written by Khatabook | June 8, 2021

Effective Steps To Start A Grocery Store In India With Lowest Investment

Every business starts with an idea, followed by the challenge of turning that idea into reality.  A successful startup is one that takes small steps and develops its brand name and quality over the years. Building a business has its own set of challenges and Kirana stores are no different.  With the increasing spending power of people in India, opening a grocery store is an excellent option. Every locality has one of its local Kirana stores as well as a supermarket nearby. 

In terms of population and demand, opening a Kirana store seems like a great idea but investing in a supermarket is one thing and sustaining it is another. Supermarket profit margins in India are low until you become a well-established brand. So if you are new to the business, then you need to be very careful. One mistake and you could lose your customer.

Let us now evaluate the Investment required for supermarkets in India 

How to Start a Grocery Store In India?

A Grocery Store is a retail store that where you can take care of your household needs such as grains, flour, rice, pulses etc. They also sell plastics products for household use such as mugs, buckets, etc and cleaning products like soaps, detergents, etc.

Before learning how to open a grocery store or start a supermarket store in India, we need to first answer questions like - how much money I need to open a grocery store in India? What things to consider before opening my own store? Let's first start with how to open the store and things to keep in mind :

  1. Business model 

It is important to decide on a business model while setting up a business. It includes decisions such as 

  • Size - Should it be small, medium or large? What kind of a store are we looking at? Is it a small local Kirana store with necessities? Or is it a big store with many products, various brands, multiple varieties on different shelves?
  • Ownership - Should it be a sole proprietorship, partnership, company etc.? Should you start the business on your own or along with others? Each type of ownership has its set of advantages and disadvantages.
  • Capital - how much money would be needed, and how can you arrange it? Would you need a loan? If you have a good credit rating, business loans are available at reasonable interest rates. Always leave a certain amount of money for unforeseen expenses that every business incurs and then allocate your money accordingly. 

Every good investment requires great research, so make sure you do your homework properly and then proceed.

  1. Location 

Location plays a vital role when you run a business. The less competition you have, the more you can keep your own prices and build your own customer base. Where do you want to target the customer is one of the crucial questions that should be decided very carefully. 

  • If it is nearer to your house, it will help in better supervision of the store. 
  • If there is already a branded store in that area, it won't make sense to open a local store next. 
  • The rentals are different at different locations. In good locations, where more people are likely to visit, the rent is generally higher. On the other hand, locations with lower rents may not have not many customers either. A good mix of affordable rent and enough customers is ideal.
  • So it would be best if you did your research thoroughly, keeping in mind your budget and then decide accordingly.
  1. Staff 

The size of your store will decide your staff strength. However small or big, a good grocery store should have helpful staff to guide the customers. The more comfortable your customers are, the better will be the sales at your store.  It is not hard to find staff for a grocery store. You can take anyone with good manners, and train them on the products and customer service. You can also keep bonus schemes on sales done by each person and motivate them to help consumers. Your Kirana store margins are very much dependent on how good your staff is. So carefully employ your staff.

  1. Legal expenses

When you start thinking about how much investment you need to start a departmental store, you also need to keep in mind the various legal formalities and get your shop licenses. If you acquire a space on rent, then you must make a legal rent agreement. It should include details like your basic rent, maintenance charges, terms and conditions of renewal, the consequence of the breach of contract, etc. 

Next, you would need a Trade license. Local bodies like panchayats, municipalities or corporations issue trade licenses. As they may vary from state to state, check with your local body for getting a trade license. Again you would need your PAN Card, bank statements, electricity or water bills as proof for the establishment to be attached to your application for the license. 

Seek a bit of chartered accountant advice or a legal consultant before you proceed with any trade, and they will guide you on these licensing and registration formalities. Better to be safe than sorry. 

  1. Taxation

Every business ideally needs to have GSTIN before starting a business in India. Every business has to apply for GST registration in their respective states within 30 days of the applicable date. If your turnover is less than 20 lakhs, then you don't need to get yourself registered. But all businesses having an annual turnover of more than Rs.40 lakhs need to have a GSTIN number in India. This number has been revised from Rs.20 lakhs to Rs.40 lakhs except in some states where 20 lakhs is still applicable. 

You need to have your PAN Card,  Aadhar, and any other business proofs while applying for GST registration. Also, businesses with an annual turnover of up to Rs.1.5 crores can opt for the Composition Scheme. Check if your proposed business is eligible.

Check the documents required below

Sl.No.

Documents

1.

PAN Card of the owner

2.

Aadhaar Card of the owner

3.

Bank Statement of the owner

4.

Registration Certificate

5.

Address proof of the premises like electricity or water bills

6

Colour photos, ID Proof and Address Proof of the owner

  1. Pricing

Now, this is one tough call to make since it's not dependent entirely on you. You need to check out your competitor's prices and then decide on your margins. Even a 5-10 rupee margin is a big deal when buying groceries in the Indian market. Hence it would be best if you gave extra consideration to pricing. You should be able to give better prices than your competitors and at the same time get a good margin.  You can also offer loyalty programmes, and give membership and goods deals to repeat customers. 

