Since inception, supermarkets have been a core destination for shoppers because of the transparency, convenience, and shopping experience they offer. Being an important subset of the retail sector, supermarkets act as a promising business opportunity for entrepreneurs in India.
If you are an aspiring supermarket owner, it is time to transform your dream of owning a supermarket into a successful reality!
Why set up a supermarket?
For anyone dreaming of starting their own supermarket, the first question that naturally pops up is, “Why should I set up a supermarket in the first place?”
Here are some compelling reasons to open a supermarket:
- Meet diverse needs and a set up a one-stop solution for shoppers.
- Offer daily convenience by providing easy access to daily needs.
- Gather a steady consumer base with consistent demand.
- Pick tailored investment options based on the size of the business.
- Bolster profit potential with strategic business operations.
Challenges in starting a supermarket
The journey of establishing a successful supermarket is filled with promise. However, from fierce competition, choice of location, and financial planning to regulatory compliance, adopting the right technology, training, and strategic marketing, opening a supermarket can be initially challenging. Luckily, there are things you can do to mitigate these issues.
Follow these 10 steps to set the stage for your supermarket’s success!
10 steps to start a supermarket in India
1. Market research and planning
“Give me six hours to chop down a tree and I will spend the first hour sharpening the axe.”
Abraham Lincoln
Are you ready to sharpen your axe?
Before diving into a supermarket business, you should start with thorough market research and planning. Market research and planning empowers you to make well-informed decisions at every step, mitigating risks and uncertainties. A supermarket business plan helps to identify the right target audience, understand competitors, study local consumer preferences, and set realistic goals.
2. Financial planning and funding
Turning a plan into reality requires financial fuel. Accurate financial planning is the cornerstone for a sustainable supermarket business. It ensures you have adequate capital, smooth cash flow, and the ability to make timely payments to employees and suppliers. A financial plan should not only include initial investment requirements, but operating costs, and revenue projections as well, so you can secure proper funding through personal savings, loans, or investors. When your finances are well-planned, your path to success is set clear and you can scale up.
3. Choosing the right location
The location can significantly impact the success of a supermarket. The needs, lifestyle habits, budgets, and priorities of consumers differ based on the type of location. Here are a few quick tips to selecting a perfect location for a supermarket business:
Find something near residential areas and neighbourhoods
Most people prefer shopping at nearby supermarkets as a part of their daily routine. Ensure your supermarket business is conveniently located close to a residential area to accommodate your target customers, making it a preferred choice for their regular shopping needs.
Select a geographic area that aligns with your business needs
Pick your location based on the products you offer. Remember, shorter distances matter more for smaller purchases, and it is important to consider the average distance people in the area are willing to travel for their purchases before finalizing your location.
Consider a marketplace
In India, 90% of supermarkets are situated in a marketplace. Indian marketplaces serve as centralized hubs catering to a wide range of needs from grocery to clothing. A marketplace can work well for your supermarket where stores can complement each other to increase sales and become profitable.
Look for a, high-traffic road with sizable parking facilities
A well-located supermarket near a busy road and with ample parking facilities not only ensures high visibility and easy access for customers, but attracts impromptu shoppers, increasing footfall and potential sales.
Analyze local competitors
While you may want to pick a location with no other supermarkets, competition can be favorable too. When business conditions are good and you draw high traffic throughout the day, competition can turn out to be positive. If you find a location you like but see there are local competitors, analyze your direct competition and then mold your business to offer something different from your competitors. In that way, you can set up in your ideal location without worrying about difficult market competition.
Enhance the customer experience and set your supermarket apart
For larger supermarkets, facilities like lifts, parking, and well-maintained restrooms are essential to create a comfortable shopping experience that favors a diverse customer base from kids to elders.
4. Store layout and design
The immediate step right after selecting the supermarket location is designing your supermarket layout. Here are the rules of thumb for designing your supermarket layout:
Customer flow
Establish the customer walkways from entry to exit, including display areas and checkout areas.
Product groupings
Define the product mix and plan the display areas based on similar product categories to simplify the shopping experience.
Comfortable shopping
Allocate ample space for customers to navigate comfortably, preventing overcrowding and ensuring a pleasant shopping experience.
Layout type
Finalize the layout type based on how you want your customers to navigate your store. The grid layout, commonly used in supermarkets, features long aisles to optimize product exposure and retail space.
Adequate aisle space
Aisles must be wide enough to invite customers to shop, with a minimum of four feet wide or more so there is enough space for traffic to pass both ways.
Shelf accessibility
Design your shelves so products are accessible within a maximum height of six feet from the ground. This ensures customers can reach items without difficulty.
Position your checkout counter
Checkout counters at the front-left of the store take advantage of shoppers’ natural behavior, as they tend to enter on the right, move in a clockwise direction, and exit on the left to make the checkout process more convenient.
Merchandising strategies
From placing bestsellers in primary zones, and using cross merchandising to promote multiple item purchases to keeping impulse items, such as small toys and chocolates, near the checkout counter encourages additional purchases and drives more sales.
Optimum space for fixtures and furniture
Fixtures and displays must be able to handle the products’ weights and sizes to ensure the safety of your merchandise and create a visually appealing shopping environment. Space for specialized racks like “gondolas” offer an excellent opportunity to capture shoppers’ attention, leading to increased sales especially during seasons.
5. Legal and regulatory requirements
Complying with legal and regulatory requirements helps obtain the necessary permits, licenses, and adhere to local and national laws. For instance, if you are starting your supermarket business in India, here are the common licenses that you need:
- FSSAI license for selling consumables.
- GST registration for compliance with taxation.
