How to Start a Supermarket Business In India - Everything You Should Know

Planning to start a supermarket business in India? We’ve outlined a complete supermarket business plan for you, so read on!

Introduction

The retail sector deals with the provision of goods and services to customers. It includes departmental stores, supermarkets, convenience stores, shopping complexes, speciality stores, restaurants and bars.

Before we move on to the basics of how to start supermarket business, let’s talk about India’s place in the retail sector!

India has the world’s 5th-largest retail sector, contributing 10% to its GDP and employing more than 8% of the working population. According to Kerney, India’s retail sector is projected to reach USD 1.5 Tn by 2030, from USD 0.8 Tn in 2020!

Despite the devastating COVID-19 pandemic, the sector has recovered 93% of its sales compared to pre-pandemic times. In 2022, food and groceries comprised 68% of India’s total retail market. Moreover, many emerging Indian supermarkets such as Reliance Fresh, More and Big Bazaar have scaled up significantly over the years.

Without a doubt, the retail sector is projected to deliver some very promising results - which means now is the perfect time to establish a business in it.

How to Start Supermarket Business In India?

If you’re confused on how to open a supermarket, read ahead!

A supermarket is a large outlet that sells household and essential products such as packaged foods, groceries, household essentials, apparel, kitchenware, cleaning products, footwear, electronics, toys, medicines, etc. It is a self-service store where customers pick products themselves, compared to grocery stores where assistants help you locate goods.

However, if you want to open supermarket business in India, it’s important to have clarity on the process. So read on!

1. Business Plan

Before starting any business, supermarket in India or otherwise - it is crucial to have an action plan. A business plan for your supermarket will help you define details such as:

- Size:

Based on your budget, will your store be large, medium, or small? The types of products you plan to offer will also impact the store's size. If you want to open a small grocery store, it would be a great decision to test waters in the business if you have limited working knowledge on how to open supermarket ,operate and expand it in India.

- Capital & Financing:

Evaluate your budget and figure out how much capital you’ll need to raise. Generally, the capital requirement depends upon the scale and size of your business - so it’s important to figure out how much you want to invest. There are many factors that depend completely on the size of your business you want to operate. If it’s a small grocery store, then capital required to put together a supermarket setup of that scale would be lesser compared to a larger store. Also, other investment avenues are inventory, rent or cost of purchase of shop, software to assist in case of larger inventory, manpower required will be higher for a bigger supermarket setup.

- Ownership:

Are you going to run your supermarket with a partner, or will you be the sole proprietor? Remember, a business must keep a legally viable organizational structure for effective management and administration.

- Brand Partnerships and Collaborations:

As the owner of a supermarket, you need to figure out which brands you want to work with. Additionally, you must determine the varieties of products you want to offer. You will need to plan ahead for such partnerships or collaborations. We recommend following the latest consumer trends, and keeping yourself updated with new and upcoming brands that enter the market.

Such considerations are essential to help you formulate an action plan for starting a supermarket business. To summarize, in order to make decisions for such collaborations, you would also need to understand the customer demographics, i.e. what category of products are in most demand, which products can do well, lack of availability of certain products in the vicinity to fill the demand-supply gap, and other customer trends. By collating these data points, you’d be in a great position to determine which sort of brand partnership you can do to boost your sales and advertise your supermarket among customers.

2. Location

The next step is to identify an appropriate location for your supermarket. It should be easily accessible from the city, and be well connected by public transport. The size of the store must be enough to display a minimum of 2 to 3 varieties for every product line. You must also have space for a warehouse, in order to maintain a standard inventory of products. The probability of a business doing well is usually higher for

3. Licencing

It is mandatory to register your business to ensure that it is legitimate, and can attract reputed brands for partnerships. Some necessary permits for opening a supermarket business are:

• Trade licence
• FSSAI licence
• GST Registration
• Import Export Code
• MSME Registration
• Shop Act Registration

The easiest way to get all licensing done is to hire a legal firm. They’ll help you take care of all permits & registrations.

4. Pricing and Product Offering

To open supermarket, it is essential to have a plan in place. Business plan for supermarket will help you make decisions swiftly and with confidence to open your business. For a supermarket business plan to be viable, you must identify the products you will offer at your supermarket. The product and price range must be set according to the area’s income standards, property circle rates, etc.

