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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.

# What is a Kirana store?

Kirana Store or local departmental store is a small neighborhood store in India. These stores sell all types of groceries needed in every household like; Rice, Wheat, Sugar, Vegetables, Spices, Coffee\tea, Snacks, Toothpaste, Sanitizer, Shampoo, etc. The store size of any shop depends on the money available to a local merchant. These Kirana stores are also known as corner shops, convenience shops.

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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%.

# 8 tips for Kirana Stores to Increase Sales

To improve and increase sales in your kirana stores, focus on customers and shift to increasing sales performance rather than profit. This is the first word of advice that any sales expert will give you. If you want to increase sales and don’t know how to do it then here are the 8 best tips:

1. Focus on existing customers: Marketing can certainly affect sales, but it cannot lead to increased sales altogether because you only focus on new customers and forget to maximize already existing customers. If you want to improve or increase sales, you should start focusing your attention on old customers who have already tried to repurchase your products or services and learn to retain all buyers along with focusing on attracting new customers. If you focus on your proven customers, you can dramatically increase your sales. 

2. Innovation and unique products: Customers should not leave your business for certain products or services, but be completely satisfied. It is important that you make your business a choice for others by maximizing quality & unique or innovative products. Uniqueness and quality will attract the unique customers to your store and this also helps in mouth to mouth marketing of products. 

3. Customer relationship: One way to promote sales is through enhanced customer relationships and maximizing the available customers in a real way, employees must learn how to retain Customers in a special and appreciative way to grow the business. 

4. Take Your Kirana Store Online: Today, everyone is busy with their lives. In his extremely busy schedule, he does not get enough time to spend with his family. They don’t even get to spend quality time with their family during weekends as they have to go shopping for household items.That’s why these days most people have opted for online shopping.

Nowadays Everything available online, so should your Kirana store too. So, you can also think about taking your Kirana store online. It doesn’t matter whether you are a small Kirana shop or have a retail chain, you should be online. The online Kirana store is not a new concept. Many store owners have already started selling their products online.

Moreover, with the help of accounting software, you can easily start your online Kirana store without any cost and make your business digital. This is the best way to boost sales of your business.

5. Understand customer preference: Understanding customer preference is very important & profitable when you want to learn how to do a Kirana business. When customers come for some petty products, they generally do not care about the brand. If the customer asked for any brand. In a situation like this, it is preferable that you know the customer preferences and sells the brand that the customer’s family generally buys. 

Upon realizing that you know all their likes and dislikes, the customer would have more trust in you and your store. And they will come again and again to your shop.

6. Promotion: Promotions and marketing give customers a great deal of existence products or services in the market. In some instances, discounts give customers the ability to try your products. Promotions can give way to attract more customers and at the same time maximize the number of existing users. In some examples, you can offer free samples. For your retail business you can do promotions via free whatsapp greetings, SMS, online store.

7. Marketing: Marketing is a safe method that helps in promoting sales. Marketing, through products and services, which are unique and of high quality, primarily attracts the attention of customers and, in the process, honors them to consumers. Customers are the only option that can help you increase sales. Marketing can also include rewarding customers. Currently sharing your online store link is the best way to do free marketing of your products. 

8. Improve customer service: Some other additional services, such as delivering the product for free to customers homes during breaks or at night will be a major effort for you. You can also ask customers to return the product if you find them defective. It gives a good effect. 

# 4 Ways to Increase Profit of your Kirana Store

You have passed the initial stages of starting a Kirana store. However, still you have to cross a long way to establish your presence among customers. Do not intimidate yourself with this idea and be confident with the help of these simple tips to increase the profit of your Kirana store.

1. Store open on weekends: Some store owners have a fixed time to open their store, from 9 a.m. to 8 p.m., even if they are nearby. You can open your grocery store at 8 am and close it at 10 pm. In addition, you can open stores for Sundays and other holidays to get more sales. It is obvious that when other store owners are busy with gold or pleasure, you are selling and making profits.

2. Eye your Customers: Before you start opening your store, you should visit a competitor store near you to gain possession of the land.

  • Browse around the structure of the shop and the brands they mostly stock.

  • Evaluate your opportunities and look to create a new strategy.

  • Research your competitors and understand the techniques they use for effective marketing.

3. Attractive discount offer: Offer discounts and gift coupons to entice customers and make them your permanent visitors. Be sure to offer the right things for free and do not make unattractive or silly deals that discredit your business. 

4. Technological catch: Smart systems are operating the world smartly and it is important that you also stay advanced. Apply for UPI / QR Code which is an easy and quick payment method for customers. Collect customers’ mobile numbers to share discount details by creating groups of like-minded people or easily sending invoices, visiting cards & greetings in WhatsApp.

Frequently Asked Questions:

# How do I start a Kirana Shop?

Take care of these easy steps and effective methods when starting a kirana store:

  • Having a solid business plan

  • Choose your area

  • Understanding Your Customers

  • Calculate your investment

  • Digitizing Your Store

  • Obtaining all licenses / permits

  • The weekend gimmick

  • Keeping an eye on your competitors

  • additional services

  • Offer attractive discounts

# What is the profit margin for a Kirana store in India?

  • Apart from store capacity, profitability for Kirana stores in India ranges anywhere from 5% to 25% per cent.

  • India Kirana stores are a fruitful market in India, and therefore, many local and imported brands compete to provide and maximize their reach in the common man’s market.

# Which license is required for the Kirana stores?

The licenses required to open a Kirana store in your area are-

  • Unit registration

  • Food license

  • Shop and establishment registration

  • FSSAI license

# What do we call Kirana in English?

In English the Kirana is common to the grocery or general provisions store. Or in India, a kirana store means a daily supply or your local department store.

# How many Kirana stores are there in India?

According to various records and surveys, India has more than 12 million Kirana stores across the country. It is one of the most profitable businesses in India.

# Who is the biggest retailer in India?

Reliance Retail Limited is India’s biggest retailer company by reach, scale, revenue, profitability.

# What are common grocery items?

Most common grocery items list in India are:-

  • Rice

  • Dal

  • Flours (wheat flour, rice flour, etc.)

  • Sugar

  • Spices (Khada Masala and Powdered Masala)

  • Vegetables 

  • Tea Coffee

  • Snacks

# How can I improve my Kirana shop business?

If you want to improve your Kirana business and don’t know how to do it then follow these tips;

  • Focus on existing customers

  • Innovation and unique products

  • Customer relationship

  • Take Your Kirana Store Online

  • Understand customer preference

  • Product Promotions

  • Good Marketing strategy

  • Improve customer service

# How do grocery stores make money?

Grocery stores operate at a slim profit margin per item. Typically, the profit margin ranges from 1 percent to 3 percent depending on the item. Grocery stores make money on quantity & quality. They are relying on customers to buy multiple items per shopping trip, so the shop’s profits will increase.

# How many supermarkets are there in India?

With the increasing modernization in retail, supermarkets are being set up all over India, especially in urban areas in big cities. From just 500 supermarkets in 2006, this number reached 8.5 thousand in 2016. The number of retail grocery retailers across India in 2020 was around  12.8 million.

# Which is the most popular grocery store?

Here is the list of the most popular and notable online grocery stores Big Basket. Big Basket is the most popular online supermarket in India, offers a wide range of best quality grocery at the lowest price. few more popular Grocery Stores-

  • Big Basket

  • Grofers

  • Nature’s Basket

  • Amazon Pantry

  • Flipkart Grocery

  • Zopnow

  • Spencers

  • Easyday

  • DMart

  • RelianceSMART

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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