How to Start a Supermarket Business in 20 Steps
Do you want to start a supermarket business? If YES, here is a complete guide to starting a supermarket business with NO money and no experience plus a sample supermarket business plan template. A supermarket business is a very profitable business because it is normal for the average shopper to visit stores where they can find all the groceries they need in one location and also where they will buy stuffs at highly discounted prices.
The running cost of this type of business is a bit high and if you are able to secure a high traffic location or a good store in a shopping mall, you can be rest assured to rake in good returns from your supermarket especially if it is stocked with products from various manufacturers.
Before launching this type of business, it will pay you to carry out your due diligence as it relates to market research, economic and cost analysis and of course feasibility studies. If you get things right before launching your supermarket business, it will not take you long before you breakeven and start smiling to the bank.
You can start your supermarket from a small town in the United States and if you are consistent and creative, it won’t be too long before your brand becomes nationally recognized and your business network spreads across the length and breadth of the United States of America especially when you go into franchising.
20 Steps to Starting a Supermarket Business
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1. Understand the Industry
The Supermarkets and Grocery Stores industry makes up the largest food retail channel in the united states. Players in this industry retail general lines of food products, including fresh and prepared meats, poultry and seafood, canned and frozen foods, fresh fruits and vegetables, various dairy products and other nonfood items, drugs and health products.
Please note that delicatessens who engage primarily in retailing food are also part of the Supermarkets and Grocery Stores industry.
A supermarket and groceries store business is a very easy business to start and it is not so capital intensive especially if you choose to start on a small scale in a small community. Getting the right products that people want to buy and good stock keeping records are the secrets of running a the business.
The Supermarkets and Grocery Stores industry has performed strongly over the five years to 2018. While it was uncertain if the industry would remain in high demand following the economic recession, supermarkets and grocery stores have made several changes to their operational strategy.
A considerable platform for change within the industry has been the customer base; while the industry has historically targeted exclusively low-income earners, this consumer pool has expanded in recent years to include middle-class shoppers and even some high-income earners. A recent report published by IBISWorld shows that the Supermarkets and Grocery Stores industry has grown over the five years to 2019, benefiting from a strengthening economy.
As per capita disposable income increased during the period, many consumers shifted to premium, organic and all-natural brands, helping lift industry revenue. Conversely, inflationary food costs have caused many consumers to continue purchasing private-label brands over the past five years.
While a shift toward more generic goods curbs revenue growth, it helps operators maintain profit margins, as store brands are less costly to produce than national brands. Overall, industry revenue is expected to grow an annualized 1.3 percent to $666.5 billion over the five years to 2019, including a 0.9 percent increase in 2019 alone.
Statistics has it that in the United States of America alone, the Supermarkets and Grocery Stores Industry generates over $678 billion annually from more than 66,596 registered Supermarkets and Grocery Stores. The industry is responsible for the employment of over 2,772,898 people.
Experts project the industry to grow at a 1.4 percent annual rate. The Kroger Co., Albertsons Companies LLC and Publix Super Markets Inc. are the leaders in the Industry. Despite the fact that the industry seems over – saturated, there is still room big enough to accommodate aspiring entrepreneurs who intend opening their own supermarket in the United States of America.
Some of the factors that encourage entrepreneurs to start their own supermarket business could be that the business is thriving business and it is easy to setup and manage with minimal startup capital and manpower.
If you are contemplating starting your own supermarket and groceries store business in the United States, you should endeavor to carry out a thorough market survey and feasibility studies. Despite the fact that this line of business is thriving and profitable venture, if you get some key factors wrong before starting out, then you are likely going to struggle to stay afloat.
2. Conduct Market Research and Feasibility Studies
Demographics and Psychographics
The demographic and psychographic composition of those who patronize supermarkets and groceries stores cut across all genders; male and female above 18 years with the financial means hence the demographic composition for supermarkets are all encompassing.
In essence, your target market can’t be restricted to just a group of people, but all adults who reside in your target location and who have the purchasing power. So, if you are thinking of opening your own supermarket and groceries store business then you should make your target demographics all encompassing.
It should include corporate executives, students, migrants, entrepreneurs, business people, military men and women, sports men and women, tourists, and every adult in the neighborhood where your supermarket will be located.
