Starting a supermarket business in India can be profitable as the industry seems to grow at a high rate and the never-ending demand for groceries and a wide range of products never disappoints the owner.
As the retail industry in India continues to grow, supermarket franchises can play a significant role for new entrepreneurs who want to do business.
However, opening a supermarket market is not easy, you need to consider several factors in mind and go through a lot of planning, and specific procedures and you need to have a full understanding of the market to succeed and make a profitable business out of it.
Here are the key factors to consider when opening a supermarket franchise in India.
1. Research
Before directly entering the supermarket market, you should know about the entire market and research every product, its demand and supply.
This will make sure that your investment aligns with consumer needs and market trends.
Having a look at the previous data can help you grow a lot.
Key Factors in Research
1. Customer Needs – Talk with the consumer, and neighbours and ask them what products they like and use, always know what your customers need and have that products in your supermarket. The product range, pricing and convenience must suit the customers.
2. Competition – You must know about all the supermarkets or normal shops nearby and check what is the gap that you can fill.
There is always a way to be ahead of your competitors you just need to look for that.
3. Local Psychology – Understand the population size, income level and shopping behaviour of all the people nearby to identify which products can be sold easily and regularly.
4. Market Analysis – Have a look at all the new evolving trends such as online grocery shopping, eco-friendly packaging and discounting.
2. Supermarket Franchise Business Model
Before directly entering the supermarket franchise in India business you must know what a franchise model is and how it works.
It is basically a collaboration between the franchisor ( which is an established brand) and the franchisee(the owner who runs the store).
This business model generally provides you with readymade brand and brand value, you only take care of the day-to-day operations.
Advantages –
1. Established Brand Name – You don’t have to put much effort as you get an already established brand with a high customer base. Only day-to-day operations are to be handled by the owner.
2. Business Idea – It removes all the guesswork from operations as each and everything is taught and specified by the brand’s team. This reduces the risk of failure.
3. Support and Training – Franchisors are very adjusting nowadays and they provide marketing, operational training, supply chain support etc.
4. Resources – It provides access to all the inventory management tools, centralised procurement and technology.
Challenges to Anticipate –
1. Initial Investment – Franchisee fees, Setup cost and stock procurement require a significant amount of capital which is not easy to arrange.
2. Royalties – Paying Royalty every time you sell something can be irritating sometimes if the work is not up to date. Royalties affect a lot of profit margins.
3. Compliance – Franchise agreements may impose restrictions on operations and pricing as everything is under the brand and they work according to their convenience.
3. Right Franchise
India is home to many of the most successful entrepreneurs, especially in the supermarket field, Dmart, Metro, MORE, easy dayyReliance Freshsh etc.
Many of the successful brands are offering franchisees nowadays which can also help you in earning a significant amount of money.
Choosing the right franchise is going to be one of the critical decisions yet everything depends only on this decision.
Factors to Consider –
1. Brand Reputation – Always go for the brand that is liked by people and has a strong customer base which means it has loyal customers. Make sure that the brand also has an amazing market presence.
2. Franchise Fees – You must understand the full payment plan including franchise fees, royalty payment, upfront fees and hidden costs if any.
3. Support – Look for brands that have nice reviews and provide comprehensive training and operational support which can be beneficial in tough times.
4. Offerings – Always ensure that the franchise aligns with local customer needs and preferences.
It is very important to understand what the local customer needs as they are the only loyal customers.
5. Area Speciality – Always ask or check whether the franchisor offers some exclusivity in terms of place or provides a special geographical area to avoid competition from the same brand.
Also read: Best Supermarket Franchise Opportunities In India 2024
4. Business Plan
A business plan is enough to identify your objectives, strategies, and financial projections. It often serves as a blueprint for operations and a tool to secure funding.
While running a business plans always back you as everything is so uncertain that anything can happen at any time.
Key Components of a Business Plan
1. Summary – Brief overview of your goals and the supermarket franchise in India you wish to establish including the location.
2. Market Analysis – All the insights from your research including the target customers and operations. Market analysis benefits in a lot of ways.
3. Operational Plan – It includes all the details about the location, staffing, inventory management and technology. All the operations must be managed properly for adequate working.
4. Financial Plan – It must cover all the important aspects such as Investment requirements, expected revenues, profit margins and break-even analysis.
5. Marketing Plan – All the strategies and promotions are done to attract local customers through digital marketing and loyalty programs.
5. Funding
Starting a supermarket always depends on the area, facilities to be provided, inventory and the most important thing which is capital.
