Launching a small grocery shop can be a fulfilling and rewarding endeavour, but there are a range of factors to consider before you begin. From the skills and the equipment to the mandatory licences, this guide will demystify the process for you.
What is a grocery store business?
A grocery store business is a food seller that typically operates in a city where there is less competition from nearby supermarkets. A grocery shop sells groceries, drinks or specialty ingredients that aren't available locally.
Writing a business plan
There are no prerequisites for starting a small grocery shop. However, writing a business plan can help you get off to a successful start.
Here are some of the key aspects to consider when writing your plan:
Location. This is key for grocery stores. Will you open near a residential area, a school or offices? If you open in an office area, you might receive a lot of traffic during the week from 7am to 6pm. However, it may be fairly quiet over weekends. Ask yourself, how will this affect how much money comes in?
Target market. Decide on what demographic you are targeting. Who is the ideal customer? This will depend on your location. For example, maybe there are plenty of environmentally conscious locals in your area and you decide to open an organic-only store.
Costs. Be clear on both the initial fixed costs and the running costs of your new business. What equipment will you need? How many employees do you plan to hire?
Brand identity. Creating a consistent look for your store can help promote confidence in your business's brand. Will you work with a graphic designer to create a logo and other aspects of your brand identity?
Niche. Identifying and targeting a niche customer base can be lucrative. How can you stand out from the competition?
Marketing strategy. Marketing and attracting new customers will be vital to the financial health of the business. Create a marketing strategy and decide how you will grow sales. For example, you may decide to focus some of your efforts on digital marketing via social media or search engines.
Get the right qualifications
Trained workers that your grocery store might need include:
Food Safety Supervisor (FSS). You need at least one if your business involves selling food items to customers. A worker can become a supervisor by taking one of the government courses outlined below.
Employees trained in food safety. Any worker dealing with food or food equipment needs training.
There are also government courses available for anyone interested in retail operations and management. These courses cover essential knowledge for running a grocery store. The courses available include:
Certificate III in Retail. This course covers everything from customer service to daily store operations. The average course fee is $2,063 and takes around 12 months to complete.
Certificate IV in Retail Management. This course covers the skills required to manage a retail store, including handling food safety standards, how to recruit staff and managing inventory. The average course fee is $3,080 and takes around 12-18 months to complete. Students must have completed Certificate III in Retail or have relevant industry experience.
Certificate III in Retail
A Certificate III in Retail from training.com.au could help start your small grocery business.
Good software not only helps you grow the business, it can also save many headaches when it's time to count stock or file tax returns. Software to consider:
Inventory management software to keep track of how much you have of every product.
Ecommerce grocery web-platform as a shopfront for your products online. Essential if you also offer grocery deliveries.
Choose a business structure
To start your business, you will need to decide on a business structure. There are three common types in Australia:
Sole Trader. A Sole Trader is a one-person business. Sole Traders have full control over their business, as they don't have business partners, investors or employees.
Partnership. A Partnership is when two or more people start a business. In a Partnership, everything from the income to the debt, and even legal liability, is shared equally between partners.
Company. A Company is its own independent legal entity from the business directors. Ownership of a Company is based on shareholders. Setting up a Company protects the director's personal assets from legal liability, unlike a Sole Trader or Partnership setup.
Deciding on a business structure is only the first step. To start a company in Australia, you need to register for an Australian Business Number (ABN). You'll also need to register a business name and open a business bank account.
Get the right licences
There are several licence hurdles to pass before launching your grocery business. Different councils across Australia require different licences and, depending on the food and drink products you are selling, you may be required to get the following:
Food licence
Meat licence
Tobacco and alcohol licence
Fuel licence
Medicine licence
Music licence, if you plan on playing copyright music in the store
We update our data regularly, but information can change between updates. Confirm details with the provider you're interested in before making a decision.
