How To Find Best Location For Supermarket? Supermarket Location Strategy.

. 7 min read
How To Find Best Location For Supermarket? Supermarket Location Strategy.

Table of Contents:

1. Importance Of Supermarket Location

2. How To Choose Best Location For Supermarket?

3. Supermarket Location Strategy- How To Run It successfully?

4. Supermarket Location- Future In India

1. Importance Of Supermarket Location

Supermarket business is ideal for people who aspire to make a living by providing the customers with their daily needs to run their households. In terms of profit, the sky is the limit for a supermarket owner. To understand what makes a supermarket successful, we first need to understand the format of a supermarket.

What is the supermarket?

A supermarket is like a general store, but on a larger scale, that offers various household products like food and beverages, daily use items, stationery, etc. To put it more explicitly, the supermarket is a self-service grocery store, a concept that came into operations in the USA intending to put an end to the time-taking, labour-intensive and cumbersome process of traditional grocery retailing. As it was introduced in the USA, the supermarket was a one-point solution for getting green groceries, fresh stock, dry groceries, home utility items, personal care, and even a pharmacy.

Piggly Wiggly stores, launched in 1916, in Tennesse, USA, is the world's first supermarket. India's first supermarket in 1966, named, Super Bazaar opened its doors in Connaught Place, Delhi. The retail-scape of India has gone through some major transformations to accommodate traditional and organised retail formats ever since. And at present, both the formats co-exist and serve the customers with equal aplomb.

For aspiring entrepreneurs who want to start a supermarket, here is a word of caution - with great opportunity comes great responsibility. And the to-do list for a supermarket owner will certainly be concurrent, Hence, venture into it only if you have the tenacity. Now, to begin with, here is a list of absolute essentials that you must keep in mind before you take your plunge.

2. How To Choose Best Location For Supermarket?

If you want to start a supermarket business, choosing the location is one of the most important decisions that you have to take. You have to carefully examine new sites and determine which of them are near a densely populated neighbourhood. The best location combines accessibility, good visibility, and a good footfall.

You can consult an experienced real estate broker to help you in your search. There are three steps to finalise the best location for a supermarket:

A. Find the right city

While choosing the city, you have to consider the following factors:

  • Demographic of the city.
  • The purchasing power of the people.
  • The number and size of the competition.

B. Find the right neighbourhood

Having finalised the city, look for an area with the following qualities:

  • Not too much competition.
  • Living standards of the people.
  • Growth prospects of sales.

C. Find the right site

Make sure that the sight which you have zeroed on has the following:

  • Good access with adequate space.
  • Availability and affordability of the real estate.

1- Traffic

If you can find out the average vehicular traffic on the roads of your proposed sites, and compare the data, it can help you in zeroing in on the perfect one. Another important point to consider is whether there is adequate parking space for the customer’s vehicles as well as your goods vehicles. You have to factor in whether the location has ease of access because no customer would like difficulty in driving or parking. The best place to locate your business would be along a busy road, where a lot of people pass through daily.

2- Demographics

You have to study where there is a growing community of people with a regular income who can buy your products. Other research areas are the lifestyle of the residents and the type of traffic that flows through the area. A demographic overview of the area will include the age, income, and population of the residents. The location you choose should be close to the residence or workplace. Or, it could be a place that falls on their way to either of these places.

3- Competition

You have to find out whether there are other supermarkets in the same area, and if the market can sustain yours. Some experts suggest that you should locate your store near your biggest competitor. That way, you can benefit from their marketing efforts on driving traffic to the area. But be sure that your products can outsell your competitors.

4- Noticeability

Your supermarket should be situated in such a place that grabs your customers' attention when they are going to a nearby location. The proximity to potential customers will help you to cut back on expensive advertising campaigns. One supermarket location strategy would be to locate it in a marketplace. Customers usually go there with a purchasing mindset and will be more likely to visit your store. Your signage and window display should be noticeable to people who are driving by.