- Trade license for any legal business to operate.
- Fire department NOC for compliance with fire safety regulations.
- Health trade license to protect the health of consumers.
- Signage license for displaying signage with your supermarket’s name and logo.
- Environmental clearance for larger supermarkets.
- State-specific shops and establishment acts compliance.
- Commercial electricity license.
- Labor laws and regulations for supermarkets based on state.
- Intellectual property rights for safeguarding and exclusive use of supermarket’s assets.
- Import-export regulations based on products sold.
Note:Regulatory requirements can vary based on factors like products sold, the size and type of the business, and the state or region in India where the supermarket is located. This list is not exhaustive; be sure to check your local requirements to make sure your business is legally compliant.
6. Stocking inventory and suppliers
It all starts from purchases. The key to maintaining a consistent supply chain is based on the relationship with the suppliers. Given the extensive array of products, supermarkets should identify the right supplier who provides high-quality products on time and at the right price to deliver the best customer service.
Maintaining transparent and timely communication with suppliers is difficult without the right tools in hand. From streamlining the entire procurement process with digital tools, to ensuring par reorder levels with AI-based reordering solutions, automation plays a major role in modern purchase management. In this way, inwards can be made on time without any delays, dependencies, or difficulties, with real-time inventory consolidation.
7. Employee recruitment and training
Considering the rising quit rate among retail workers in recent years, the task of recruiting and retaining skilled employees has become increasingly challenging. This might tempt you to contemplate managing the business single-handedly, but that doesn’t work, especially when you wish to scale up your business.
Combat this challenge by empowering your workforce with an easy to use, reliable ERP software that requires minimal training, and can be used by anyone no matter their skill level. From struggling to cope with the costs and complexities of training and swift replacements when employees move on, to doing more with minimal staff, a reliable software allows you to reduce labor costs with accurate operations. You can set and adopt standard operating procedures (SOPs), streamline processes, automate operations, and enhance your supermarket’s overall operational efficiency.
8. Marketing and promotion
With more new stores popping up around us, clearly competition has become intense. Marketing builds a strong and recognizable brand, which goes beyond just increasing sales and profits.
How to market your supermarket brand?
As you know, traditional advertising is expensive; the use of social media, and CRM tools are the preferred and most cost-effective way to reach a wider audience. Explore powerful marketing strategies that can help you build your brand so it becomes a favorite among customers. Initiate tailored campaigns for specific customer groups through SMS and WhatsApp that resonate with and engage with the target audience.
Here are a few examples:
- Send birthday and anniversary wishes with personalized offers to customers acts as a special gesture that makes them feel valued, potentially leading to increased customer loyalty.
- Create unique loyalty programs (sale, visit, points-based) and coupons to nurture long-term relationships.
- Send campaigns to bring back lost customers based on previous visit dates and trigger them to visit again.
- Promote your supermarket’s membership program and offer privileged discounts.
- Initiate welcome campaigns to engage new customers on their first visit and provide special offers on their next visit.
9. Customer experience and service
One of the primary goals of aspiring entrepreneurs is to provide outstanding customer service that acts as a key differentiator for their business. Starting from staff greeting customers with warm smiles to offering super-fast checkouts there are various factors that collectively enhance the shopping experience.
The Majority of Indian customers are price-sensitive, and having visible price sign boards with attractive promotions and discounts not just reduces staff dependency but attracts and drives more sales. As a potential supermarket owner, it is important to understand customers’ buying habits and preferences through KYC (Know Your Customer) practices, and impart the same to the employees to make customers feel connected to the store. Focusing on product quality and freshness, cleanliness, properly-stocked shelves, and appealing visual merchandising are all integral components to offer the best customer experience and service.
10. Technology and automation – Adopting the right ERP
The era of technology and automation has made a smart and collaborative platform a necessity for any business. Supermarkets, in particular, stand at the forefront of this transformation, demanding integrated solutions that seamlessly connect the diverse facets of different operations across the supply chain.
An ERP should go beyond conventional billing, inventory, purchase, and accounts management. It should have extended digital tools for everything from daily stock taking, automatic reordering, managing marketplaces, and ecommerce to facilitating online ordering and delivery, running offers and loyalty programs, and encompassing various integrations.
Role of the right ERP in starting a supermarket business
Gofrugal is an omnichannel ERP trusted by more than 5,000 supermarkets across the globe. It acts as their reliable and accurate technology partner for consistent growth even if they have minimum staff with the least amount of training.
Gofrugal empowers supermarkets to:
- Offer a frictionless experimental shopping experience with omnichannel solutions for online ordering, order picking, and home delivery management.
- Reach an extensive consumer base with the seller app on the ONDC network.
- Transform digitally for improved profitability, and productivity with dedicated digital solutions for billing, stock taking, purchase inwards, refilling and consumer feedback.
- Ensure high operational excellence across outlets with CRM, marketplace, payments, loyalty, and banking integrations.
- Make timely data-driven decisions on the move with instant critical notifications about the business.
- Secure your ERP data from external and internal threats with cloud data backup and recovery.
To learn more about the exceptional features Gofrugal’s integrated ERP offers, click here.
Starting a business is undoubtedly a challenging endeavor, but with the evolving retail landscape and the increasing purchasing power of consumers, it holds the potential for great success. Aspiring supermarket owners, now is the time to seize this opportunity and kickstart your supermarket venture!
We would like to extend our gratitude to Hawwa consultant, one of the most preferred supermarket consultants in India, for their invaluable assistance guiding us through the process of establishing a supermarket. If you are seeking a helping hand to simplify these essential steps do reach out to them here.