Also Read: How To Get A D-Mart Franchise?

  1. Marketing 

Advertisement is also key to the success of any business. Also, by advertising, you introduce your business to the locality.  You distribute pamphlets, put advertisements in newspapers and even give vouchers on first purchase. Even though most grocery store promotion is through word of mouth, a grand opening of the store and widespread advertisement will also contribute a fair bit. 

A grand opening always attracts customers, so if possible, you should allocate a part of the money to advertising it. It makes consumers curious, and they definitely would want to come and explore. While designing a supermarket business plan in India, marketing is one aspect that should not be ignored. A lot depends on how effective your marketing ideas are as well.

  1. Online ordering

Traditionally, we used to go to a store, search around and select the product, and stand in a queue to pay for it. However, now that all the products can be ordered online from the comfort of your home, a lot of people now get most of their purchases done onlineOnline grocery is a new demand. Instead of stressing over how much money I need to open a grocery store, take a small space and use any spare money to promote your e-commerce business. 

In this digital age, everyone uses their mobile phones, and online ordering is a tool to engage more consumers. You can tie up with online delivery companies to get your products online. 

Make sure you always have items in stock and don't run out of stock.  Unavailable products for a long time will shift your customer loyalties very fast. You need to make sure your page is updated and fully stocked as soon as possible.

  1. Delivery Partners

Offering home delivery is what makes it attractive to customers.  Whether ordered online, over the phone or even in-store, you need delivery partners to deliver those products. You can set a range of km and the minimum order amount for which you will provide this service so as to not waste money on fuel and time. 

You can put an advertisement for delivery boys required on well-known job sites mentioning the salary payable etc., and you will get immediate responses for the same. Supermarket profit margins in India are to a certain extent indirectly related to their grocery delivery schedule as well. More time slots for delivery and faster deliveries ensure loyal customers.

  1. Open a Business Account 

Every Business needs to have a separate business account of its own. Your personal account should not be your Business account. It is important to separate your business assets from your personal assets. In the event of a loss or failure of the business, it prevents your personal assets from being sued along with your business assets. Also, it's much easier to apply for future business loans. It will also be possible to do accurate accounting and pay taxes properly. 

Banks provide great offers these days when you enquire about opening a business account, so compare them and choose the one that gives you the best deal.

  1. Business Insurance

Even when you plan for everything, sometimes things can be out of your control. Getting insurance helps you to safeguard your assets from any unforeseen risks in the future. There are different insurance plans available for businesses with different risks, including general insurance. As a grocery store, you may need insurance cover against fire. Therefore. choose the insurance which provides you with proper cover.

HOW MUCH MONEY DO I NEED TO OPEN A GROCERY STORE IN INDIA? 

After taking into account all the costs, the minimum investment for a small store would range between Rs.10 lakhs - Rs.20 lakhs, and this can go up to crores depending on whether you want to open a departmental store or a supermarket. As mentioned before, business loans are easily available these days with excellent offers, so if your dream is to own a bigger store, you don't need to give up on the same. Just make a cost-benefit analysis and then invest accordingly.

Also Read: How To Start A Bakery Store?

PROFIT MARGIN IN GROCERY STORE INDIA

We can all agree on how essential groceries are and also that this business is actually profitable. The lockdown gave us a reality check on how groceries are a necessity. Grocery is one thing that will never become non-essential, and this alone is a good reason to venture into this space. The average grocery store profit margin ranges between 5% to 20%.

Every business' main objective is profit, and here also, your primary focus will be to increase the profit margin in the grocery store day by day. Profits and costs go hand in hand, so before you can figure out the profit, you need to calculate grocery stores start-up costs in India carefully. 

GO FOR  IT

If you have a passion for business and you're able to arrange the required capital, then you definitely stop thinking about how to start a grocery store and start the process of setting one up. There are many opportunities available today, and you need to tap on the right one. But you must keep in mind the above points before doing so. These are a few effective ways to start a grocery store and yet keep a check on your finances. Also, remember there is no business without risk. You will be successful only after undertaking a few risks, but first, you must begin and take the first step.  

FAQs

1. Is the FSSAI license compulsory before opening a grocery store?

Yes, The Food Safety and Standards Authority of India license is mandatory to obtain before opening a grocery store.

2. How to choose a domain name for my online Kirana store?

A Domain name should be short, relevant and easy to spell and also unique. You can search for domain names on sites like godaddy.com, name.com, etc.

3. Is GST registration mandatory for a grocery store?

If the annual turnover of the grocery store is more than 20 lakhs then it’s compulsory to get the 15-digit GSTIN number.

4. Is opening a  grocery store worth the investment?

Independent grocery stores earn a margin of 1-4% while the bigger brands earn more than 5%. While keeping the costs in check, opening a grocery store is among the profitable businesses in India.

5. How can I make my grocery store more attractive to consumers?

Apart from ensuring you always have enough stock of commodities, you can provide additional discounts, promotions, valet parking, free home deliveries and membership points to gain customer loyalty in the long run. 

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