Different brands have different locations and the investment can range from 10-12 lakh to 2 crore again depending on the square feet area and a lot of parameters.
Options
1. Personal Savings – If you have sufficient funds to start a supermarketfranchise in India then don’t wait for anyone and go for it as you don’t have to take permission from anybody and you are already financially independent.
2. Bank loans – Many of the banks offer loans to people under the schemes that are run by the government such as Mudra Loans and Stand Up India.
3. Government Grants – Always check for government initiatives that are supporting MSME in the retail sector.
4. Partnership – Always collaborate with the investors who can share the financial burden instead of people who already depend upon you financially.
6. Location
The location of your supermarket is the real game changer, it can either make the business or break the business. A location with high traffic and high footfall, easily accessible areas ensures high sales and loyal customers as the local buyers always prefer the local shops.
Factors to Consider
1. Residential Areas – Supermarkets near residential areas or huge societies attract regular customers who are loyal and promising.
2. Visibility – Always make sure that the store is easily accessible and visible to the audience also ensure that there is an ample amount of parking for the customers.
3. Competition – Always choose the location where competition can be managed or you can offer something unique and also help in making money.
4. Space Requirement – Supermarkets are generally opened in 700 sq. ft to 3000 sq. ft also depending on the budget and the location one is opening their supermarket in.
7. Legal Formalities
Starting a supermarket franchise in India adheres to various legal formalities, and following these properly is very essential to avoid complaints.
Ensure that all the legal formalities are completed so that you don’t have to face any problems while working.
Requirements
1. Establishment License – Register your store with the local authorities so that they know that you have a store at any such place.
2. GST Registration – For billing and tax compliance, it is necessary to have aGSTt number.
3. FSSAI license – It is one of the most important aspects as it is necessary for selling food and beverages.
4. Trade License – You can get this license from the Municipal Corporation which grants you the ability to trade goods from one place to another.
5. Franchise Agreement – Sign an agreement with the Franchisor stating all the terms and conditions and make sure that you agree to all of them then only sign it.
8. Design and Setup
The layout and design of your supermarket should always enhance the experience of shopping and increase its efficiency to keep more products.
The design should always be attractive and appealing to the eyes which automatically attracts you towards the shop.
Tips For Setup
1. Product Placement – Always use your mind and then make the decisions, place all the high-demand items at eye level and all the impulse buy products or cheap products at the cash counter.
2. Aisle Design – Ensure that the aisles are spacious and well-organized for easy navigation and accessibility to the consumers.
3. Ambience – Create a welcoming environment with adequate lighting and proper LED lights that are bright enough to make all the products shine.
4. Technology – Always go for the brands in terms of technology, install a reliable Pos System, inventory management system and security cameras that enhance the security of your supermarket.
9. Recruitment and Training
Your staff is going to be the main representative and face of the supermarket franchise in India when you are not present.
Franchisors ensure that the staff gets proper training and knows how to attend to the customers and all the operations.
Tips
1. Hire Local – Always employ individuals that know the local people, and language and are a part of local people to remove interaction barriers.
2. Cross Training – Train staff to have multiple roles so that you can consider anyone for billing, stocking and customer assistance.
3. Incentives – Always give recognition to the employees and motivate them by offering performance-based incentives.
10. Marketing
Marketing is one of the major factors in a supermarket especially at the initial stages. Both traditional and digital marketing can help you get recognition and establish your brand.
Marketing Strategies
1. Launch Event – Host an opening event with discounts and attractive offers that automatically attract clients.
2. Loyalty Programs – Introduce Innovative Schemes such as reward points or cashback programs to encourage repeat and loyal customers.
3. Local Advertising – Use banners, flyers and daily newspaper ads to target nearby residents.
4. Digital Marketing – Leverage all the social media platforms, email campaigns and Google ads.
5. Collaboration – You must partner with local businesses and appear at local community events to increase your visibility and gain the trust of the local public.
Check out this: 20 Questions To Ask A Franchisor Before Buying A Supermarket Franchise
Conclusion
These were some of the best tips to open a supermarket franchise in India, if you tend to open a supermarket while keeping these steps in mind, you are going to run the business smoothly.
Franchises provide training and marketing support which results in growth at a nice rate and the consistency of the product is also maintained.
Once all the legal formalities are completed you can move to design and setup.
Design should always be appealing and attractive, try to keep unique products that generally lead to impulse buying.
By using all of these tips you can easily open a supermarket franchise.