How to start a Grocery store

How to start a Grocery store

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A grocery store is a shop that has all the products of daily needs under one roof. Recently with the increase in the standard of living of people, they start to buy the best quality products thus requiring a shop that has all their products with quality. For this purpose, you can start a grocery store that can provide all these services.

So for opening a grocery store you need to plan the business, plan about the finance, do all the legal requirements, select the best location, find the supplier, do the stock management, Hire good and liable staff, do measure for wastage, and also do the investment according to the requirements of the business. All this will help you to open a grocery store with strategies and will help to grow it.

Grocery stores are as important as our daily lives and thus they are always alone when it comes to buying the daily needs of our groceries and even many more daily needs.

grocery store


As a boom in the economy of India the purchasing power of people is also increasing This leads to an increase in the standard of Living with an increase in spending power. They also start to prefer to buy from new edgy and shiny stores with high-quality products for daily needs like dairy, cereal, pulses, cleaning items, etc.


Also, statistics show that the profit margin of grocery stores in India lies between 2% to 20%. Thus it’s been suggested that if you’re planning to start any kind of business go for the grocery store as it is one of the businesses which can survive in any of the locations. Also, it will provide a reasonable profit with a good Return On Investment.

Step-by-step Guide for opening a grocery store

So, these are the steps for How to start a Grocery store:-

PLAN YOUR BUSINESS

For starting any business there should be a business plan before investing in it because it will always help to act as a guide during the time of implementation of your business opportunities.

Thus for setting it you should have good knowledge about your customers and competitors so that you can plan according to the niche in the market. For this, you need to invest your time in knowing your customers by analyzing them and trying to find their interests, size, and buying preferences. This analysis will help you to set up the right person, place, product to sell, with pricing and selling strategies.

The whole concept of your business will depend on what the customers are looking for according to their background, their living standards, the locality and tastes, and preferences. So for growing your business you need to understand the needs and requirements of customers and work accordingly. With that, you also need to understand your competitors and check what your customers feel about your products in comparison to your competitors.

Thus you should ensure that you take a good time to sit back and draft a worthwhile business plan that can serve as a bridge between your investment and the profit of your business.

Thus for legal purposes, few entities to be considered are:

● Sole proprietorship: It is owned and operated by a single person and requires less finance with less liability.

● General partnership: It is also the same as a sole proprietorship with two or more owners. But they do not have liability protection as in sole proprietorship.

● Limited Liability Partnership: This type has a partner where one works on a day to day activities and another invests money depending upon the location of the company.

DEFINE YOUR BRAND NAME AND LOGO

After planning for the business that you need to start you need to think about your brand name and logo both of these need to be so synchronized with each other and with your targeted audience and the products you are selling. Brand name and logo should also be unique in itself that everybody can remember it this brand name and logo should be as simple as to understand by everyone’s audience so that they can get attracted towards your business off a grocery.

GROCERY STORE MARKET RESEARCH

Before setting up and doing planning for grocery business firstly find out the opportunities that can be there for opening a grocery store. As a grocery store is for the basic and daily needs thus you should have all the items that customers will look for under an umbrella.

This industry is competitive thus you need to identify the Market location where there is an underserved market to serve to attract as many customers as you can. This can be done through market research that can make your business unique by enhancing your services from your competitors in the market.

FINDING THE BEST LOCATION

Location of the business needs to be most feasible as it is the most important factor which affects business growth. The location of grocery stores depends upon the customer base from place to place and from the demand for products. It also depends upon the age group of people in your targeted customers depending upon the product you have in your shop.

The location that you choose should have easy access to the customers like the center of the town or the busy market, also have ample parking space, or it should be near shopping centers, restaurants, bakeries, coffee shops, etc. Even you can check and choose the location where there is no grocery shop so that your business has the monopoly and grows accordingly.

Also if your grocery shop is modern then you have to provide the people according to their level of a standard like AC hall, latest technology, Marketing based on modernity. 

Also, statistics suggest that grocery stores that exist in 5kms in urban areas are the main preference of people to go with.

A good location will be that which has the besound of feet every day. So make sure that you need to choose the best location that will always house your business. Where the cost of place is minimal with all other aspects to be the best.

TARGET MARKET

Targeting a market is one of the most important aspects to keep in mind was starting a grocery business you know that every local market has some mainstream eateries and some conservative eating locations.