From covering rent to furnishing your store and buying inventory, starting a grocery business can require high initial investments. However, with the right financing, these investments can seem a little less daunting. You can make the most of different loans available, including:
This depends on a variety of factors, such as the location or the types of products sold. Generally speaking according to research, retailers might expect to make 0.5% to 4.5% net profit.
What are the most profitable items in a grocery store?
The most profitable items in a grocery store typically include:
Non-grocery products. Items such as light bulbs, batteries or a coffee plunger may have a profit of around 40 to 50%.
Prepared food. Prepared meals or pre-cut vegetables may enjoy a profit of about 40%.
Organic produce. Organic fruit and vegetables may be marked up by as much as 30 to 50%.
What are the costs involved in opening a grocery business?
The initial investment can vary a lot, as there are so many factors at play. Generally, you might have to pay anywhere between $30,000 to $70,000 for a small grocery business.
Lukas Reinhardt is a writer at Finder. Lukas has a Bachelor of Science in Environmental Economics from the University of York and a Masters in Industrial Engineering from the University of Cambridge. He’s passionate about all things business, food, and sustainability.
If you're a startup founder and you want to apply for a loan, find an angel investor or put it all on a credit card, this guide will take you through your options.
How likely would you be to recommend finder to a friend or colleague?
0
1
2
3
4
5
6
7
8
9
10
Very UnlikelyExtremely Likely
Required
Thank you for your feedback.
Our goal is to create the best possible product, and your thoughts, ideas and suggestions play a major role in helping us identify opportunities to improve.
Important information about this website
finder.com.au is one of Australia's leading comparison websites. We are committed to our readers and stands by our editorial principles
We try to take an open and transparent approach and provide a broad-based comparison service. However, you should be aware that while we are an independently owned service, our comparison service does not include all providers or all products available in the market.
Some product issuers may provide products or offer services through multiple brands, associated companies or different labeling arrangements. This can make it difficult for consumers to compare alternatives or identify the companies behind the products. However, we aim to provide information to enable consumers to understand these issues.
We make money by featuring products on our site. Compensation received from the providers featured on our site can influence which products we write about as well as where and how products appear on our page, but the order or placement of these products does not influence our assessment or opinions of them, nor is it an endorsement or recommendation for them.
Products marked as 'Top Pick', 'Promoted' or 'Advertisement' are prominently displayed either as a result of a commercial advertising arrangement or to highlight a particular product, provider or feature. Finder may receive remuneration from the Provider if you click on the related link, purchase or enquire about the product. Finder's decision to show a 'promoted' product is neither a recommendation that the product is appropriate for you nor an indication that the product is the best in its category. We encourage you to use the tools and information we provide to compare your options.
Where our site links to particular products or displays 'Go to site' buttons, we may receive a commission, referral fee or payment when you click on those buttons or apply for a product. You can learn more about how we make money.
When products are grouped in a table or list, the order in which they are initially sorted may be influenced by a range of factors including price, fees and discounts; commercial partnerships; product features; and brand popularity. We provide tools so you can sort and filter these lists to highlight features that matter to you.
Please note that the information published on our site should not be construed as personal advice and does not consider your personal needs and circumstances. While our site will provide you with factual information and general advice to help you make better decisions, it isn't a substitute for professional advice. You should consider whether the products or services featured on our site are appropriate for your needs. If you're unsure about anything, seek professional advice before you apply for any product or commit to any plan and read any disclosure documents (such as any Target Market Determination (TMD) and/or Product Disclosure Statement (PDS)) issued by the provider before making a decision.
Providing or obtaining an estimated insurance quote through us does not guarantee you can get the insurance. Acceptance by insurance companies is based on things like occupation, health and lifestyle. By providing you with the ability to apply for a credit card or loan, we are not guaranteeing that your application will be approved. Your application for credit products is subject to the Provider's terms and conditions as well as their application and lending criteria.
Please read our website terms of use and privacy policy for more information about our services and our approach to privacy.
