“Starting a Grocery Store Business”
Comment Page 1

@ Lewis (9/16/09) --> in Michign, grocers are required to have a food handlers license. You can get this from your state dept. of health or, in some instances, dept. of agriculture.

My question: I am well into my process of opening a full-line grocery store in my city. I have loads of retail experience, but none in managing a grocery store. Where can I find training for ordering food from national distributors?

@ ownsix (123.) --> you seem to have a host of experience operating a grocery store. I appreciate your comments. Would you be willing to share more info. on running a store for beginners like me?

Anyone out there able to help me figure out what kinds of insurance is needed for a grocery store? Fire, Liability, what else? Also how much insurance will cost/yr in NYC area?

And if anyone else in the NYC area is trying to start a food retail business and wants to share resources/help each other, post your email and I will contact you. As much as I wish everyone luck, I'll only be responding to NYC area folks, sorry.

Also to other fellow grocery store entrepreneurs; I see this attracts a global audience and I'm from NYC area but I can share a few thoughts:

1. Try to take a business planning classes if you can, or at the least take a class to help you write a business plan. Even the smallest grocery store will benefit from this process.

2. There is a book on fabjob.com called "How to Open a Gourmet Food Store" but it also applies to Organic and Specialty food stores; this is a wealth of information.

3. Some costs to consider just for start up budget: Rent, Security deposit, Lawyer fees, Build out space, Store fixtures/equipment, Computer hardware/software or cash register, Sign for store, Alarm system, Licenses, Permits, Marketing, Inventory, Supplies, Loan fees if applicable, Utilities (Elec will be a lot), Phone, Internet, Working Capital, Grand Opening, Contingencies.

4. Costs to consider for Operating budget: Cost of goods, Rent, Salaries, Loan repayment if applicable, Utilities, Phone, Internet, Insurance, Payroll tax, Equipment maintenance, Marketing, Office Supplies, Membership fees, Trade shows, Accountant, Bookkeeper, Technology, Contingencies

5. B/T/W, I could be wrong, but I doubt that "Joni" is still reading this site to answer every person that needs help.

Hi guys, to all you out there wanting to open your own store.

Like you, I too am dreaming of opening my own store. I have thought of some advice to give you, some thoughts I have gone through myself, and what you need to survive. Before you read on, I want to mention that I am NOT giving you specific costs etc, just GUIDANCE.

First off, you have to look at yourself. Question why you want to start your own business, how you think you could succeed in what is now-a-days a very tough job sector, and what will make you different from others.

My first advice is quite obvious really - DO YOUR HOMEWORK. I read an article (can't remember the exact figure for the life of me..) but something like 80% of all small businesses fail after their first 2 years trading. Don't rush into spending any money until you have thought every single little detail out. Here’s a few starting points to think about;

WHERE: Location is a very important factor when starting a business - especially a grocery store. You need to know where the nearest competition is, and what makes you stand out from them. What’s the rent? Lowering your costs, not just improves profit directly, but it means you can lower your prices attracting many more customers (indirectly improving your profits too!!). If you’re in a competitive area, you really are going to struggle unless you offer something completely different to everyone else.

HOW: So what do you know about retail? I myself have many years experience at a leading supermarket. I have been a shop filler, a cashier, and a manger. I am highly trained in stock replenishment, customer service, staff management and many more aspects of running a store.

WHY: Why are you going to succeed? You’re going to succeed because you are going to put all your efforts, all your focus, attention, and heart into it. That's really the best advice I could ever give you. You can never fail if you want something so very bad.

One important factor you must ask yourself if you are near a recently closed store...why do you think it closed down? I've heard many people speak in here about finding great locations where stores used to be etc etc. The post above me sums up my next point. Do your research into the area. 'Alethea' mentions a college area nearby. Now that’s a great chance in itself! All you need to do is focus on what their NEEDS and WANTS are, mix in a great low price, and you have before school, during school breaks, and after school trade nearly everyday, and that’s ONTOP of your normal customers.

