1/15/2015

TheFranchisingWorldDecember2008IssueStartingagrocerystore

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Starting a grocery store

Starting A Grocery Store

BYTFWBUREAU|JANUARY01,1970|COMMENTS(0)|

The traditional grocery retail business has undergone a change and the
customers no longer have to stand at the counter and wait for their turn.

DAILY NEWSLETTER

Rather they are now treated to wide aisles where they can browse neatly-

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stacked shelves in air-conditioned comfort. Sales persons are around to help.

Submityouremailaddresstoreceivethelatestupdates
onnews&hostofopportunities.

The new face of grocery retail is rightly named `Convenience Store` that
offers quick and friendly service.

B U SINE SS

O PP O RTU NI TY

Connect with over 120,000 suppliers from Hong Kong, Ch

Goingbacktothe`80s,fewthingsremainedconstantinanormalmiddleclass
family,likethedailynewspaper,thebrandoftoothpasteandaselectedfew
shopsastheshoppingdestinationamongwhichthegroceryshopcouldbe
chartedatthetopofthelist.

Ihaveseenmyfathergoingtothesamegrocerdayafterdayforyears.Ahearty
chataboutthesociopoliticalsituationofthecountrywiththeothercocustomers
overacupofteafromateavendoruntilthesalesboyhandsoverabagfullof
householdnecessitatesthatmatchedwiththelisthandedovertohimwhile
placingtheorder.Ihaveneverseenmyfathercrosscheckingtheitems
purchased.

NEWS

MORE

Predominatedbyneighbourhoodstores,thegroceryretailsectorhadavery
typicalpictureevensometimesbackcustomersjostlingforspaceatthecounter
askingtheownerorhishelpertoretrieveitemsfromglassenclosedshelves.
Gradually,these
momandpopgrocersmadehomedeliveryfreeandaccountsweresettledat
customer`sconveniencefreeofinterest.Untillatelytheorganisedretailing
strategiesbroughtinarevolutionarychangeintheentiregroceryretailscenario.
Inthenewgroceryretailstores,thecustomersdonothavetopusharoundthe
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JANUARY15,201513:25IST

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TheFranchisingWorldDecember2008IssueStartingagrocerystore

Kidzee looking at aggressive

growth in FY

counterforspace.Rathertheyaretreatedtowideaisleswheretheycanbrowse
neatlystackedshelvesinairconditionedcomfort.Everyproducts,beitdairy,

ZeeLearnLimitedislookingatincreasing
accesstoqualitypreschooleducationin
IndiawithaggressivegrowthforKidzee.

meat,cereals,canned
foodorcleaningitemsofdifferentcompaniesarearrangedinorderwithspecific
pricetagssothatitisconvenientforthecustomertopickandfilltheshopping

Sushant Singh Rajput, new

face of Pizza Hut

basket.Salespersonsontheirtoes,renderingahelpinghandtothecustomers

January15,201512:16IST

frompickingtheshoppingbaskettothepaymentcounter.

Hfele opens its Exclusive

Hafele Design

Thenewfaceofgroceryretail,rightlynamed`ConvenienceStore`thatoffers

January14,201516:50IST

quickandfriendlyservice,handylocations,avarietyofmerchandise,and
extendedhoursofoperation.Buthowhavethesestoresaffectedtheexisting
neighbourhoodgrocerystores?AccordingtoSadashivNayak,CEO,Food
Bazaar,Theexistingneighbourhoodgrocerystorehavenotatallbeen
influencedbythecomingoftheorganizedconveniencestore.Rathertheyhave
createdanewavenueforconsumptionmostlyintheurbanareas.The
semiurbanandruralareasarestilldominatedbytraditionalgrocerystores.
Beingagrocermeansbeingtheultimateanswertoallyourcustomers`
householdneeds.Thehallmarkofagoodgroceralsomeansbeingtrustworthy
andreliable.

