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How to Start a Departmental Store/Kirana Shop in India

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Looking to open a Departmental Store/Kirana shop in your locality?

Well, starting a kirana business is not at all a big deal if you have cash in your pockets, but making it successful is! Having a successful departmental store depends greatly on offering the right product, at the right price, at the right time to the right people.

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Having said that, here’s what should be considered while starting a successful departmental store:

  1. Location: As it always plays a crucial role in any business.

    Of course, getting the required licenses and permits is the first step. But, the BIGGER question that you would need to answer before step 1 is “where is it” that you want to setup your departmental store.
    i.e. you must know where your customers are because this is what makes or breaks your business.

    a. Finding a Location:

  • Although a great location may not guarantee success, a bad location will almost always guarantee failure. Deciding where to put your business is as important as the type of business you choose to do.
  • A location with a reasonable degree of security, access to public transport for your customers, adequate parking is suggested.
  • Also look out for the competitors in the area. Lesser the competition, easier is the sales.
  • The best location combines visibility, affordability and lease terms you can live with. In particular, a departmental store is more successful in newly developed areas.
  • The rent for a place can be as small as Rs 10,000 to Rs 10 lac depending upon the city, location and size of the departmental store. The rent of a store shouldn’t be more than 4% of sales on the safer side.

    2. Investment:

    Once the location is sorted, you can either plan to buy a franchise or go ahead with creating your own standalone departmental store.

    A. If you plan for a franchise:

  • Several ready-made departmental franchise stores exist which will give you complete support for which you’ll have to pay an initial fee and ongoing royalties to a franchisor.
  • In return, the franchisee gains the use of a trademark, ongoing support from the franchisor, and the right to use the franchisor’s system of doing business and sell its products or services.
  • In addition to a well-known brand name, buying a franchise offers many other advantages that aren’t available to the entrepreneur starting a business from scratch (I don’t think a normal Kirana store would be making so much money until and unless they have a large number of regular customers)
  • You could explore a wide range of departmental stores and retail franchise opportunities at
    Franchise Bazaar
    Franchise India
    Franchise International matching your investment levels and available for your locations.

    B. If you plan to plant your own store from scratch:

  • Self-started departmental stores are less expensive than buying a franchise.
  • Investment is based on your budget and place you choose to sell.
  • Design your store according to local tastes which leads to better relate-ability with your potential customers.
  • Identify the highest selling products in the vicinity, stock up on them.
  • Find distributors who can provide you with quality products for a reasonable price and let it rip!
  • Establish a healthy relationship with customers. Make your customer believe in you.
  • Make sure your store has all the necessities people would ever need. If not all! At least most of it.

3. Inventory:

  • Firstly, start with visits to competitor stores. Browse the store’s product selection, making a note of the brands and products they carry. What products seem to be selling well? Which items are in the clearance bin?
  • You can buy products either from a distributor or directly from wholesalers which will cost you much cheaper. A distributor generally sells a large variety of a certain classification of products. They must make a profit too, so their prices may be slightly higher than if the item was purchased directly from the manufacturer. Find best places to buy wholesale merchandise.
  • Sometimes, even manufacturers will sell their products at wholesale prices directly to the retailer. If they do, they may sell their products in large quantities or at a high minimum order.
  • Anyhow, once your store is open and doing business, it will be easier to find wholesale merchandise to sell because the suppliers will be coming to you, instead of you looking for them.
  • Customers can also play a large role in finding suppliers as they recommend products they would like to see in the store.
  • Use business accounting software that has inventory management feature to manage your items. Try Vyapar App for FREE.

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    4. Choosing a Vendor:

  • Once you’ve located several sources of products, evaluate each vendor on a variety of factors. In order to bring the best merchandise to your customers, you’ll need to buy from someone offering quality products, reliable delivery, and superior customer service. This information can be gathered through sales representative how they conduct business
  • Choose products to sell demand based and seasonal. Ideally, you should have an overall inventory cover of around 2 weeks, but that could be pretty tight in an Indian distribution environment, but more than 4 weeks is lots of cash stuck for a convenience store.
  • FMCG products like soaps detergents, toothpastes, cosmetics have a longer shelf life you can buy them in bulk to better profit margins.
  • Register your business with a large format wholesaler like Metro, Reliance Market and also reach out for ITC, Hindustan Unilever, Dabur, Nestle, Britannia and other such top companies whose products are doing well in Indian market for better deals on bulk purchases. Sometimes, they can offer you better deals than a small wholesaler.
  • Follow first in first out (FIFO) rule for selling perishable goods. But guess which gives the maximum margin? It is dairy products. Milk, butter, cheese, paneer all give you 20%.

Vyapar Advice:
A piece of marketing advice to departmental store owners:

  • Firstly, design interesting store banners that people will remember, not just your regular banner.
  • Secondly, try to get the mobile number of everyone who shops at your store, Plan a discount strategy and promote through SMS marketing, this will lead to improved customer interactions, which will lead to increased repeat buyers and mouth to mouth publicity.
  • Business Hours: This is the time of operation when the retail store is open to the public for the purchase of goods. Make sure you keep your store open on weekends, holidays where people find time for shopping. This ensures quicker movement of your products.

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