profit of your grocery store.
The right prices will help sufficient gross profit to make-up for all the overhead expenses and get a good amount of net profit. You can opt for one of the two pricing methods, namely Markup (cost based) or margin (selling price based).
Grocery stores traditionally have mark-ups of 33% to 67%, or margins of 25% to 40%. As grocery stores cannot purchase inventory in huge volumes, it is advisable to not offer low prices. However, with this, you need to stress more on good service and convenience to your customers.
Also Read : 15 Profitable and Super-Easy Retail Business Start-up Ideas
Hire Sales Staff
Hiring sales staff depends completely on the size and requirements of your store, which usually is one person per square feet. Your staff members should be trustworthy and alert. They should be able to handle crowds of people with a smile on their faces. Other requirements are thorough knowledge of the inventory and well-trained and highly motivated personnel.
Get your Business GST Registered
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To start a best grocery store in India, you will need to have your grocery store business GST registration done. You will get a GSTIN, which is a 15 digit code number or a unique GST identification number. Registration is compulsory only if your annual business turnover crosses a specific number.
If the annual turnover of your grocery store is less than 20 lakhs, it may or may not register itself under GST. But if the annual turnover is more than Rs 20 Lakhs, then it becomes mandatory to be GST registered.
With the implementation of GST in India, most businesses avoid doing any transactions with companies that are not GST registered as every transaction is documented and can end up in reverse taxation. You will need to file 3 monthly GST returns and 1 annual GST return.
Take your Business Online
Nowadays it is imperative to take the help of the online market to market your grocery store. You will need an online website of your grocery store, with an option of online payment through which you can take orders from consumers and get it delivered right to their doorstep. The consumer of today needs facilities like these and so, apart from having a physical grocery store, you can sell your grocery products online as well.
Promote your Business
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Advertising is extremely important for any business to get noticed, and for your grocery store to draw maximum customers, you will need to inform your family members, relatives, and friends about your new endeavor as word-of-mouth is the best way of advertising for your grocery store.
Build a good relationship with your customers, as a satisfied customer is your best advertisement. Depending on your custom size and market, make a choice of advertising mediums like flyers, newspapers, TV, business pages, etc.
You can also install a drive-by traffic neon signboard to attract customers. Interesting window displays could help in attracting customers to your grocery store business as well.
Profit Margin and Future
The Profit Margin of a grocery store business could vary between 2% to 20% depending on the investment and the income being generated from it.
The future of grocery store business is bright as there is a huge population in India and grocery staples are required in every household family.
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Conclusion
With a huge population and booming economy, people in India are ready to spend money on commodities they need on a daily basis. Opportunities are plenty but all you need to do is concentrate on your customer, invest in better infrastructure, improvise on technology, and be ready to soar in your new business.