3. Decide Which Niche to Concentrate On
It is important to state that there is no known niche area when it comes to the supermarket and groceries store business.
Every player in this business usually sells a wide range groceries, general lines of food products, including fresh and prepared meats, poultry and seafood, canned and frozen foods, fresh fruits and vegetables, various dairy products and other nonfood items, drugs and health products, children’s toys and beauty cosmetics, soaps, detergents, cleaning supplies and paper related products, men and women wear, and other products et al from top manufacturing brands.
Some supermarkets still decide to build a strong online presence/online store and service the online community.
The Level of Competition in the Industry
The competitions that exist in the Supermarkets and Grocery Stores industry goes beyond competitions with supermarkets and groceries stores in your location; you will be expected to compete with any other outlets such as mom and pop shops and pharmaceutical stores that also retail stuffs that are found in supermarkets. So, it will be right to say the competition in the Supermarkets and Grocery Stores industry is tough.
The truth is that no matter the level of competition in an industry, if you have done your due diligence and you brand and promote your products or business properly, you will always make headway in the industry. Just ensure you stock your store with wide range of groceries and general lines of food products.
4. Know Your Major Competitors in the Industry
In the business world, there are always brands that perform better or are better regarded by the customers and the general public than the others. In most cases, brands that are the pacesetters automatically achieve the status of being one of the leading brands in the industry, while other brands have to work their way up.
Here are some of the leading supermarkets and groceries stores in the United States of America and in the globe;
The Kroger Co.
Albertsons Companies LLC
Publix Super Markets Inc.
Wegmans Super Markets
Aldi Super Markets
Stew Leonard’s
Trader Joe’s Super Markets
Hy-Vee store
Whole Foods Market
Harris Teeter Super Markets
Costco Wholesale
SuperTarget
Albertsons Super Markets
Meijer Super Markets
Safeway Super Markets
WinCo Foods
Hannaford Super Markets
The Fresh Market
Fairway Market
New Seasons Market
Economic Analysis
When it comes to starting a new business, economic analysis is one of the important factors that should never be taken for granted. If you get your economic analysis wrong before investing your capital into any business, the likelihood of the business struggling to make headway cannot be ruled out.
If you want to start your supermarket business, then you should endeavor to carryout detailed economic analysis so as to know the amount to invest in the business, the best suppliers to deal with, the running cost and overhead cost of owning the business.
Please note that in order to carry out thorough economic analysis for your supermarket business, it will profit you to engage the services of business consultants who can come up with tailored economic analysis that will help properly structure your business.
5. Decide Whether to Buy a Franchise or Start from Scratch
Everyone who wants to start any business will always want to adopt the simplest route or Business model that will guarantee them profits with minimal effort and investment which is why people usually purchase the franchise of existing and successful brands.
If you are looking towards starting supermarket and groceries store business, you have the options of either purchasing a franchise or starting from the scratch. There are a couple of supermarkets and groceries stores that are into franchising that you can purchase from.
The truth is that entrepreneurs usually prefer to start from scratch because the business has a low level entry barrier and it can be started with minimal startup capital. As a matter of fact, you can start the business by operating only an online supermarket.
In a nutshell, whether you choose to start your supermarket and groceries store business from the scratch or buying a franchise, the choice is yours, but make sure whatever choice you make aligns with your business goal, vision and mission.
6. Know the Possible Threats and Challenges You Will Face
When starting a business you will not be immune to threats and challenges because that is the usual hurdle you must overcome in other to grow your business and make profits. The truth is that when you start a supermarket business in any part of the United States of America, you will be confronted with challenges that come from other players in the industry especially those with active business in your location.
Some other challenges and threats that you are likely going to face are economic downturn and unfavorable government policies. There is nothing you can do as regards these threats and challenges other than to stay positive that things will work well for you.
7. Choose the Most Suitable Legal Entity (LLC, C Corp, S Corp)
Please note that if you want to start a supermarket and groceries store business, the legal entity you choose will go a long way to determine how big the business can grow; some supermarkets are designed for the neighborhood market, some for city wide market, while others are for the national market via franchising.
In general, you can either choose a general partnership, limited liability company, or even a sole proprietorship for your supermarket. Ordinarily, sole proprietorship should have been the ideal business structure for a small – scale supermarket especially if you are just starting out with moderate startup capital in a small neighborhood.
