How to start a grocery store
The grocery business is an exciting and rewarding field to be involved in. Owning a grocery store is a lot of work, but can have a large financial payoff. You'll also enjoy the peace of mind that you're helping people fulfil one of their most basic needs.
Starting a grocery store requires a well-thought-out and executed plan, hard work and the financial backing to be able to purchase and finance all the needed supplies, permits, leases and other mandatory components involved in opening a business.
Decide if you want to open a stand-alone store or become part of a large grocer chain (such as Publix, Kroger, Giant or Harris Teeter). Both options have benefits and drawbacks.
Having a stand-alone store will allow you more control as the owner. You will be able to control what inventory you buy, when you have sales and what promotions you employ. On the downside, you will also not receive support----either financial or administrative----from anyone, so you'll need to be prepared to handle everything on your own.
Signing up with a franchise will give you much-needed support. Unfortunately, along with this support will come control over what you sell and how much you sell it for. The franchise will also likely require a percentage of your profits.
Be sure to evaluate all of these issues before making your final decision.
Find a good location to operate your store. Pick a community that is not already saturated with grocery stores. It is often hard to determine exactly how many grocery stores are too many in a given area. A good way to make an educated decision if another store would succeed is to monitor the number of cars in the car parks of the already-existing stores. If the car parks are always full of cars, with people fighting for spots, another store may be needed. If not, you might want to look for another community to open a store in.
In addition, make sure you are in an area that has the financial means to support a store. It's best to compare multiple locations in order to choose the best one. Your location will be a very important part of your success.
When evaluating each location, consider issues such as safety, ease of finding the store, neighbouring businesses, parking availability, area permit laws and the building's square footage.
Decide what products you would like to offer and how large a variety of food distributors you want to work with. If you offer multiple brands of the same product, you might have to work with a variety of distributors. This will add costs and headaches to your operations, but will also assist your customers with added variety.
The number of distributors you work with should be a reflection of the number of products you wish to carry in your store. Larger stores tend to have more distributors, since they offer a greater variety of products. Smaller stores will only have a few dependable distributors.
Decide if you would like to include a pharmacy in your store. This will require additional permitting and highly skilled employees.
Choose food distributors that you can trust and work easily with. Have each distributor sign a binding contract that will guarantee delivery, quality and price. Decide what brands you would like to carry and search on the Internet to see which distributors carry those brands. Contact those people to discuss prices and set-up.
Hire employees. Try to find people who are dependable, hard-working and possess good customer service skills. The number of employees you hire depends on the size of the store. As a rule of thumb, try to have one employee available for every five customers that you expect during a peak time.
You will also need to hire managers. Start by hiring a front end manager (to take care of the cashiers and check out), a human relations manager (to deal with hiring and training employees) and a manager for every major department or section of the store (i.e. produce, meat, dairy, dry goods).
Plan your grand opening. This is your moment to introduce yourself to the community and show them why you are a better option than stores that are already operating.
Decide where you want to advertise. It is normally a good strategy to pick multiple means of advertising, such as online, radio, print and TV. Think about offering grand opening discounts or teaming up with a charity and donating a percentage of your net sales to the charity during the first week. The goal is to motivate people to walk though your doors and discover what a great store you are.
- It's best to start with a smaller inventory and add products based on customer need and request.
- Make sure you have a solid loss-prevention plan in place in order to cut down on theft.
- If you're carrying perishable items, you will also need to budget the cost of loss of these products should they go bad before they are sold.