All these places might be for serving Indian cruises and some of them would not even have that many varieties of food so whenever you are going to open a grocery store in India you need to target this kind of markets to supply your customers and these are the customers who will purchase your grocery items.

you need to understand what is the target market and what you need to keep in mind while selecting your targeted market only when you get sure about understanding the market then only you should go into it and if you do not understand who your cost will be e e then try to find it out because without finding it you will get into a big problem and your business start downsizing if you do not select your targeted market wisely. So think hundred times before selecting the targeted market.

EQUIPMENT FOR YOUR STORE

To manage grocery stores there is not only a need for products but also other physical items such as baskets and trolleys to carry items or products to billing machines. Scanner, barcode reader, computers, feedback machine for billing and taking feedback. Ladders and chairs for staff to put the things upside, also shelves for putting products and customers luggage, refrigerator for perishable goods.

LEGAL REQUIREMENTS TO START YOUR MINI- GROCERY / GROCERY STORE

For every business to be listed in the government documents and to be valid needs to be legal. This legality is done for recognition and categorizing your business into the pertinent head. Also, your legal documents will be considered as proof when there is any question about your business.

Thus there are varieties of licenses and registration that are required for your business.

●  Property Registration: This is the basic need to start your business. If your business is on your land then you need to have the ownership document of your land but if it is on someone else’s land then you need to have a document of the lease for that under a body called the Rent Control Act.

This should be wholly based on commercial purposes including rent, working hours, maintenance charges, renewable terms, the authority of sublease, consequences on a violation, Name, and address of the landlord, etc.

● Trade License: To operate in the market all businesses need to have trade licenses irrespective of their business purposes. This is for the purpose that your business is ethical with all the safety standards and regulatory aspects. It mainly takes 8 days to get this license if you have submitted all your documents on time with no breach of terms and conditions mentioned in the license. The documents required are:

  • Photograph of your grocery store with goods to be sold.
  • PAN card
  • ID proof
  • Address proof of owner
  • Bank statement
  • Certificate of establishment

●  LICENSE of FSSAI: As food items are also one of the basic needs and many of the grocery stores possess these items thus should have an FSSAI license for it. This business will come under Food Business heading of Food Safety and Standard Authority of India. This license has a period of 5 years after which it gets canceled if not renewed on expiration.

● GST Registration: As we know that GST is compulsory for all kinds of business you do this for this business also you should possess 15- digits GST code which will be generated when you register your grocery store under GST (Goods and Services Tax.) This registration is compulsory only if your annual turnover of a business is more than a specific amount.

a. If your annual turnover is less than 20 lakhs rupees. It’s not compulsory to register your business and get a 15 digit GST Number.

b. But if your business exceeds 20 lakhs rupees turnover then it’s compulsory to register under GST and get your GST number.

After getting a GST number you will have to file 3 monthly GST Return where you have to give tax in 3 month period. And 1 annual GST Return where you have to file GST for the annual turnover of the business.

Open a business bank account &credit card

As we know that this is a digital era and everybody wants to get digital does every business needs to have a bank account to give multiple payment options to the customers so working with an appropriate banking partner has become a crucial need for every business. With the multiple payment options, you need to even include the billing system that is implemented within the store so that it is easier for you to keep the track of revenue generated by your business

AS India is shifting towards a cashless economy after demonetization the people of India prefer to have multiple payment options and all these payment options need to be digital does opening a bank account in an appropriate Bank is necessary.

In India, the shift has been significant in terms of moving towards a cashless economy. Keeping this in mind, multiple modes of payment being implemented would be appreciated.

Pricing of Goods (Profit Margin and Future)

Pricing of goods can influence the consumers to buy the product or to ignore it. Setting the right price can also influence the quantities of the various items that a consumer needs to buy which indirectly affects your total revenue and the profit of the store. This defines that the right price of a product is the price at which the consumer is willing to buy the product. Thus it is A very influential decision to be made while starting a grocery business. Because the pricing will make or break your business.

A price of a product should be search that it significantly affects the gross profit while covering the overhead expenses and reasonable net profit. For which there are two methods of pricing markup pricing method which is based on the cost of the product in the mark-up pricing method the cost price of the product is marked above it marks the price then they give a discount on that markup price. and another one is the margin pricing method which is based on the selling price of the product. It is that method in which selling price is such that it possesses some kind of margin after discount.