But if your intention is to grow the business and have chains of supermarkets all across the United States of America via franchising, then choosing sole proprietor is not an option for you. Limited Liability Company, LLC or even general partnership will perfectly cut it for you.
Setting up an LLC protects you from personal liability. If anything goes wrong in the business, it is only the money that you invested into the limited liability company that will be at risk. It is not so for sole proprietorships and general partnerships.
Limited liability companies are simpler and more flexible to operate and you don’t need a board of directors, shareholder meetings and other managerial formalities. These are some of the factors you should consider before choosing a legal entity for your supermarket; limitation of personal liability, ease of transferability, admission of new owners and investors’ expectation and of course taxes.
If you take your time to study the various legal entities, you will agree that limited liability company; an LLC is most suitable. You can start this type of business as limited liability company (LLC) and in future convert it to a ‘C’ corporation or an ‘S’ corporation especially when you have the plans of going public.
Please note that upgrading to a ‘C’ corporation or ‘S’ corporation will give you the opportunity to compete with major players in the industry; you will be able to generate capital from venture capital firms, you will enjoy separate tax structure, and you can easily transfer ownership of the company.
8. Choose a Catchy Business Name
When it comes to picking a name for your business, you should be innovative because whatever name you choose for your business will go a long way to create a perception of what the business represents. If you are considering starting your own supermarket and groceries store business, here are some catchy names that you can choose from;
Vivacity® Supermarket and Groceries, Inc.
Pick 1 Pick 2™ Supermarket and Groceries Store, LLC
Pat Williams™ Supermarket and Groceries Store, Inc.
Danny Welbeck® Supermarket and Groceries Store, LLC
Twinkle Stars® Supermarket and Groceries Store, Inc.
All in One® Supermarket and Groceries Store, Inc.
Ron Lacey© Supermarkets and Groceries Stores, Inc.
Grace Macron™ Supermarket and Groceries Store, LLC
Amie Allen™ Supermarkets and Groceries Stores, Inc.
Glory Wave® Supermarket and Groceries Store, Inc.
9. Discuss with an Agent to Know the Best Insurance Policies for You
In the United States and in most countries of the world, you can’t operate a business without having some of the basic insurance policy covers that are required by the industry you want to operate from. So, it is important to create a budget for insurance and perhaps consult an insurance broker to guide you in choosing the best and most appropriate insurance policies for your supermarket.
Here are some of the basic insurance covers that you should consider purchasing if you want to start your own supermarket business in the United States of America;
General insurance
Health insurance
Liability insurance
Premises liability insurance
Product liability insurance
Advertising and personal injury liability insurance
Auto liability insurance
Cyber liability insurance
Liquor liability insurance
Flood and earthquake insurance
Commercial insurance policies
Workers’ Compensation insurance
Overhead expense disability insurance
Business owner’s policy group insurance
Property insurance
Payment protection insurance
10. Protect your Intellectual Property With Trademark, Copyrights, Patents
If you are considering starting your own supermarket, usually you may not have any need to file for intellectual property protection/trademark because the nature of the business makes it possible for you to successfully run the business without having any cause to challenge anybody in court for illegally making use of your company’s intellectual properties.
But if you just want to protect your company’s logo and other documents or software that are unique to you or even jingles and media production concepts, then you can go ahead to file for intellectual property protection. If you want to register your trademark, you are expected to begin the process by filing an application with the USPTO.
11. Get the Necessary Professional Certification
When it comes to supermarkets and groceries store business, you do not need to have any formal training or special certification. All you need is informal training that will expose you to retailing. On the other hand, you come across any form of certification that can aid you to conduct your business properly, then by all mean try and pursue such certification.
12. Get the Necessary Legal Documents You Need to Operate
The essence of having the necessary documentation in place before launching a business in the United States of America cannot be overemphasized. It is a fact that you cannot successfully run any business in the United States without the proper documentations. If you do, it won’t be too long before the law catches up with you.
