Are you planning to start up a new business with a Supermarket franchise in India, but worried about the cost to open a Supermarket store? Well, you are not alone who is afraid of investing in a new business as it contains huge risk, and failing a business can make you lose so much time and money. But opening a supermarket store is something different. Although opening a supermarket store seems a bit costly, you can commence it on a small scale. Commencing a supermarket store from a small firm and then expanding it gradually can be a good idea for you if you have a small budget. But opening a supermarket business is not only about the cost, there are much more that you must be aware of before stepping into the market.
Supermarket store enterprise has become one of the biggest retail sectors around the world, especially in India. The supermarket’s stores sell a broad range of regular necessities including foods, and household goods. It is usually large area wise and well organized containing a vast collection of products like meat, dairy, baked items, fresh produce, canned foods, household cleaning products, personal care items, etc.
The supermarket store industry is highly competitive, as there are extensive supermarket chains and self-reliant traders who are operating for market share. And the constant advancement in technologies has set a new standard for the supermarket store industry, and many supermarket stores now provide the facilities of online order and home delivery. Also, they are delivering a better customer experience by subsidizing new technologies, like mobile apps, electronic price tags, self-checkout booths, and many more.
What Are The Expected Cost To Open A Supermarket
The Cost To Open A Supermarket franchise generally varies depending on different factors, including the location of the store, its size, and the variety of products offered. However, the average cost of opening a supermarket is around ₹10 lakhs to ₹2 crores, depending on the extent of the business. Here we have discussed the different sections of opening a supermarket where the money is generally spent. So let’s have a look now to get a detailed idea:
- Purchasing or Renting A Space: The retail space cost is the first and foremost expense of opening a supermarket. It generally ranges from a few thousand per month for renting a retail space, depending on the size of the room. However, the costs of buying a retail space will be higher.
- Inventory: The inventory of a business depends on the product type and the quantity that is planned to be sold. The cost of inventory generally ranges from thousands to lakhs, or even crores, again depending on the store’s size.
- Technologies and Systems: This section mainly includes the expenses of inventory management, computer systems, economical software, etc. It also includes some other technologies needed to operate the supermarket more effectively, such as inventory management systems and POS systems. Plus, it may include the cost of electronic price labels to make the Best supermarket franchise with an automatic management system.
- Essential Equipment and Supplies: Another major expense of opening a supermarket is purchasing the essential equipment and supplies. It includes everything that is required to operate the supermarket, such as shelving, refrigeration units, security systems, checkout counters, e-ink displays, cash registers, etc. However, the equipment and supplies costs depend on the type and size of the stores.
- Advertising and Marketing: It is also a very important section of setting up a supermarket business. It includes costs of broadcast media local print, discounts, and promotions to attract more and more customers. The costs of advertising vary based on the level at which they are operated.
- Accounting Fees and legal charges: This section includes the expenses of forming a business structure, fees of accounting services, and legal charges, such as obtaining necessary permits and licences. The cost of accounting and legal charges usually ranges from tens of thousands to hundreds of thousands.
- Labour Costs: Another significant expense for a supermarket is the labour costs, which mainly include salaries, bonuses, and benefits. The labor cost mainly relies on the number of workers or employees, their regular salaries, bonuses, and other benefits offered.
- Utilities: Costs of utilities are also notable when it comes to opening a supermarket. It generally includes the costs for gas, water, electricity, and phone or internet services. The utilities cost also ranges from a few hundred to several thousand per month, based on the location and size of the store.
- Insurance: This section of supermarket expenses mainly includes property insurance, liability insurance, and the insurance of workers’ compensation. The insurance costs generally range from thousands to lakhs per year.
- Security charges: The security expenses include the security systems costs, such as alarms, cameras, security personnel, etc. Expanding on security is most essential when opening a supermarket, to operate the business successfully without any errors. The security costs also range from a few thousand to tens of thousands, depending on the store’s size.
Overall, these are the most common expenses that can be expected when opening a new supermarket store. However, you should remember that the above section is not a complete list of expenses. The actual Supermarket franchise cost can vary depending on the circumstances of your business.
Is Opening A Supermarket Store Profitable
Opening a supermarket store is indeed a profitable business, if it is opened by considering all the factors. The crucial factors that make a supermarket store profitable is perfect location, effective management, expenditures, and target market.
- Location: The success of a supermarket store and its profitability largely depend on its location. Aa you know the more the customers, higher the incomes. A supermarket store opened in a largely populated area is more likely to make more revenue in comparison to one established in a rural area.
- Effective Management: Effective management is one of the most important factors in the success of a supermarket store. If you have a clear understanding of the business, and you manage everything carefully, like stocking inventories, efficiently manage the staff, and keep clear records of finance, the business will surely be successful.
- Target Market: Understanding of the target market and their requirements is a must to get success in a supermarket store. A supermarket store that fulfils the special needs of its regular customers like offering authentic and organic products and so on can attract many customers which increase sales.
- Expenditures: The expenses of a supermarket store, such as rent, inventories, utilities, and staffing must be organized carefully so that the business can be more profitable.
Reasons Why Opening Supermarket Is Profitable
Once a Supermarket franchise starts to run effectively, it can be beneficial for the owner in several ways. There are many reasons which makes a supermarket store a profitable business, including;
- Constant requirements: Foods and household supplies are the basic needs for every individual and no one can push these to the future. These necessities are relatively predictable and stable, and everyone has to buy them. It is the major assurance for every supermarket supplier that they will have a large number of regular customers as well as the revenue.
- Potential for high margins: Typically the supermarket stores have high rates on the commodities they sell in comparison to small retailers, and it creates a significant profit margin.
- Opportunity for growth: The supermarket industry is rapidly and growing by the time, providing several opportunities for the owner to expand and grow their business.
- Ability to create franchise: Supermarkets offer a comprehensive range of products and services, and it can be more accessible to get a franchise and specialise in a particular product or brand.
- Recurring revenue: Customers regularly visit the supermarket stores, and sometimes numerous times a week. So, it is of course a consistent source of earning revenue and gives a boost to your business.
Also Read: How to calculate supermarket franchise cost in India?
Ways to Decrease the Cost To Open A Supermarket Store
Although commencing a supermarket store can be an expensive experience, there are several ways to decrease the cost.
- Electronic Price Tags: Electronic price labels are very helpful to decrease the costs of setting a supermarket as manual pricing requires physical staff. Besides, it eliminates the printing cost of physical tags.
- Intervening lease contracts: You can speak with your landlords and convince them to decrease the rent.
- Install smart equipment: You can install energy-efficient equipment and lighting to minimize energy costs.
- Direct pick up: Sourcing derivatives from suppliers directly to decrease the costs associated with dealers and distributors.
Conclusion
Opening a supermarket store seems quite difficult but it actually is not. The cost to open a supermarket is not constant, because it totally depends on the size of the supermarket, inventories, and location. If you are planning to open a Small Supermarket franchise, first you need to make a complete budget according to your capital, so that you can minimize such expenses and can consider every aspect carefully. You can take advice from a financial expert as they can tell you everything about it in detail, and you will not miss out a single detail.