Pricing is a crucial aspect of every new business. Surveys are generally a good idea to gain insights into competitors’ marketing strategies, consumer behavior and preferences. Keep in mind that first impressions are indispensable to any business. Yours will be no different!

5. Advertising

Nobody will know about your supermarket until you tell them about it. Therefore, marketing and advertising are crucial. You can use offline marketing methods like pamphlets, place hoardings, and local newspaper ads. You can also run online marketing campaigns and use social media to create useful and engaging content.

Supermarkets usually rely on word of mouth from customers. Thus, you can try offering early-bird discounts or introduce loyalty programs to build your customer base. Another exciting idea is to plan a grand opening ceremony to garner people's interest in your supermarket. Try calling a celebrity/local personality to make the event even bigger!
If you want to have a longer impact on people, you can offer certain product categories that are not available in the vicinity. You may have to go the extra mile by partnering up with suppliers that deal with imported food items, luxury confectioneries, and also source food products that are trending online. Having a reputation in the customer's mind can help market your store. This strategy can also help you to leverage your position and cater in the luxury food section, which has higher profit margins.

6. Partnering with E-commerce Platforms

Since COVID, many customers have begun to prefer ordering products online from the comfort of their homes on quick delivery platforms such as BlinkIt and BigBasket. This raises the question: is starting a physical supermarket viable these days?

Answer: YES! This is because most Indians still prefer to physically buy their weekly groceries or monthly rations. It gives them the option of browsing and comparing different products before choosing.

Here’s another idea: instead of competing with e-commerce platforms, you can partner with them to benefit from their reach. Most platforms have a smooth process for onboarding vendors, so you can get started by simply filling out the required application forms.

Successfully tying up with major e-commerce platforms might make your supermarket business plan a hit!

7. Financial Planning

Your supermarket business plan will mainly depend on the capital investment you wish to make. Supermarket setup cost in India can be anywhere between ₹20L to ₹2 Cr, depending on the scale. If you feel that you don’t have enough liquidity for supermarket business investment, you can finance the surplus amount with a loan from a financial institution. Loans can be of several types: Flexi loans, SME loans, MSME loans, personal loans, or gold loans.

Financing, however, is subject to banking policies & procedures. If you satisfy these, the bank will issue you a loan after conducting a thorough background check. On the other hand, taking a gold loan is simpler as you don’t have to go through several stages of the financial process (CIBIL check, background verifications, etc.) like you do with other loans.

indiagold is one of India’s leading lending companies, and provides easy and affordable gold loans with quick disbursal and minimal paperwork. It just takes a few minutes to apply, so make sure you visit their website to learn more!

Final Thoughts

In this blog, we have laid out how to start a supermarket business, and things you can do to successfully prepare a grocery business plan. Supermarkets are excellent for customers who want products from both local and international brands. There is also huge growth potential in the retail sector, as we discussed above.

Launching a supermarket business in India can be promising if we consider the landscape of the retail sector. The retail market of India contributes significantly to boost the GDP and is supposed to grow at a spectacular rate, hence it can be a great decision to enter this industry at this point and time and start a super market in india.

Firstly, if you want to start a super market business, having a super market business idea may not be enough, you need to have a full-fledged super market business model. This new super market plan should outline important factors such as size of the supermarket, and financial plans and funding requirements. It should also highlight the ideal organization structure i.e. sole proprietorship, or a partnership. Brand partnerships are also important to make sure there is a comprehensive product offering for the demographic you’re serving. Next important parameter is the location of the supermarket. It should be easily accessible by large crowds, should have ample space for inventory, and storage.

Another important aspect is to get required licenses in order to operate. One should be in compliance with all rules and regulations to avoid any unforeseen penalties, or suspension to ensure smooth and legitimate operation.

Pricing and product offering is also very important, this should be backed by ample market research and surveys to ensure better visibility and customer stickiness. You may also consider tying up with online quick delivery platforms.

Supermarkets are great for the economy too, as they encourage global trade. And like we said, you can always get started by opting for a gold loan from IndiaGold: Convenient, economical & risk-free.

Until next time, then. Hope to see you with your new store soon. All the best!