5- Space

Make sure that your chosen location has got ample space for retail, office space, and storage. Also, keep in mind that rent is expensive, so don’t acquire a large area which you won’t really need. You should have a ready plan of shop layout because the right layout will affect consumer satisfaction.

woman cashier with barcode scanner and young couple with purchases
Supermarket Location Strategy

6- Business Plan

A supermarket business plan will include preparing a business model. The business model will contain the total capital expenditure, monthly sales, Return on Investment (ROI), marketing plans, etc. First of all, make a mission statement that will outline what you want to achieve with the new venture, and which direction you want to take the business. In the business plan, you write down the things which are necessary for starting the business. Find out about the rentals which will be the most affordable for the business. Determine the layout and square footage that best suits your brand. You have to ask yourself the following questions:

  • How much capital do I need?
  • What would be the location?
  • From where will I source my goods?
  • How many staff do I need to hire?

7- Finance

You have to calculate the total investment required to start the supermarket. It will decide the business size. You must have sufficient funds to at least start the supermarket and buy some stocks. Then figure out how much money do you need to cover a minimum of six months operating expenses, rent, plus your personal expenses.

Investment in the supermarket business depends on the following factors:

  • The cost of lease or rent.
  • The cost to decorate the interiors and on equipment like shelves, racks, freezers, etc.
  • The cost of purchasing merchandise.

8- Market Research

You can use advanced tools like business analytics and data mining to find the customers' preferences. It will enable you to stock their products of choice in advance. It will also help you find your edge over your competitors and define your Unique Selling Point (USP).

9- Inventory Management

You have to ensure a steady supply-chain of goods so that you never go out-of-stock. At the same time, you have to get your SKUs moving to make sure that they fo off the shelf before getting expired. Be particularly careful about the perishable items.

10- Marketing Strategies

All of us love discounts! The Indian middle class wants quality products at a bargain. Offering promotional discounts on specific items is a great way to attract customers and boost sales. A trick is to give discounts for a limited time, to encourage people to buy in bulk. Other ways to get new customers and retain the old ones include offering products at a lower price than your competitors, courteous and efficient service, and an option for return of goods.

11- Staff

To run a supermarket, you have to hire experienced people for different positions like a store manager, assistant, cashier, etc. The role of the assistant is crucial because he helps customers to find articles they are looking for, and replenish stocks on the shelves. The traditional supermarket business is going to be dominated by home delivery. So, you have to hire reliable delivery boys who know the neighbourhood well.

12- Innovation

Like many other businesses, the supermarket business is also affected by the Covid-19 pandemic. It has spurred the use of eCommerce and technology in the sector. With many buyers preferring to buy online, you can build a web-page to market your goods. The site can display advertising from various brands whose products you will sell.

3. Supermarket Location Strategy- How To Run It successfully?

A good tip for selling the more expensive items is to keep them at eye level. Also, adopt various inventory management techniques like the Economic Order Quantity Model and the Just In Time method to improve sales.

In the wake of the pandemic, good hygiene practices and maintaining social distancing are other points that you have to look into.

Basket of fresh produce from supermarket against yellow background
Supermarket Location Strategy

4. Supermarket Location- Future In India

The trends in the supermarket business are changing continually due to varying consumer preferences, technology upgrades, and the growth of online groceries like Amazon or Big Basket. Store operations are the most important criteria for your supermarket to be a success. Other focus areas should be price, quality, and value of the products.

As per the market reports of 2019, the growth rate of supermarkets in India was stated to be at a steady 12%. However, the Covid 19 pandemic has been a game changer for the entire retail industry all across the world. Where some avenues for income has closed down, several others have opened up. So far, it has been completely up to the business owners and their adaptability to the changing scenario that has made all the difference between a closure and a success story. The case of supermarkets is nothing different.

Also read:

1) Which city has the best electronics market in India?
2) Price it Right! Best strategies to market your product.
3) How Effective are Posted Flyers for Early Small Business Marketing?
4) Business Tips: How to Identify A Local Customer?

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