The supermarket is a place you should be able to get all your essentials and non-essentials alike. In good supermarkets, you can get anything, electronic gadgets, food items, toiletries and even fresh fruits and clothes, you can get all of them in a supermarket. But the major stock in a supermarket is the grocery, they contribute to more than half of all the supplies in any supermarket business.
It is essentially a shop but a major feature about supermarkets is that you go around stalls and shelves to shop for items. It is effective for avid shoppers and brings a lot of money to the owner because with plenty of items on display, people see items that appeal to them and they just grab them and add to their shopping basket.
SEE ALSO: How to Start a Grocery Store in Nigeria
If you are aiming to start your own supermarket business, this article explains all the detailed requirements, the startup cost, the profit margin, as well as every other things you need to put into place to get started.
Where To Locate Supermarkets
Supermarkets are best located in urban cities and suburban towns. Small towns won’t cut it, because the majority of buyers from a supermarket are city dwellers as they tend to consume more stuff, and when they shop they shop varieties of the same item. Like tissue papers for example, the city dweller buys a toilet paper for the restroom, a tissue box for the sitting room and a toilet roll for the kitchen, so the supermarket performs better in a city lifestyle setting or suburbs.
SEE ALSO: Cost of Renting a Shop in Lagos
Supermarkets do well in shopping malls, and filling stations because these are places with high human traffic. If they must be situated inside a plaza then it has to have a lot of space to accommodate the style of the supermarket, you don’t want your customers bumping into each other or goods cramped up in a little space or even worse, some goods not having fortune to be displayed. You can also locate a supermarket in line with other shops, like you have your corner stores.
Setting Up The Supermarket Warehouse
A warehouse is where you store your products before they are being sent to the shelves. They are usually located not far from the actual supermarket or even adjacent to it. Its function is to keep a stash of goods that will serve as a reserve supply when the ones in the shop are sold out because, a shop owner doesn’t wait till his stock is depleted before he makes a move for a restock. It may take several days before goods are delivered, which means there will be empty stalls in the supermarket which is not ideal for supermarket business as customers will start venturing somewhere else when they start to notice they don’t get what they came looking for.
Special care should be taken for fragile goods, ones that are heavy should be placed below light ones and when stacking carton packages don’t exceed the maximum number a particular carton could carry, the maximum stacking weight is always labelled on the carton. Goods that smell should not be put close to ones that do not, like detergent and foodstuff for example. The place should not be damp or contain a leak (both roof and rat holes) as many goods could be damaged that way. And, a great security should be in place.
Arranging Your Shelves
Arrange goods in shelves in such a way that it will be easy for customers to navigate and find what they want. You should start by creating categories for your goods, then place each item where it belongs. Related items should be found close to each other for example Pasta shouldn’t be far from macaroni.
Choose suitable furniture, metal rails are good as they are lightweight and don’t take much space as their wooden counterpart. But then wooden furniture takes more load, it’s up to you to decide which suits your shop best.
Naming your shelves is a priceless idea, it will help people navigate even more easily. You can achieve that by placing the names directly on the shelf (some shelves come with available spots for name tags) or you can erect sign boards that point to product categories, usually large supermarkets employ the use of the type that hangs from the ceiling. Another important tip when arranging goods is to separate male products from female products, it will make things a lot easier for customers but that is not why you did that, female customers tend to buy on impulse and once they have all they need in front of them it is going to be a shopping spree which means more cash into your register.
Electricity And Lighting
Since a supermarket is built under a roof it gets really dark when there is a power outage, you have to have a generator set that will supply enough to power the lights and POS machines (more on that later), and to power refrigerators. Lighting is very important, fix as many light bulbs as is possible in the shop.
Retail is your primary concern when running a supermarket. To maximize profits supermarkets usually discourage wholesale of goods except on exclusive items sometimes. Also take note the owner of a supermarket is not a reseller, there is a huge difference, a reseller usually sells one product en masse like a T-shirt reseller but in the supermarket business, you aim for everything and what really matters to you is supply and re-supply continuously of everything under the sun.
The major product categories found in supermarkets are listed below;
- Wear accessories such as sunglasses and watches
- Notebooks and stationary
- Food stuff (fresh)
- Food stuff (frozen)
- Household items
- Electronics and appliances
- Kitchen supplies
- Baby care
- Fashion and beauty products
- Simple tools such as scissors
Restocking Your Supplies
The single most important thing while running a supermarket business is to know i) when to restock and ii) the quantity to restock. One has to keep tabs on the rate at which goods are finished so that they can get them before they are depleted. Also the owner/manager has to keep a reliable and stable communication line so that you could be reached when there is need for distribution companies to contact you, and making a great number of contacts is important, because your goods come from different sources, the contact list related to this business will include businessmen, distributors, wholesalers, product companies (e.g. Indomie noodles), marketers etc. Sometimes the list may include homemade snacks from catering services or even from individual homes around your neighborhood. There is huge revenue from these small enterprises because people like them but just make sure before you start selling these products they have the necessary requirements like a NAFDAC registration for example.
There are so many different items and varieties that it’s impossible to get from one place, below are a list of some of the usual restocking methods;
- Distribution companies
- Direct from manufacturers
- Online order
Distribution companies choose a set of products to distribute, some of them distribute specific items for specific companies while others mix the kind of products they deal with. They usually come knocking at your door so you don’t have to worry about finding them but when you start out new before you are known on the yellow pages, so you have to restock by going to wholesalers the first few times.
There are businesses that setup huge ware houses or big stores to sell certain type of products, they get their products directly from the manufacturer and don’t sell in small quantities. Shop owners come to buy from them at a reduced price from the original selling price to retail. Most of your items will be coming from wholesalers.
