Supermarkets are popular places people visit for their daily
needs. They offer different items such as consumables, healthcare products,
lotions, soaps and household items.
The business is lucrative and operators earn income based
on margins. Most items sold are branded and have fixed sale and profit margins.
This makes price determination simple for new entrant
into the business. Sometimes supermarket owners add grocery items.
Before launching the enterprise there are a few things to
consider. You need an ideal location and do a comprehensive cost analysis.
Write a supermarket business plan, carry out a survey,
feasibility study and secure funding. The amount of funding depends on the
location, amount of stock and size of the store.
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Challenges
There are a few challenges new entrants into the business
will encounter. You face the possibility of purchasing substandard or
adulterated products.
Other difficulty involves finding quality substitutes,
price determination and trustworthy suppliers. There is also lots of stiff competition
from other supermarkets and grocery stores in your locality.
- Substandard products
- Expired products
- Adulterated products
- Finding quality substitutes
- Price determination
- Trustworthy suppliers
- Competition
- Stocking
Pricing
the Goods
Although packaged goods have recommended sales price
there are lots of substitutes. The popularity of the brand and price usually
determines the level of patronage.
Make sure you purchase only products popular in your
neighborhood. Select popular brands that offer best prices to customers.
Things that affect price determination are where you
sourced the product, transportation costs and demography purchasing power. Your
price should be in uniformity with competing supermarkets in your locality.
If you offer high
prices your customers will go to competitors.
Things
that Determine Price
- Buying substitutes
- Branded products
- Where you sourced the product
- Transportation costs
- location
Supermarket
Business Startup
Start by writing a business plan and carrying out a
feasibility study. You need to register the business and obtain business
permits and licenses. Other important requirements include finding a good
location, credible suppliers, trustworthy staff, funding and marketing.
- Write a supermarket business plan
- Register the business
- Raise capital
- Find a good location
- Obtain business permits and licenses
- Find suppliers
- Hire qualified staff
- Marketing
Supermarket
Business Plan
Write a supermarket business plan and factor funding,
location and sourcing the products. Conduct a survey to study competitors and
find out what your customers need. The business plan should also provide a
startup framework including expansion plan.
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Register
the Business
Select a catchy business name for your brand. You could
decide to form a proprietorship business, limited liability or partnership.
The legal structure determines the tax requirements and
management structure. Obtain a business permit and fulfill standard regulatory
requirements. Some of your items are subjected to value added tax and you need good
insurance cover.
Funding
the Business
You need substantial funds to start a grocery store or
supermarket. Majority of the funds are spend on supply and fixed inventory.
The working capital is huge and usually recurrent. Other
funding requirements are rent, security system, staff wages and maintenance.
To source funds present your Business Plan to a
commercial bank in your area. You need to open an account in the bank and
provide collateral.
Supermarket
Inventory
A basic supermarket will stock canned products, soaps,
detergents and sanitary products. They may have edibles, dairy product,
cereals, grains and frozen poultry products.
Fixed inventory include refrigerators, freezers, display cases,
cash register and computer systems. Others include a bus/truck, generating set,
lighting and large storage facility.
Choose
a good location
The success of the enterprise depends on your location of
choice. A good location should have huge pedestrian traffic or large concentration
of people.
Good locations are within a popular shopping mall,
neighborhood or a busy commercial area. Other requirements include store
visibility, adequate parking and easy accessibility. The store should have adequate
storage and a large display board.
Find
Suppliers
The source of your products is another important aspect
of the business. Try to source inventory from manufacturers or major
wholesalers.
Supermarket owners generally purchase in volume to reduce
retail prices. This is an effective strategy that offers the customers
competitive prices. Leverage on bulk purchase, branded products, substitutes
and better margins.
Employ
Staff
An average supermarket needs sales staff, cashier,
accountant and manager. Other staff requirements are security guards, stock
keepers, drivers and cleaners.
Hire staff with trustworthy characters and good customer
relations skill. The number of workforce you need depends on the size of your
establishment.
- Sales staff
- Cashier
- Accountant
- Manager
- Security guards
- Storekeeper
- Drivers
- Cleaners
Marketing
Small scale neighborhood supermarkets can use flyers,
local publications, billboards and signboards. They could hire sales
representatives and organize fun events.
Use discounts, bonanzas and free gifts to attract
patronage. Make sure your prices are competitive and fair.
Other marketing tools are yellow pages, directories and a
dedicated website. Leverage on social media such as Instagram, Facebook and
Google+
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