One of the greatest tips I've been given by a business wiz is most businesses are sitting on a gold mine of customers - RETURN CUSTOMERS. Return (or lack of) customers make or break a business. Make sure your shop layout is logical, make sure your warm and friendly greetings are constant, and make them feel they have left the store with a great deal (through either pricing deals, or product quality).

To answer a big question: WHAT TO SELL?

Well, what do you think people need? 'Peter' mentions a college and university nearby. How about the obvious? Prepared sandwiches and drinks (near the door - unlike 'normal' customers students don't like wasting break times. Just look at where the sandwich counter is in any other shop to see my point). How about the house holds essentials for the nearby residential area? Dairy products such as milk, butter, cheese. Groceries such as tinned foods, crisps, snacks. Maybe get a license to sell official Lotto tickets and scratch cards. The options are endless. You just need to do some research into what you think people need! (and even more importantly - what they WANT!).

Ok, that’s it really. If you are one of the hundred plus people above asking for exact and instant answers, then I think you really need to take a step back. Not only is it impossible for me to tell you what is the best thing to do in your area (every area being different, and therefore there is no such fail safe plan for every geographical area), but if you’re not willing to find this out for yourself, making surveys, talking to local suppliers, looking at rent rates for different locations, then I think you don't have the drive and correct mindset to make a successful business. Sometimes you have to do things for yourself, find things out yourself.

Good luck to those who are making a success, and let the profit grow by the day!

Luke.

Interesting comments in regards to starting small or big box store formats. It sounds complicated but it really isn't (of course it is). Set down a basic outline, A. Product Lines/Foot Print (HBA, Grocery, Fresh departments (produce, meat, deli, bakery)). By this time in your business plan a general idea has been established as to the size of the store you want to open. Mid size stores can be as small as a 1000 sq ft up to the big box foot prints of 160000sq ft. My favorite store size is 20,000 sq ft. Very easy to manage, big enough to compete and large enough to make adjustments to perishable departments. B. Establish your basic margins for each department (Wal-Mart and others run a basic 30% on all food based products, not taking in to account ad specials or introductory adjusted prices where you generate more margins or use the lower prices to fight your competitors down the street. Your fresh food departments have to carry stronger margins, 40% to 60% because of waste generated from poor purchases, bad rotation and general day to day trim. C. Pick your suppliers.. produce, grocery (all frozen items), fresh meat, cheeses, milk. Break these departments also into groups (for margin and retail control). There are large support warehousing organizations that a person can go to get prices and a full selection of national brands and private label brands. Google, Dog Pile, Yahoo or any search engine will bring up IGA type warehouses in your area of operations. Ethnic operations have a harder time locating items for their customers which only means that you have to find your source in the big cities. Indians, Arabs, Hispanics, European all have their own pipe line. The only disadvantage to some of these suppliers is the cost of trucking or shipping. D. Establish your aisles and store sets. E. Purchase scanning and computer software, begin logging in all UPC's and retails so you can view your average margins. You can at this point either decide to increase or adjust opening prices against your average. F. Hire your staff. G. Train Train Train. Of course there are a hundred different points I'm leaving out but I just wanted to comment with the others here in this medium. Good luck in opening your store. M

Hi All, I am an Accountant and have read most of your questions and inquiries. Let me tell you from accounting perspective the following vital issues. It is imperative that you do your research in many different ways such as;
-suitable site
-surrounding area and your prospective customers
-What you want to sell and for how much
-what is the amount of upfront capital you have available to invest in this business
-important to do a best/worst case scenario analysis
-do a comprehensive(detailed) cost analysis
-do an ROI return on investment analysis to see if you were to investment your capital elsewhere what ROI would you receive alternatively
-Who will manage your business, if it is you what are you worth working for someone rather than for yourself, e.g if your annual net is $80k but after investing in your business you are working 7 days a week but only making $20k per annum?
Do not rush into making a decision, please always consider the alternatives so that you have a good "apples to apples" comparison. Good luck

Hello everyone, My name is Jim. I currently work as a food distributor and I also own an advertising business. Many of you have been asking about profit margins. I have listed the costs and suggested retail prices to some of the items I distribute.

