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If you are planning to open a supermarket or a grocery store and you have this big question in mind that how to open a supermarket in India, then this article will provide you with some key insights.
There are a whole lot of nuances that are involved in starting such a venture which demands a huge investment upfront. Thus, if these nuances are not taken care of initially then it creates a lot of problems in the subsequent stages and then there is no going back. Thus, it is prudent to contemplate these measures and then take a judicious call about how to go about tackling these small issues which can pose bigger problems at a later stage, if not dealt today.
To be on the safer side, you can also avail the services of independent experts like grocery business consultants or specialists like supermarket setup consultants to help you with the initial design and setup. These independent consultants bring with them the relevant experience and expertise, awareness of the industry’s latest trends, knowledge of changing customers’ tastes and preferences and competitiveness in the industry.
In this article, we shall discuss ten preliminary aspects that need to be addressed in the process of starting a new supermarket or grocery store.
- Business Model
In a business model, we try to figure out how a business is going to generate revenue and make profits. In a grocery or supermarket business, it is difficult to create a USP in terms of products because of product homogeneity. It is through the services and intangible aspects that the existing grocers and supermarkets are able to create a niche for themselves. Big brands spend more on building and infrastructure and technologies to enhance the customer experience and create value-addition there. It is through these indirect niche-building and value-adding efforts that the successful businesses in this industry are able to attract and retain customers leading to increased scope for revenue generation and profits.
An important factor for aspiring entrepreneurs who intend to start a retail supermarket/grocery business is the store space. What should be an ideal area for a supermarket? Everything depends on the investment budget you have at your disposal for your grocery business plan (or for a supermarket). You can do the buy versus rent analysis for your supermarket i.e. whether to buy the property or lease it.
What will be the desired return on investment (RoI) and whether it is achievable? If you go for a larger store, then the investment will be high. This will affect an effect on your break-even analysis. Repaying a heavy cost of capital will also affect your profitability.
Searching for answers on how to open a supermarket business in India is not easy. You need to play out of your skin as the risk-taker, go out in the market, meet people, ask them the right questions, or take the help of retail experts or retail grocery consultants.
The next important consideration in your retail supermarket business plan is to figure out the location of your supermarket. This is a highly important decision as you can only take this once and then you cannot change your store’s location if the footfall is less than expected because of locational factors. Thus, this is a strategic decision with long-term consequences.
What most of the supermarket setup consultants suggest is that supermarkets should ideally be located for the local population to easily access it. By that measure, populated residential areas or commercial areas offer a higher probability of more footfall and more sales.
It is this location of a store which decides to a large extent its footfall. For instance, if a store is established close to another well-established supermarket which is favoured by the locals in that region from many years now, then it would not be difficult for the new store to be visible and attract footfall.
Another consideration for the location is to identify areas where there are no existing stores or the locals have to move out of their localities for grocery purchases.
- Store Layout Finalization
Store layout forms an essential component in a grocery and supermarket business. The profit per square feet which is a critical measure of profitability in the retail industry largely depends on the store layout. These days there are many grocery store design consultants who can help businesses with the store layout to use the store area optimally to generate higher returns by stocking more and more products in every category.
Another important aspect here is the prevention of losses due to pilferage and lack of proper storing features. With a well-planned store layout, such problems can be easily avoided by accounting for appropriate display and storing specifications.
This is also a one-time decision since you cannot change your store layout every week. Though you can make slight adjustments here and there the overall scheme remains the same in the long run. You can take the help of supermarket setup consultants to make this job slightly easier for you and your management team.
Remember what Paul Rand, the famous art director and the face behind logos of IBM, UPS and Enron said, “Design is the silent ambassador of your brand.” Thus, make sure to have the right design and layout.
Branding is not just a flashy logo, a cool website or a catchy tag line. It is an experience to put it succinctly. As Amir Kassaei, Chief Creative Officer at DDB Global puts that a brand is not a product or a promise or a feeling and rather it is the coming together of all the experiences you have with a company. The entire purpose of this process of branding is about providing such an experience to your customers that they keep coming back and become your loyal customers over a course of time. This is a litmus test of your supermarket brand.
This unique experience must reflect in everything inside your supermarket and must be felt by the customers. Be it the interiors of your stores or the packaging quality, be it the products quality or customer interaction while billing or your logo for that matter, all this and other such allied activities fall under this category of branding. There must be some value creation and a unique experience for the customers such that they leave your supermarket with a delightful experience every time.
