While the supermarket as a concept is not new to Kenya, their rapid growth is a very recent phenomenon. Many supermarkets have popped up all over the country. Around the residential areas, smaller format stores and smaller chains have emerged.
Supermarkets in Kenya are no longer the niche players catering exclusively to the high income consumers in the capital they once were. They have moved into residential areas and now almost every other area has a supermarket or a mini supermarket.
Starting a mini supermarket can be a good business idea if you have the required capital to fully stock it up. You will need adequate funding because a supermarket is a large scale project and requires regular stocking.
Here we are not talking about those big supermarkets such as Nakumatt, Tuskys Magunas or Naivas . Those are beyond the scope of this analysis. What we will discuss in this article are the mini supermarkets you see in your local shopping centres. Some of these factors to consider include:
1. Location
To set up a successful supermarket, you will need to choose a very convenient location. A location with high foot traffic will be the best. Aim to pull in as many walk-ins as possible.
Choose a location which gives them no choice but to walk into your supermarket. Do not select upper floors of a building, you will be out of reach and many shoppers will not come up there.
As a small or mini supermarket, shoppers will not look for you, they need to spot your shop and just walk in easily and that is why most small supermarkets in and round Nairobi are located on the ground floor, within easy reach.
Premises big enough to hold your supermarket will cost about Ksh.40,000 to Ksh.150,000 in rent depending on location, building, floor space and other amenities in the building.
2. Permits/Licenses/Certificates
A mini supermarket requires several authorizations before you can fully and legally operate. Apart from the usual annual business permit, you will be required to have a health certificate at a cost of about Ksh.5,000.
The cost of your business permit will vary but may cost up to Ksh.25,000 depending on the size of your business and the number of employees.
Your employees will be required to undergo health examination and be issued with certificates renewable after six months at a cost of Ksh.500 or Ksh.1,000 per year. However, many employees in supermarkets in many towns do not have this certificate.
The county government will require your supermarket to comply with fire safety rules by installing fire extinguishers and be issued with a fire certificate. The fire certificate will cost about Ksh.4,500.
If you will be playing music in your supermarket to entertain shoppers, which is optional, you must obtain a license from the Music Copyright Society of Kenya (MCSK) at about Ksh.10,000.
3. Supplies
Unlike the bigger supermarkets who get their supplies from manufacturers, the mini supermarkets depend on distributors for their supplies. These distributors bring supplies to the shop without charging for transport.
Many mini shops stock after a fortnight while a few stock monthly. Sodas are mostly stocked weekly while perishables such as bread and milk are taken daily. Depending on your location, size and sales, you can settle on a suitable schedule to stock your shelves.
These mini supermarkets prefer stocking, toiletries, food stuffs and baby stuff in plenty. A number of them have discovered that these are the things that sell in large numbers.
4. Prices
Common items such as 400g bread will cost around Ksh.60 while milk varies between Ksh.50 – Ksh.60 for 500ml packet depending on location and shop.
Baby stuff such as diapers, glycerine, powder and petroleum jelly amongst many others are frequently bought. Many people buy the big pack of with 36 diapers going for about Ksh.800.
Johnson’s Powder is preferred by many shoppers, especially the small one going for about Ksh.75 and the 50ml glycerine going for Ksh.35.
Other popular items are cooking oil, tissue paper, and detergents such as Toss, Sunlight and Arial. The prices of these items will vary depending on the location.
Stocking a small supermarket to start you off may cost you as much as Ksh.500,000 while a bigger one may need Ksh.1 million and above.
5. Profits
It is fairly obvious that the profits you will make in supermarket business will depend on your prices and the volumes moved. To calculate their profits, some mini supermarkets engage the services of external auditors/accountants to work out monthly or weekly profits while others do it themselves in-house.
Smaller supermarkets reported profits ranging from Ksh.100,000 to Ksh.150,000 every month. Bigger ones collect approximately Ksh.1 Million to Ksh.1.5 Million per month.
End month is a very busy time for many supermarkets, big and small. This is the time that shoppers throng the shops and a big portion of the profits are collected at this time.
6. Salaries
Workers in supermarkets have different salaries depending on the job, experience, shop and location. Bigger supermarkets pay much more than the local mini ones.
Many mini supermarkets have between 6 to 12 workers, shop attendants and cashiers. Shop attendants earn about Ksh.10,000 – Ksh.15,000 per month while cashiers are paid about Ksh.14,000 – Ksh.20,000.
The number of workers you can start with depends on the size of the business. You can start with a smaller number and increase with time as work increases.
7. Challenges
The nature of a mini supermarket presents many challenges that will be faced in the course of the business. The arrangement where shoppers serve themselves from the shelves increases cases of shoplifting, which many supermarket owners grapple with all the time.
Some goods will most likely expire on the shelves before they are bought. The challenge you may face is that distributors may delay to change these items, leaving you with expired goods. This can hurt your reputation and affect your sales and profits.
Whenever you stock new products, don’t be surprised when they don’t sell. This is a challenge faced by many small supermarket owners. At the same time, shoppers may need products and items that you do not have, making you lose the opportunity to make sales.
Finally,
We have seen that a supermarket is a very profitable business but also requires heavy capital investment and management to remain profitable. If you have the time to manage and have access to a large capital outlay, why not consider starting a mini supermarket?
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