Stacy's Pita Chips 8oz bag $2 cost - $2.99 retail
Snyder's Tortilla Chips 16oz $2.15 cost-$2.99 retail
Pirate's Booty 4oz bag $2 cost - $2.99 retail
Popcorn Indiana 10.5oz bag $2.70 cost $3.99 retail

These items and most items from independent vendors are guaranteed so if they go stale or break, the vendor will give you credit for them. This is usually true for snack food, bread, pastries, soda, other beverages, etc. I do not believe this is the same for grocery distributors who would bring you items such as bulk meat and bulk produce. After you figure out your costs, the key to long term success is to build a turn-key system. So that everything you do has a method to it. This will remove much of the thinking, therefore reducing the stress of running a small business.

If anyone would like assistance in building a strong brand for your business, let me know. I can help you develop a solution where customers will enjoy shopping at your store, tell their friends and continue to return time and time again.

Things to keep in mind:
What does the store look like?
Is it easy to navigate?
Is it clean and fresh looking?
How does it smell?

Your answers to these questions are important but in the end, all that matters is what your customers think. Everyone sees through different eyes to make sure to ask quick simple questions from time to time. "Did you enjoy shopping here today?" "Is there anything we can do to improve our business so we may serve you better?" I hope this post helps. Feel free to email me with any questions you may have. jim@citispectrum.com
Thanks, - Jim

Here is some additional information that might help. An excellent place to search for commercial real estate for rent or sale is loopnet.com. You can register for free and search for and view most of the listing. There is another website called webstrauntstore.com. They have supplies for the restaurant industry but still may help. They have walk-in coolers, refrigerated display cases. I would also look into Displays2Go.com, they have a wide selection of signs and displays that may help. Last, there is a new website called AliExpress.com that has direct sourcing at smaller quantities, direct from manufacturers.

Hi Everyone, I am working on opening a small neighborhood grocery store in Atlanta, GA. My husband works for an organic produce distributor, so we already have a supplier lined up. They extend product on Net dating terms which allows you flexibility with your cash flow. Just make sure you pay your suppliers on time to maintain good credit standing. If you are in the Southeast US area, Destiny Organics and Global supply to this area. Check out your organic farm suppliers as well. They can supplement with seasonal crops and great to feature local businesses in your store, especially since there is a huge locavore movement.

Check out other grocery stores in your area and in other states for lay out and product ideas. After all, opening a grocery store is nothing new and many successful business owners have found ideal layouts and product offerings. You don't have to reinvent the wheel and can certainly be inspired by what works for them and/or how you can cater more towards your specific market. Whether you plan on opening the small neighborhood market or want a larger grocery operation like a Whole Foods or Earh Fare; use these businesses to get an idea of how to lay out your store and product to carry.

Manage your inventory. The margins in the grocery business are really tight and you are dealing with products with a shorter shelf life. Don't overbuy, but keep track of what sells out quickly so that you can keep up with demand. Find a way to "reprofit" bad produce by turning it into compost that you can resell. Saw this at a co-op. Great idea to turn your rotting produce into a profit.

Commercial leases are suffering due to the recession. Ask for free rent for so many months in exchange for signing a longer term lease. This can help give you at least 3-6 months to get the business off the ground while using that much needed capital to invest into equipment, inventory, labor, etc. There are a lot of empty retail spaces out there and it never hurts to ask. Just make sure it is in the right location and you understand the demographic you plan to serve. Conduct market research by surveying the people you plan to sell.

If you have bad credit, it will be tough to open a store unless you already have enough start-up funds to get the store open, filled, and operating to generate cash flow. Finding investors or partners can also help you get your business off the ground if you have poor credit. Ask your family and friends. Check out micro-funding in your area. These sources can lend up to $10K and do not solely base it on your credit.

Hope this info helps. Small businesses generate much needed jobs in the US and remember food is the number one item people spend their money on even in a recession. Good Luck to you all!!