Traditionally, convenience stores have had markups of approximately 33 percent to 67 percent, margins of 25 percent to 40 percent. Convenience stores simply cannot buy in large volumes like superstores, so do not attempt to offer lower prices. Instead, lay more stress on service and convenience.

Set up business accounting

To do an accountant of a business is a hectic task for opening a grocery store the investment can be e between 10 lacs to 2 crores depending upon the size you are planning to open for the store. You need to plan about the funds to be used because these forms will be needed for varieties of action starting with the registration then hiring of employees store design marketing doing legal registrations etc.

If you are looking for refunding then find the financial institutes and going to them is the best thing you can do to find the institute that offers benefits like a long time for repayment lower interest rate extra benefits etc.

You need to keep one more thing in mind while going for the accounting purpose is that there are specific government-designed programs that offer you loan up to 10 lacs at the lower interest rate possible. So going for the accounting of the business needs to be done with concentration and care.

Taxation norms

Controversially called the ‘Poster-boy of Indian Tax Reform’ – Goods and Services Tax (GST) has changed the taxation norms for grocery stores across India. Every business is required to pay tax and register itself under GST, as it deals with the sale of goods. Every grocery store owner, on registration, will get a GSTIN, a 15 digit code which is a unique GST identification number.

Registration becomes compulsory only when the business crosses a specific annual turnover. If the annual turnover of a grocery store is less than 20 lakhs, it may or may not register itself under GST but an annual turnover greater than Rs. 20 Lakhs invites mandatory registration with GST.

Due to the emergence of GST, businesses avoid transactions with unregistered companies as everything is documented and could result in reverse taxation. Under normal GST returns, shopkeepers have to file 3 monthly returns and 1 annual return.

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Sign permit

You decide to put up a big sign outside your grocery store to attract people, but you realize you’re not attracting customers with your sign but some trouble, instead. Some cities have regulations on the size, location, type, or even the lighting of a sign you put outside your grocery store. This particular compliance may not be apparent enough but owners must acquaint themselves with the local regulations on signs from their local municipality.

Are there any legal compliances to follow for starting home delivery services by a grocery store?

Home delivery is one of the important aspects to start the grocery stores nowadays and if you are considering to start a home delivery service for your grocery store you can start it which will make shopping convenient for your customers and it will increase your profit but if you are starting this business with the home delivery you need to keep few things in mind before allowing a delivery boy to deliver groceries these are

  • A motorbike used by the delivery boy for a delivery purpose cannot be privately registered. It is known to all that vehicles have to be registered before it is driven. A privately registered two-wheeler cannot be used for commercial purposes, i.e., delivery of groceries.
  • RTO can seize any motorbike being used for commercial purposes.
  • There are no regulations concerning the use of bicycles for purpose of home delivery by grocery stores.

FINDING SUPPLIERS

The price factor is one of the most attractive factors which helps your grocery store to gain customers. So finding suppliers who provide you with stock to sell in your market at a reasonable amount is important.

They not only provide stock but promote your business at an extra level. Make long-term tie-ups with the vendors to deliver goods to you.

How to start a Grocery store

So the vendor should be the one who is helpful to you in a lot of ways for that proper research is needed thus vendor ranking based on before performance needs to be checked before choosing him.

But before finding a source you need to understand the market so that you can stock the right product in the right quantity according to their needs otherwise you will have a dead stock so you need to have proper research in finding suppliers.

SETUP COST OF THE BUSINESS

This is the most important part of business as with the help of financial background only you can make a sound arrangement of your business. So the proper and clear forecasting about the business investment needs to be done to achieve the company goals in the future.

So make sure to arrange the amount that you can fruitfully use for your business if this is not being done you will not be able to run the business properly. You should invest the amount in such a way that you have savings for the future because a business is fluctuating every day according to market influence.

Investment in this business is dependent on major components which are:-

  • Cost of Leasing or renting a shop in the proper location.
  • Setup cost of the grocery store such as interior design and number of racks.
  • Purchase of products in stock.
  • Business setup costs like obtaining a license from required authorities.
  • Tech investment such as CCTV, billing counter, billing software, etc
  • Salary for the employees.
  • Marketing and advertising costs.