These are some of the basic legal documents that you are expected to have in place if you want to legally run your supermarket in the United States of America;
Certificate of Incorporation
Business License
Tax Payer’s ID / Tax Identification Number
Business Plan
Non – disclosure Agreement
Copy of license for the service support facility and/or a recent inspection report
Employee Handbook
Employment Agreement (offer letters)
Operating Agreement for LLCs
Insurance Policy
Online Terms of Use (if you also operate online supermarket and groceries store)
Online Privacy Policy Document (basically for online payment portal)
Building License
Franchise or Trademark License (optional)
13. Raise the Needed Startup Capital
Starting a supermarket business can be cost effective especially if you choose to start on a small scale by running a store in a street corner. Securing a standard and well – positioned store facility and stocking your store with a wide range of products from different manufacturing brands are part of what will consume a large chunk of your startup capital, but if you choose to start the business on a large scale, you would need to source for fund to finance the business.
When it comes to financing a business, one of the first thing you should consider is to write a good business plan. If you have a good and workable business plan document in place, you may not have to labor yourself before convincing your bank, investors and your friends to invest in your business.
Here are some of the options you can explore when sourcing for startup capital for your supermarket business;
Raise money from personal savings and sale of personal stocks and properties
Raise money from investors and business partners
Sell shares to interested investors
Applying for loan from your bank/banks
Pitching your business idea and applying for business grants and seed funding from donor organizations and angel investors
Source for soft loans from your family members and your friends.
14. Choose a Suitable Location for your Business
As regard choosing a location for your supermarket and groceries store, the rule of thumb is that, you should be guided by the demand for such products and easy access to wholesale goods. Of course, if you are able to secure a central location for your supermarket, it will give people easy access to locate your store.
The truth is that the location you chose to open your supermarket and groceries store business is key to the success of the business, which is why entrepreneurs are willing to rent or lease a facility in a visible location. If you make the mistake of renting or leasing a facility in a not too visible or hidden location simply because it is cheap, then you must be prepared to spend more in promoting the business.
It is important to note that a business facility in good location does not come cheap hence you should be able to allocate enough fund for leasing/renting in your budget. If you are new to the dynamics of choosing a location for your business, then you should feel free to talk to a business consultant or a realtor.
15. Hire Employees for your Technical and Manpower Needs
There are no special technologies or equipment needed to run this type of business except for Point of Sales (POS) Machines, shelves, and relevant retail and accounting software applications. You will definitely need computers/laptops, internet facility, telephone, fax machine and office furniture amongst others.
As regard leasing or outright purchase of a store facility, the choice is dependent on your financial standings, but the truth is that to be on the safe side, it is advisable to start off with a short – term rent / lease while test running the business in the location. If things work out as planned, then you go on a long – term lease or outright purchase of the property.
When it comes to hiring employees for a standard supermarket, you should make plans to hire a competent Chief Executive Officer (you can occupy this role), Admin and Human Resources Manager, Merchandize Manager, Store Manager, Sales and Marketing Officer / Sales Girls and Sales Boys, Accounting Clerk, IT officer and Cleaners and Security Officer. On the average, you will need a minimum of 7 to 10 key staff members to run a small – scale but standard supermarket.
The Services Delivery Process of the Business
When it comes to running a store or buying and selling stuffs, there is no hard and fast rule about it. Basically, it is the duty of the merchandize manager to stock goods from different manufacturing brands. They go out there to source for good purchasing deals and they also ensure that they do not only purchase at the right prices that will guarantee good profits, but also ensure that they purchase products that are in demand in their business location.
Once the products are bought, they are properly arranged in the store for customers to see and purchase. Stocks are taken after the close of business every day and account are balanced.
It is important to state that a supermarket may decide to improvise or adopt any business process and structure that will guarantee them efficiency and flexibility; the above stated supermarket and groceries store business process is not cast on stone.
16. Write a Marketing Plan Packed with ideas & Strategies
Generally, running a business requires that you should be proactive when it comes to marketing your goods or services. If you choose to launch a supermarket, then you must employ strategies that will help you attract customers or else you will likely struggle with the business because there are well – known brands that determine the market direction for the industry.
People will buy goods from your store if they know that they are going to get quality products and of course value for their money. Your marketing strategy should center on quality, and pricing, and above all excellent customer service.
You should ensure that whenever your customers visit your supermarket, they will get quality products and excellent service. If you are able to put the above stated in place, you won’t struggle to retain your old customers and at the same time win over new customers.
