THE INSTOR BLOG

How Much Money is Required to Open a Kirana Store?

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The past two decades saw an onslaught of supermarkets, and large retail chains, followed by the e-commerce wave. However, the competition could hardly alter the influence of kirana stores on the Indian consumer. Retail players, both global and domestic, have big plans to leverage these very stores in order to expand their retail presence and get a stronger hold over the Indian consumer.

Important factors influencing Kirana store business

The modest kirana store in the neighbourhood has proved to be exceptionally durable under all influences. It did not just survive the large format retail chains and e-commerce but is also thriving. Of all the factors that keep the concept of kirana shop relevant and evergreen, the most important ones are:

  • Its ease of access. It is located in the neighbourhood.
  • Its ability to provide a locally relevant assortment of goods to the consumers. It’s incredible how a kirana store owner is always abreast of what the local community consumes.
  • Availability of local produce. The most-loved pickles, batters, and ready-mix powders are more likely to be found at a kirana store than the swanky supermarket.
  • Quickness and flexibility. Besides selling a variety of local produce, the kirana shop usually offers free delivery, that too in less than an hour. For regular customers, it also gives a handy credit facility.

Kirana store as a business

Running a kirana store has its own set of challenges. With the growing spending power of Indians, starting a grocery store is one of the best business options. Every area has a local kirana store nearby. A Kirana store appears to be great idea looking at the population and demand in this country. However, merely investing in the business is not the complete story. It needs to be sustained till it gets established to make profits from it. You must tread cautiously from step one.

Profitable business model?

We all know how essential groceries are. The lockdown once again reinforced the fact that groceries are our daily needs. It is one thing that will never become non-essential. And this alone gives us a reason to believe that we can consider it as a feasible business idea. So, starting a kirana store is definitely among the profitable businesses in India. An average kirana store’s profit margin ranges from 5% to 20%. While an independent kirana store earns a margin of 1-4%, bigger grocery store brands make above 5%. It’s profitable also because opening a kirana shop doesn’t involve overwhelming costs.

How much money is required to open a Kirana store?

Rs.5 lakhs – Rs.15 lakhs. That would be the range of minimum investment, considering all the costs involved in opening and operating a kirana store. The costs can’t go much beyond this unless you wish to open a departmental store or a supermarket. Business loans are easily available and with excellent offers. So, if you are dreaming of owning a kirana store, you can go ahead with it after making a detailed cost-benefit analysis.

Cost of buying/renting a store

The rent for a shop to start your kirana store can range from Rs10,000 to 1 Lakh depending on its floor size, location, and the facilities offered by the landlord. If you wish to own a shop, a rough cost of a 500sqft shop can be somewhere between 25-60 Lakh depending on the location.

Cost of obtaining permit

As the owner of a kirana store in India, you must obtain the mandatory trade license, to ensure that your store abides by all regulations, principles, and ethical & safety norms. The business should be approved by the local municipal authority. The process of obtaining a license is complete within 8 days unless there is any problem with the documents. The authorities may even revoke or cancel the license if the store owner violates any legal conditions.

Cost of designing the store

Designing your kirana store with the display racks, fixtures, and counters will cost you somewhere between Rs. 70,000 to Rs. 3 lakhs.

Look for brands that understand the needs of a kirana store. Not just attracting customers, but also retaining their visits matters for a kirana store. You need a supplier who has flexible fixtures which can be tailored to suit your kirana store space.

Keep in mind to design your store for maximum product display in such a way that the customers can get a clearer view of products and offers without any clutter. Look for durable, robust, as well as easy-to-alter racks and fixtures.

Instor has been a specialist in designing small format kirana stores. Its fixtures and designs add high aesthetic value, ensure optimum space utilization, and have higher in-store customer flow.

From display racks and shelving racks to storage units and cash counters, Instor makes your store look unique, shopping-friendly and gives you higher returns on your investment.

Cost of stock buying

Stock buying and stock rotation are the most important part since these are the very products of your kirana store business. You must bring the best merchandise to your customers by getting stocks from a quality supplier, with reliable delivery and customer service. 

Ideally, you must have an inventory cover of about 2 weeks. You can buy certain durable FMCG products in bulk, such as toothpaste, soaps, detergents, cosmetics, etc. 

Bulk orders bring you better profit margins. Register your kirana store with large format wholesalers such as Metro, Reliance, ITC, Dabur, Hindustan Unilever, Nestle, and Britannia. Their products are doing well in Indian markets, so you will get good deals on bulk purchases, sometimes even better than wholesalers.

Operational costs 

Operational costs include:

  • Employees’ salaries
  • Electricity bills
  • Phone and internet bills
  • Miscellaneous payments
  • Storage maintenance and cleaning
  • Buying and keeping payment solutions updated
  • One-time expenses such as measurement tools 
  • Advance payments 
  • Customer credits
  • Reserve funds for backup

Here are 3 quick tips to increase profits in a Kirana store business.

  • Dairy products give you maximum margin, up to 20%. The only thing is, they are perishable, so they need to be displayed well and sold fast.
  • Perk up customer service, from order to payment, and after service. Customers get attracted to respectful treatment. Train your staff for this.
  • Take your kirana store online. People find it convenient to order from home and get it delivered. Provide that. Simple. A study found that 170 million people in India are expected to shop online in 2021. Isn’t that huge enough to convince you?

Kirana stores are still in vogue. They are not dying anytime soon. Right now, there are over 12 million kirana stores across India. Despite that kind of competition, a kirana store can turn out be profitable for you, provided you are ready to take one step at a time, with patience and perseverance.

 

 

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