 Mainly a medium-size grocery store with minimal facility will require 40 lakhs of investment. You can even go above it if you have financed with more facilities available and you can even expand your business in future to gain profit.

HIRING STAFF – WHO DO YOU NEED?

A grocery store is a kind of market that is labor-intensive thus 10 requires hiring staff for which services are provided. as we know that grocery stores mainly depend upon the need of costume customers but with that if anything activity is to be done in the grocery store you need to have skilled or unskilled labor for it.

It is not the business that can be run alone by the owner, you need proper staff for it. The number of staff will depend upon your business size and what kind of services you are providing. For this purpose, you need to have efficient and reliable staff.

Some of the important positions that are needed for your business to work are:

  • Accountant 
  • Cashier
  • Marketing Manager
  • Store Head
  • Salesperson 
  • Cleaning staff
  • general staff
  • Store supervisor

A grocery store means to deal with your customers so a start should be honest and reliable enough to build customer relationships and make a bridge between the customers and the products. So please your staff in such a way that it should not go wrong dealing with customers and train them how to interact with customers because good customer relationships will build your image in the market.

TAKE YOUR BUSINESS ONLINE

In this modern era of technology, all the things are recorded in software rather than books so to run your business smoothly with no fault. With the help of software you have every record of your business thus, there is no chance of being cheated by the fraudulent.

So purchase the software that is reliable enough to maintain your records and track your business performance. With the help of software you can easily in one click or on a fingertip you can record your sales and then get your profit by subtracting your sales from your purchase. You even can record all the customer details that will be helpful for you legally. A good P O S is always beneficial for your business for working fast and easily.

Tip- Here are some important benefits of having an online presence of your business – What Are The Benefits Of Having An Online Presence For Your Business?

ADVERTISING FOR YOUR GROCERY

Marketing means opening your business officially to the public. In the world of technology, you should go with online and offline technology to market your grocery store. You can use both ways to inform your customers about your grocery store opening.

Advertising is one of the most ancient and prominent ways To market your business. Therefore it is the most important way through which you can attract your customers. You can do this by giving advertisements in papers, magazines, radios with hoardings and boarding to attract new customers.

The second marketing activity is word of mouth publicity which is very common for this type of business in this type of marketing. A person who gets satisfied with your services will praise your services in front of other people and will force them to buy products from your grocery store thus this confidence needs to be built into your customs by you.

Thirdly you can go with the online marketing of your business it can be through your website or by marketing on different social media platforms by targeting relatable customers. You can give advertisements on different social media to promote the business or makeup block of your grocery store.

Hence marketing your grocery store is one of the best ways to push the traffic and increase your sales this will increase your profit. The scope of marketing is huge but we can bring it down to a few simple questions for which businessmen and entrepreneurs need to find the best possible answers:

  •  What value is your business idea delivering?
  •  What is your offering?
  •  Whom is it meant for?
  •  How would you like customers to identify your brand?
  •  Is it value for money?
  • How will it reach the customers?
  •  How will customers get to know about your brand?

HOME DELIVERY

Nowadays people become lazy or do not have time to go to stores to buy items and thus it is imperative To Have an online business. Do 

you have online websites with the option of online payment and delivery of products at the address provided by the customer.

supplier

For delivering products to the home you need delivery boys and vehicles for the same, these vehicles need to be registered for commercial purposes this registration is done under RTO. But if you have a bicycle there is no need for registration. Thus home delivery could be a good option to promote your business in this busy life and send the product of your customers to Their Doorsteps.

CONCLUSION

To start a new business, one must have a business plan which is the basic pillar of any business. They should have proper and intact management of their valuable resources. Also, there must be a different idea that puts their business apart from the queue.

While starting a food business one must keep following things in mind like first, they have to choose what type of grocery products they have to keep and what segment of society they have to aim for. They can go for baby products, kitchen food items, products for old age people, etc.

The secondary thing comes from a proper location which is keen to any business. The location should meet necessary needs like proper availability of your material, transportation, etc. The most important thing about your business is the logo. 

The logo defines any brand or business and it should be catchy enough to imply your expression on customers. After comes the financial need on which your whole business depends. One can take a loan from a bank or can also invite outside investors in their enterprise or can get government aid.

As a food enterprise, you must choose your suppliers wisely for your products to be delivered in remote areas as well as urban locations. You must assemble your team of workers and without them, no one can run their business. The most important part of your business is your license which is to be provided by a government authority known as FSSAI (Food Safety and Standards Authority of India).