Andasfaraswinningthecustomer`sloyaltiesareconcerned,nothingcanbeata
wellestablishedgrocerystore.Thatispreciselythereasonwhytheorganized
brandswhichhastakenitstollonallthesectorsstartingfromapparelstofood
jointstorealestate
havefailedintheireffortsinmakingamarkonthegrocerysectorinIndiasofar.
WHATS NEW

MORE

Beforestartingconveniencestore
Startingaconveniencestoreisaverygoodideaifyouhavethemindsettoserve
yourcustomersfortheirdaytodaynecessities.Agoodnetworkwiththevendors
isalwaysanaddedasset.However,therearecertainotherthingsthatneedto
begivenathoughtbeforetakingthefinalplungeintothegrocerybusiness.
Ifyoulookatthepresentgroceryretailscenario,thereisamarkeddistinction
betweentheexistingtraditionalgrocerystoresandthenewlyemerging
conveniencestores.Inonewehaveunmatchedservicepotentialandinthe
otherwehavetheboonsofthetechnologiesandmarketingpotentials.Youcan
mixthebestofthetwoworldstocreatetherightconcoctionforyourcustomers.
Youhavetotakeintoaccountthefollowingpointsbeforestartingyourventure.
Opportunitiesandchallenges

ADVISORY

Franchisee training, a click away

TrainingandsupportistheDNAofevery
franchisebrand.Andinthenewage
world,franchisors
Recent

Intermsofopportunitiesaconveniencestoreownerhasthescopetodrivealot

Weight loss biz gaining

weight

ofefficiencyintermsofservices.Besidesbuildingconsumption,hecancreate

NowLosingThatExtraFlabIs

morevalueaddedservices.Hecancreateadvertisingopportunitiesforother
brandsbankingonthefootfallinhisstore.

Hourly business, heavy

returns
Time,FundsAndLocationAre

However,therearesomechallengesinthistradeaswell.Inregardsto
challenges,itisaverylowmargintrade.Onehastomakesurethatthereisno
wrongpurchasewhilesourcingthemerchandise.Theconsumerbaseisdiverse
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TheFranchisingWorldDecember2008IssueStartingagrocerystore

inmanyplacesespeciallyinthemetropolitancitiesinIndia.Sometimesitis
cateringtoacustomerbasefromdifferentbackground.Agrocerystoreowner
alsohastomakesurethathehasapackedinventoryofnotmorethan2025
days.
Marketresearch
Beforestartingyourgrocerystore,youshouldhaveextensiveknowledgeabout
yourcustomersaswellasyourcompetitors.Accuratemarketassessmentand
developmentofaneffectiveplaniscrucialtothesuccessofanewventure.The
marketimpactsanddirectsallaspectsofthecompany`sactivitiesandultimately

INTERVIEWS

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willleadtosuccessorfailureofthebusiness.
Understandtheneedsanddesiresofyourcustomer,selectordevelopyour
productorservicethatwillmeetcustomerneedsandpreferences.Comparewith
yourcompetitorsandfindouthowthecustomersperceiveyourproductrelative
totheothersavailable.
Targetmarket
Agrocerystorecaterstotheeverydayneedsforrunningahousehold.Inthis

DEBUTANT

regard,needlesstosay,thetargetmarketistheentireneighbouringareawithin

Invest in the house of profits

onetotwokilometersofreach.Analyzingyourcustomerwillhelpyoutoassess

Cateringtotheresidentialarchitectural
consultancyservicespace,ApnaGhar
isallsettocarve

themarketsizeandthefactorsthatinfluencetheirbuyingdecision.Thisvaluable
informationenablesyoutochoosetherightlocation,determinetheproductor

Recent

servicestooffer,setpricing,andplanasellingstrategy.Considerfactorslikethe

Eco-friendly idea!

customers`backgroundincludingwhowillbuyyourproducts,wheredotheylive,

Debutant

whatisthelivingstandardofyourcustomers,wheredotheybuycurrently,when,

Donear to have 1000 EBOs

by 2020

howmuchandhowoftendotheybuyandultimatelywhataretheirbuying

Established

preferencesandneeds.Whilestudyingthecustomerbase,thesefactorswill
helpyoufindoutthewaytoestablishalongtermrelationshipwithyour
customers.

VIDEOS

MORE

Aboutthetargetmarket,MohitKhattar,MarketingPresident,Subhiksha,
explains,Targetmarketismoreforthebusinesstodefine.Everythingelseis
secondaryandneedstobedonebasisthetargetmarketdefinition.Whethera
particulartargetgroup(TG)offerssignificantpotentialornotmustbeculledout
frombroadsocioeconomicdataandavailabletrends.
Oncethebusinesshasdonethat,itrequiresMarketresearchforthreethings:
Tozeroinontherightlocation
Evaluatelocationpotential(visavistherightTargetGroupfit)
Arriveattheperfectassortmentmixfortheidentifiedlocation
Choosingthelocation