There is a saying or rather a school of thought according to which skilled and happy employees lead to happy customers which leads to more profits and happy shareholders. This ideology has myriad proponents around the world and thus its veracity is never questioned. For your supermarket business plan to be successful, your employees play the biggest role here since they are the ones representing your company to the customers and almost everything depends on them. Thus, maintaining a qualified, content, and motivated workforce is crucial for your brand and business.
Starting from hiring to promotions, there are plenty of things to be done to ensure a superior workforce. It includes defining your organization structure, job design, job analysis, manpower planning, roles and responsibilities, training and development, salary structuring, etc.
- Merchandising and Purchase
Merchandise planning here shall cover the product categories you intend to offer in your supermarket. This will depend on two big factors – demand and supply. It is advisable to offer products and product brands which are always on demand. Supply is usually not a constraint for such products but the margins offered by the manufacturers and distributors could be lower for the popular brands. For a homogenous product, there could be many competing brands and several SKUs. Customer demand needs to be taken into consideration here.
The purchase department needs to be well-acquainted with the merchandising plans and priorities. Otherwise, they will have to be advised every time which might delay the purchasing process and result in lost sales.
Only when the duties and responsibilities are crystal clear to all of your employees in all the departments will they be able to carry out what they are needed to do. Now, how to achieve such clarity for all? The answer is SOPs. SOP is an operational roadmap for each operation or activity. SOP defines the step-by-step approach to carry out a particular task or operation. SOPs need to be planned and documented. It removes subjectivity and doubt. It also makes supervision, monitoring and improvisations easier.
There should be SOPs for every department like finance, HR, store operations, merchandising, purchase, inventory, etc.
- Grocery store management software
The leverage provided by business software applications can significantly trim the operational costs of a business, especially in the long-run.
Running a small store is one thing and managing a superstore is quite another. It involves multiple business processes and operations that need to run in a synchronized manner moving the wheels of the entire business.
A suitable business software application, customized to suit specific business strategies and the resultant operational requirements, can simplify complex business operations to a matter of few clicks and a few inputs. Such software applications collect the data fed into the system by different users across the enterprise, store such data centrally, and make it possible for other process owners to access the relevant data for further decision-making in their respective departments. This results in automation, more accuracy of information, and speedy decision-making.
For a simple example, the waiting time for customers at the billing counter gets reduced as the billing software could generate the bills in a matter of seconds once the data is fed. Another example would be the auto replenishment system (ARS) which automatically places the order for products that hit the reorder levels.
The right IT and automation tools could lead to better grocery business profit margin. Going forward, retail analytics for better insights and more informed decisions.
- Marketing Plan
Marketing begins with an idea. This idea is about creating something of value; something that could solve a problem or fulfil a need. Everything else spirals from this idea. For a supermarket, the marketing question is ‘what value are we serving’. People do not go to a supermarket only to buy stuff; they seek a complete, fulfilling experience from an advertisement to leaving the parking space after shopping. But what would bring people to one supermarket and not any other?
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 as?
- Is it value for money?
- How will it reach the customers?
- How will customers get to know about your brand?
- Launch Preparation
This is where the reverse countdown is set for the take-off. It is much more than ribbon-cutting and inviting family and friends to be present. This is the day when a new retail store wants to see the excitement and delight on the faces of their customers as they explore something new for the first time. The launch program needs a bit of planning and marketing efforts.
The need here is to create a genuine promotional buzz at the locality level. It will be good if the launch-day promotional campaigns are started a month earlier with increasing intensity as the day gets closer. Coinciding launch-days with festivities is old now; people already make their plans by then. Free beer on a weekend will just do fine.
Opening a supermarket can be tough. But with a few months of good planning and expert supermarket business consulting, we can be home. Hard work is irreplaceable. A good team is a must; that’s something we should start even earlier. We simply tried to cover ten important considerations. Read them and redefine them because your planning must complement your business idea.
Your Retail Coach (YRC) is a retail consulting and eCommerce outsourcing company in India offering a wide range of services in retail, eCommerce and retail omnichannel catering to a multitude of industries. In supermarket retail consulting, YRC consultants can help in the various stages of store set up of a grocery or supermarket business including store operations manual, digital marketing strategy, layout planning, inventory planning, IT-system integration, launch activities etc.