Without their approval, our business will be termed null and void. We must provide every detail of our product to the concerned authority with proper testing results that should be unharmed and then only we can get a proper license to run our business. We must have a Federal Employer Identification Number (EIN) for tax purposes. Then comes the buying of your needy equipment like bowls, baking dishes, mixers, spoons, machinery, etc. 

Promoting your business is also an important step to establish your franchise. We must hire a professional promotion agency to run our advertisement online and offline which can attract our customers to an extent level. Eye-catching pictures and videos attract people easily which forces them to look at least once at your product.

FREQUENTLY ASKED QUESTIONS

Ques1. How do I start a small grocery store?

Ans: For starting a grocery store business you need to take care of-

  • Having A Solid Business Plan
  • Choosing Your Locality
  • Understanding Your Customers
  • Calculating Your Investments
  • Digitizing Your Store
  • Obtaining All Licenses/Permits
  • Promotion of your business
  • Home delivery

Ques2. Is owning a grocery store profitable?

Ans: yes a grocery store can be a profitable business. Starting a business with a smaller market will give you a chance to experience market conditions and even the failure of your business will get limited

Ques3. How much does a grocery store make a day?

Ans. The grocery store’s turnover depends upon which kind of product is there in the stores and which kind of audience you have targeted. If you have targeted the youngsters’ audience and your products are unique they will give you the amount you demand. In total, the grocery store’s turnover of a day can be from 20000 to 5 lacs or more depending upon the size of your business.

Ques4. How do grocery stores get profit margins?

Ans: as per the research it’s been said that the profitability of grocery stores in India ranges from 5 % to 25% irrespective of the locations it has this is because grocery stores have the items that are needed in the daily routine of your life does everybody will need it now then

Grocery stores are one of the fruitful markets in India and hence many local and imported brands compete to provide and maximize their reach to the common men’s market.

Ques5. How much money do I need to open a grocery store?

Ans. The investment depends upon the size of the grocery store you are opening. Mainly for mini grocery stores, you require 20 lacs as your investment this can go higher if you have a large amount of investment. And with this, you can provide unique services to your customers

Ques6. What is the most profitable item in a grocery store?

Ans. Grocery stores typically have a very low-profit margin (some as low as 1-2%). So they make their money in volume by selling large quantities. But there are some items that a grocery store has to make a high profit on. Here are the Top 10 most marked-up items in a grocery store:

  • Prepared Foods
  • Vitamins
  • Bodycare
  • Fresh coffee
  • Reusable shopping bags
  • Cheese
  • Deli meat
  • Produce
  • Bulk Foods
  • Frozen Foods

Ques7. How much investment is required to open a Kirana store?

Ans. The investment depends upon the size of the grocery store you are opening. Mainly for mini grocery stores, you require 20 lacs as your investment this can go higher if you have a large amount of investment. And with this, you can provide unique services to your customers

Ques8. Can a small grocery store be profitable?

Ans. yes, a small grocery store can also be a profitable business in India because a grocery business has the items of products that are one of the regular needs of the people do it can be a profitable business even if you start it with a small investment as the profit margin will always high with that you will be able to learn about the market that what is going in the market as a trend and then you can invest more on that trend.

Ques9. How do grocery stores increase profit?

Ans. The grocery stores increase profit in the following ways 

  • Right Product, Right Place, Right Time
  • Tighten Up Your Supplier Policies
  • Improve Your Private Label Strategy
  • Consider Meal Kits
  • Prioritize BOPIS buy online, pick up in-store over Delivery
  • Rethink Your Loss Leader

All these points will help you to increase profit because shoppers nowadays do not want just the right product at the right place at the right prices but they also want you to have the products that are efficiently fulfilled through different channels.

Ques10. How many times does the average person go to the grocery store?

Ans. Statistics have proven that the average person goes to a grocery store or 1.6 times a week and he averagely spent 43 minutes there and it does not include the time that is spent on getting to and from the stores therefore on average a person spends about 60 hours in a grocery shopping in a year.

Ques11. What are small grocery stores called?

Ans. The small grocery store is a store where mainly the products related to food items are kept and this is one of the items that are needed regularly. Thus in India, small grocery stores are called Kirana stores.

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