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Estate Summit and Awards

2014, organized by Franchise
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Choosingalocationforyourstoremaybeyoursinglemostimportantdecision.
Doyourresearch.Inparticular,considerthesefactors:
Population:Studiesrevealthat,inordertosustainagrocerystore,between500
and1,000peoplemustlivewithinaonemileradius.Ifpeoplehavetotravel
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morethanamile,theywouldpreferablytogotoasupermarket.Inthisregards,
youshouldalsoconsideranarea`sfuturedevelopmentplansandexpected
growthrates.
Competition:Althoughagrocerystore`scompetitionismostlyfromothergrocery
store,itcanalsocomefromsupermarkets.Itisimportanttostudyallthepossible
competitorstoseeifthelocalmarketcansupportanotheroperation.
Traffic:Impulsepurchasesconstitutealumpsomeshareofagrocerystoresale.
Hencehighfootfallandvehicletrafficpassingyourstorewillbeadvantageous.
Trytolocateyourstorenearschools,parks,sportingfacilitiesandother
businessestoincreasetraffic.Khattar,ofSubhiksha,opines,Locationfora
conveniencestoreisclosesttotheconsumercatchments,ideallyinresidential
areaslikecoloniesandmarketsandcommunitycentersincommercialplaces.
Thedesiredrentforaconveniencestore,assuggestedbyNayak,is22.5per
centofthesale.However,usually,astoreownerendsupgiving34.5percentof
thesaleasrent.
Startupcost
Thestartupcostforaconvenientstoreincludescostrelatedtorenovations,
inventory,shelving,coolerleasedeposit,airconditioner,signage,cashcounter
andoperatingcapital.SadashivNayak,CEO,FoodBazaar,saysIntermsof
investment,ifweleaveoutthecostoflandwhichvariesfromplacetoplace,one
requiresa300to1000rupeesinvestmentpersquarefeetforthestoreandthe
same300to100rupeespersquarefeetfortheinventory.
Thegestationperiodforaconveniencestorecanvaryfromthreetoseven
months.
Storelanddesign
Thestoredisplayofaconveniencestoreideallycouldeitherbeselfserviceor
overthecounter.Thereareothervariationsoftheseformatsalso.Consumers
liketogothroughawidearrayofproducts,pickthemup,feelthem,and
comparethefeelandpriceforthemselves.OTCstorestothatextentarepass`.
Beforeorderingorinstallingequipment,designyourstore`slayout.Remember
thefollowingtips:
Trytokeepitassimpleaspossibleinordertokeepcostsdown
Reservethemostspaceforproductsyouwillsellthemost
Placementofalltheproductsshouldbedonekeepinginmindtheconvenience
ofthecustomerstoseeandreachthem
Positionproductswiththehighestprofitmarginsateyelevel
Placehighdemandproductssuchasbreadandmilkatthebackofthestoreto
increasetraffic.Thiswillencourageimpulsepurchaseswhichcanaddupto70%
ofyoursales.
CitingtheexampleofSubhiksha,Khattarsays,Subhikshaisanofrillsstore
chain,henceitconcentratesmoreonofferingtruesavingstocustomersrather
thanoncreatingambiencethatconsumerstireoffaftersometime.Ourstore
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layoutsanddesignsaresuchthatconsumerscaneasilyfindwhattheywantwith
minimalhelpofstorestaff.Therearenoloudcolours,noairconditioning.We
justmaintainaneatandcleanambiencethatcustomersfindeasytorelateto.
Selectingyourinventory
Selectingtheinventoryofagrocerystoredependslargelyonthetargetmarket
andthelocationofthestore.Dependingonyourlocationandtargetcustomers,
youmustbeabletoestimateproductdemand.
Keepongoing,accurateinventoryrecordsinordertocontinuallymonitortheratio
betweenyourstockandactualsales.Thishelpstominimizelostsalesand
moneyblockedininventory,aswellasdeterminesthedemandfordifferent
products.
Sourcingmerchandise
Sourcingandsupplychainmanagementformthebackboneofdiscountretailing.
Itbecomesimperativeforadiscountretailertoinvestinarobustsupplychain.
Someofthethingsthatneedtobekeptinmindare:
Firstly,asKhattarsays,Theturnaroundtimeforthemerchandiseneedstobe
asshortaspossible.Thelesserthistimeisthebetterarethediscountsyoucan
getfromyourvendors.
Secondly,forthefruitsandvegetablesbusinessfreshnessisthetopmost
concern,whichmeanstheinandoutoftheproduceshouldbeonadailybasis.
Thirdly,fortheprocessedfooditemsandpharmaceuticals,checkingtheexpiry
dateofthedrugsisimportant.
Lastbutnottheleasttrytoprocureproductsinbulkfromthevendors.Thisway
youcanavailofspecialdiscounts.
Marketingandadvertising
Brandingandadvertisingareveryimportantforanybrandtgetnoticed.
Advertisingisthemediumthroughwhichyoucommunicateyourcorevalue
propositionanddifferentiatingfactorstotheconsumers.However,foragrocery
storethebestpublicityisonethatisthroughwordofmouth.Thiscoupledwitha
goodpublicrelationadduptomakeagoodadvertisementforaconvenience
store.Alwayskeepinmindthatasatisfiedcustomeristhebestadvertiser.
Dependingonyourmarketanditssize,youcanchoosefromthevarious
mediumsofadvertisementslikeflyers,localnewspapers,radio,TV,thebusiness
pagesofthetelephonebookandtheInternet.
Itisadvisablenottospend1percentofgrosssalesonadvertisingtoyourtarget
market
Installabrightlylitsigntoattractdrivebytraffic
Createsomestrikingwindowdisplaysandpointofpurchasedisplaystoincrease
thetraffic.Itisadvisabletodeliverormailflyerstoneighbourhoodhomesand
placeadsinlocalnewspapers.Stressconvenience,accessibilityandextended
hours
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TheFranchisingWorldDecember2008IssueStartingagrocerystore