Direct From Manufacturers
Some manufacturers allow for their goods to be bought by small buyers like retailers. Mostly because they don’t produce much at a time or it is part of their marketing strategy to sell to retailers, anyways you jump at the opportunity.
Making Orders Online
At this technological age it is close to impossible to skim off the internet from any business. With products spread all over the globe, getting your hands on them quickly has never been easier, it is fast, it is convenient and it is cheap as you wouldn’t need to worry about shipping costs if you are buying in bulk, especially when one orders from China where most products are being made.
You could use this method to buy from specific sellers like a fashion house, and you could use it to order for items that cannot be sourced locally.
Tools For An Inventory
Keeping a good inventory list is a must, which is an itemized list of all the merchandise in stock. It will help you determine what you need, how much you need and when. The simplest way is by manually writing in a book, though it is time consuming and very susceptible to errors.
The other way is by using barcode scanners. Computers fitted with a barcode scanner and the appropriate software makes the job a lot more easier, for every item that is sold it is registered into the system simply by scanning it, the software marks that product as ‘purchased’ and at the same time strikes it off your inventory, it collects other data such as price of item so that at the end of the day you know exactly how many of that same product is left and how much it will cost you to restock.
List Of Required Items
In order to start a supermarket business you are going to need some serious equipment. Our calculations and price quotes will be based on an 8×16 meter square of shop space, and as it is impossible to name a price for the goods in a supermarket because of their abundant varieties, we are just going to name a single price for the goods that will represent the amount needed to fill the 8×16 meter square shop if they were displayed on racks and some stored in the warehouse.
The price that will conveniently fill the 8×16 m2 supermarket will be approximately N2.8 Million Naira plus N500,000 worth of warehouse supply, it would total N3.3 Million Naira.
The list consists of two tables, one for goods/products and the other for capital assets you will need to start the business.
|Items||Description||Percentage||Price (Out of 3.3 Million)|
|Food Items||Canned foods fall in this category, frozen foods, fresh fruits, snacks and other groceries.||34%||1,122,000|
|Toiletries||Soaps and detergents fall under this category.||23%||759,000|
|Books and Stationary||School materials.||9.2%||303,600|
|Clothing and clothing accessories||Clothing should not be a major focus in the business.||3.3%||108,900|
The next table below is the one with the list of capital assets.
|Shelves||Wall facing and double facing shelves.||11||759,000|
|Display racks||Ones for particular type of goods, 3-5 different types.||5||35,000|
|Electric wiring||To fit lights.||13,000|
|Desktop computer||The complete set.||1||85,000|
|Employees||Monthly salary for up to four people.||95,000|
|Thermal receipt printer||37,000|
|Paper rolls||For receipt printer.||10,000|
|Price label tag machines||5,800|
|Refrigerator||Suitable for soft drinks.||1||113,000|
|Freezer||For items such as ice cream and packed frozen turkey/chicken.||1||83,650|
|Trolley carts||Small size.||10||60,000|
|Push/pull glass doors||Install these doors to make air conditioning efficient.||250,000|
|ATM POS machine||1||27,000|
Adding the total capital 2.4 million with the price of goods 3.3 million it will be N5,765,150.
Hired Help For Your Supermarket Business
Your supermarket business is going to need to be run by assistants, some persons who do the hard labour of moving goods to and fro, at least one security personnel, and the sales person at the counter. The sales person has to be experienced and have a technical know-how of how to operate the computer and the various software that will come with it, know how to operate the printing machines should be able to replace paper rolls, and should be perform simple trouble shootings by him/herself.
There should be at least four workers in the shop that size. Salary ranges widely between the employees, the sales person gets the chunk of the salary which may range from forty five to fifty thousand Naira. The others may be at the range of fifteen to twenty thousand Naira each monthly.
Sales In The Supermarket
All the action happens at the counter when a customer is about to pay for items. Here, you employ what marketers call after sales marketing, bring forward the snacks and other small items such as batteries and small toys, things the customer will not hesitate to buy because of their low price, these items may save you the hassle of finding change and put more money into your pocket. Custom plastic bags is also a great marketing tool, whereby your supermarket business name and brand is printed on it and handed to customers when they checkout.
Each and every item should be scanned by the barcode scanner for the computer to process the transaction and update the inventory list, and for every transaction there should be a receipt printed and given unless the customer states otherwise. At times you might experience a computer breakdown, this should not spell the end of the day, devise a backup plan to record the sales data, which the best way to achieve this is by writing in a book, tedious but worth it.
Another important thing at this point is to keep things tidy and organized, simple chores should be organized and be done with efficiently, for example shopping baskets should be returned to their place and not to be left at the counter where the customer presented it.
Paying of Tax
You could easily be paying too much tax if you haven’t registered your business properly with the CAC because your tax will only be an estimate and you could be facing fines.
Promotion And Deals
Participate in as many promotions as possible, help brands spread awareness of their products. That does not only help them it also makes people view your supermarket business as more legit and ‘classy’, and you might end gaining rewards from the promotions and deals.
Expected Profit Margin
It is very hard to say as this form of business swerves with the economy, a simple rise or fall in the economy can affect it badly and change the margin by several degrees but it is possible to be estimated around 1% or less, which could be up to N78,000 in cash every day.
Capital to start business: N5,765,150.
Suitable location: Urban areas.
Potential customers: Everybody.
Profit margin: 1-2%
Business hours: 12 hours daily.
Supermarket business is one of the most profitable venture in Nigeria this time. The daily products sold in supermarkets are the everyday needs for everyone. Follow these guide to start your own supermarket business today and watch as the profits overflows.