Businesses these days are aware of the power of the internet, which is why they will do all they can to maximize the internet (videos/YouTube) to market their services or products. In other words, a larger percentage of your marketing effort should be directed to internet users. These are some of the marketing ideas and strategies that you can adopt for your supermarket business;
Introduce your supermarket and groceries store by sending introductory letters alongside your brochure to every adult in the neighborhood where your supermarket will be located
Advertise on the internet on blogs and forums, and also on social media like Twitter, Facebook, LinkedIn to get your message across
Create a basic website for your business so as to give your business an online presence
Join local supermarkets and groceries store associations for industry trends and tips
Provide discount days for your customers
Advertise our business in community based newspapers, local TV and radio stations
List your business on yellow pages ads (local directories)
Encourage the use of Word of mouth marketing (referrals)
17. Work Out a Reasonable Pricing for your Services & Products
One key factor that will help you sell your products at rock bottom prices is to purchase your items directly from the manufacturers in pretty large quantities. The truth is the higher the quantities of items you purchase, the cheaper you tend to get them.
Another strategy that will help you retail your products at the right price is to ensure that you cut operational cost to the barest minimum and channel your efforts towards marketing and promoting your brand name. Aside from the fact that this strategy will help you save cost, it will also help you get the right pricing for your products.
18. Develop Iron-clad Competitive Strategies to Help You Win
The availability of a wide range of products from different manufacturing brands in your supermarket, your business process and of course your pricing model are part of what you need to stay competitive in the industry. Another possible competitive strategy for winning your competitors in this particular industry is to build a robust clientele base.
Over and above, ensure that your organization is well positioned, you have unmatched visibility, robust business network/relationships with manufacturers, key members of your team are highly qualified and your product can favorably compete with the some of the best in the industry.
19. Brainstorm Possible Ways to Retain Clients & Customers
When it comes to business, no matter the industry that you choose to pitch your tent in, one of the easiest ways to increase customer’ retention and perhaps to attract new customers is to produce results and satisfy your customers always. If your customers are satisfied with your products and services delivery, they can hardly source for alternative service provider or products.
If you can continue to make available a wide range of products from different manufacturing companies, and your customer service delivery is top notch, then you won’t struggle to maintain loyal customers. Ensure that you offer your customers incentives if you want to retain them and of course continue to generate repeated sales from them.
Part of what you need to do to achieve this is to track progress, results or outputs with the aim of improving on them quickly as the case demands. When it comes to managing your customers, and building loyal clientele base, you should purchase a customized CRM software.
With a customized CRM system, you can easily stay in touch with your clients (you can carry out quick surveys, you can introduce new products and prices to them without any hitch, you can felicitate with them on their birthdays and other anniversaries, you can keep track of their progress, you can send bulk sms and customized e – mails and above all, you can easily receive compliant and feedback from them).
20. Develop Strategies to Boost Brand Awareness and Create a Corporate Identity
If you are in business and you are not conscious about boosting you brand awareness and communicating your corporate identity, then you should be ready to take on whatever the society portrays your business to be. One of the secrets of larger corporations is that they are willing to spend fortunes to boost their brand awareness and to continue to communicate their corporate identity the way they want people to perceive them to be.
If your intention of starting a supermarket is to grow the business beyond the city where you are going to be operating from to become a national and international brand through franchising, then you must be ready to spend money on promotion and advertisement of your brand.
Here are the platforms you can leverage on to boost your brand awareness and create corporate identity for your supermarket;
Place adverts on both print (newspapers and retail / shopping magazines) and electronic media platforms
Sponsor relevant community based events/programs
Leverage on the internet and social media platforms like; Instagram, Facebook, Twitter, YouTube, Google + et al to promote your products
Install your Billboards in strategic locations all around your city or state
Engage in roadshow from time to time in targeted neighborhoods to create awareness of your supermarket
Distribute your fliers and handbills in target areas
List your supermarket in local directories
Advertise your supermarket in your official website and employ strategies that will help you pull traffic to the site.
Position our Flexi Banners at strategic positions
Ensure that all your staff members wear your branded shirts and all your vehicles and trucks/vans are well branded with your company logo.