Legalformalities
Inregardstothelegalformalitiesalotofemphasisshouldbegiventothe
licensinginvolved.Nayaksays,Thereare35oddlicensesrequired:Food
license,druglicense,insecticidelicense,shopandestablishmentregistration
etc,tonameafew.
Pricing
Settingtherightpricecaninfluencethequantitiesofvariousitemsthatthe
consumerswillbuy,whichinturnaffectsthetotalrevenueandtheprofitinthe
store.Intheend,therightpricefortheproductisthepricethattheconsumeris
willingtopayforit.
Hence,correctpricingdecisionsareakeytosuccessfulretailmanagement.
Pricesshouldallowforsufficientgrossprofittocoveroverheadexpensesanda
reasonablenetprofit.Chooseoneoftwopricingmethods:markup(basedon
cost)ormargin(basedonsellingprice).
Traditionally,conveniencestoreshavehadmarkupsofapproximately33per
centto67percent,marginsof25percentto40percent.Conveniencestores
simplycannotbuyinlargevolumeslikesuperstores,sodonotattempttooffer
lowerprices.Instead,laymorestressonserviceandconvenience.
Hiringemployee
Hiringstaffdependsonhowbigyourstoreis.Usuallyitisadvisabletohireone
personpersquarefeet.Employeeofagrocerystoreshouldbothbetrustworthy
andalert.Theemployeesshouldbeabletohandlecrowdandcatertothe
customerswithasmileevenintherushhours.Athoroughknowledgeaboutthe
inventoryismandatory.Thestoreownershouldmakesurethathisemployees
areproperlytrainedandmotivatedforthetrade.
QuotingKhattar,Asretailingisaconsumerfocusedbusiness,peoplewithgood
interpersonalskillsarehired.Itisadvisabletohirepeoplefromthelocal
community,andprovideprimarilyconsumercentrictrainingandsomefunctional
trainingaswell.
Customerservice
Agoodcustomerserviceisthebackboneofeverytradeandconveniencestore
isnoexception.Conveniencestoresthriveonitsowners`relationwithhis
customers.Trytowinthecustomers`trust.Alwaysprovidequalityproduct.Be
absolutelytransparent.Goforstandardpackagedandsealedproductswith
clearlyspecifiedprice,weight,expirydateetc.Followaverymeticulousbilling
system.Trytoprovideserviceslikehomedeliveryandpurchaseoncredit.Ifany
substandardproductpurchasedfromyourshopisbroughtbackbythecustomer,
replaceitwithoutanyhesitation.Thiswillonlyaddtoyourgoodwill.
Welcomeadvicesandfeedbackfromyourcustomersinregardstoincreasingthe
qualityoftheproductsaswellasyourservice.
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Annotation
ToquoteSadashivNayak,CEO,FoodBazaar,InIndiathereisalotof
consumptionopportunities.Thepopulationisyoungandreadyto

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