How To Start A Kirana Store

Kirana stores are departmental stores in Indian localities which serve as a center for groceries and other items of daily use for the local community. Opening a Kirana outlet is a simple process which does not require any special skills or degree. With decent funding, anyone can start operating their Kirana store selling their choice of items. 

Moreover, as Kirana stores sell general daily items for almost every household use, the revenue generation is almost a sure shot process, albeit the local competition around.

What is a Kirana store?

A Kirana store is a departmental shop which serves as the local neighborhood stores in India. One can find daily items of household use like rice, wheat, vegetables, spices, shampoos, etc. The store size depends on the investment made, it can be a small shop serving daily rations or a mini-mart kind of set-up allowing customers to pick their own items. 

Why open a Kirana store?

Kirana stores are worthy investments if you are looking for a regular, moderate inflow of income. Even during the pandemic, Kirana stores sales surpassed many e-commerce giants and supermarkets. 

Here are some other benefits of operating a Kirana store:

  1. Ease of accessibility by daily customers 
  2. Strong interpersonal relations with customers
  3. Low stocking requirements and risk
  4. Credit and discount advantages
  5. Flexible payment options
  6. Home delivery without any minimum delivery limit for a localized area

These are a few things which can make your Kirana store a profitable venture.

Process of opening a Kirana Store

Here is a step-by-step guide to open a successful Kirana store in India:

1. A sound business plan

No businesses can operate successfully for much longer without a sound business plan. One must understand the target range of their customers and the average income of the locality they are serving in to price their products accordingly. 

You may also need to figure out how much manpower you may need for your start-up for delivery, packing items, etc.

2. Selecting locality

Selecting the right locality is also an essential step towards opening your Kirana store. One should go for an ideal location which can be easily accessed by the public with reasonable security. You should also look for an area with less competition for your business and good visibility.

3. Required Investment

When you are thinking of investment, be prepared to include costs to be expended on commodities, manpower, suppliers, maintenance, etc. 

The required investment also depends on whether you want to open a small-scale shop or buy a franchise. 

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4. Registration and licenses

When you have ascertained the volume and scale of your business, you can then proceed with fulfilling the legal formalities necessary. 

A Kirana store needs the following registrations:

  1. i) Shops & Establishments Registration
  2. ii) Food License
  3. iii) Entity Registration 
  4. iv) GST (optional)

If your turnover exceeds Rs. 20 lakhs annually, your Kirana business will have to register under GST to obtain the GSTIN or the 15-digit unique identification code. 

5. Inventory

To manage an inventory, start by selecting what items and brands you want to sell. You can review the best selling products by visiting your nearby departmental store. For procurement, you could either use a distributor or get it directly from the wholesaler, which may be a little bit expensive. 

You can also use online business accounting software to keep track of your inventories. This will help you to integrate digital receipts and payments more easily than doing so manually. 

6. Selecting the right vendor

Select the right vendor based on certain evaluations once you have selected which products to sell. For your perfect vendor, you need someone with reliability on quality products and on-time deliveries. 

Look to keep your inventory cover between 2-4 weeks. You can also go for seasonal items, other than the in-demand ones to cater to the niche segment of customers. 

Dairy and FMCG products like soaps, detergents, and cosmetics offer lucrative margins, though you need to be careful and follow the first in first out rule with dairy products. 

7. Study your competitors

Visit the nearby local departmental stores and even supermarkets to get a hang of the operations and way things are managed. Make a note of the shop structure and which brands are mostly stocked. Look for new ideas and opportunities. 

8. Add-on services

People like to be treated specially, particularly if they want to buy items from a specific store regularly. From home delivery services to an attractively designed shop, you can explore what things you can do which may set you apart from your competitors nearby. 

Find out what other Kirana stores nearby are doing, identify an opportunity and grab it with both hands. 

9. Offers & Discounts

You can cook up some attractive schemes, offers and discount policies to retain buyers. The main aim here is to keep your buyers engaged with regular service from your Kirana shop. 

As a start-up, it is prudent to advertise your business using all resources at hand to spread the word of a new convenience store in the locality. Mobile marketing is an economical way to engage with your customers and spread word about your business. 

You can also take a step ahead with discount vouchers and freebies for children. 

How to increase sales in my Kirana store?

Increasing sales is not something one can achieve overnight. You have to act all along and gradually increase sales and drive revenue with the following tips:

Retain customers

Keep unique products

Focus on customer relationship

Take your store online

Identify buyer trends

Promote business with offers

Improve customer service

Advertising

Are Kirana stores a profitable venture?

Kirana stores require daily updates of your inventories and building personal relations with customers, even in unique ways if necessary. The profitability of your business would depend upon the minutest of details to increase profit margins, like availing the cheapest price for your stocks and basic commodities like rice, wheat, oils, soaps, shampoos, etc. 

It is indeed an easy-to-open venture, but making it profitable is another task at hand that one must perform. 

With proper strategy, cheapest procurement of items and efficient planning on selling the items with the most profit margins, your Kirana store can prosper and start yielding returns like any other business.

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Kirana Store Business Plan FAQs:

1. Is Kirana store profitable?

Yes. Kirana stores are profitable ventures if done right. One can easily build revenue and generate profit in the long-term. Initially, it may be prudent to open a small-scale department store to minimize risk and understand the market.

2. How do I start a Kirana store?

In order to successfully start a Kirana store business, you must fulfil the following: • Have a business plan • Select the right locality • Understand the investment required • Registration and licenses • Inventory management • Selecting vendors • Competitor analysis • Provide additional services • Advertise and promote

3. How does a Kirana store work?

Kirana stores operate a little differently from other businesses, in terms that most of the transactions take place on a credit basis. Wholesalers and retailers buy or sell goods on a credit basis, generally a week. All inventories are purchased on a credit basis and once the items are sold, payment is made to the distributor while procuring the next round of items.

4. How to take my Kirana shop online?

Taking your Kirana shop online is a great way to increase your customer base to significantly with nominal charges. You can collaborate with e-commerce websites and list your products on their site. Conversely, if your store size is big and you have the financial capability, you can opt for your own ecommerce site to sell your products exclusively. On a small scale, you can do WhatsApp marketing, create digital catalogues and adopt softwares to send payment reminders or invoice online to customers.

5. What is a Kirana store?

A Kirana store is a departmental shop which serves as the local neighbourhood stores in India. One can find daily items of household use like rice, wheat, vegetables, spices, shampoos, etc. The store size depends on the investment made, it can be a small shop serving daily rations or a mini-mart kind of set-up allowing customers to pick their own items.

6. What is the profit margin of Kirana stores?

Depending on the store capacity, profit margins for Kirana stores in India are pretty decent, ranging from 5-25%. There are so many Kirana stores in India because they are a profitable venture.

7. What are legal obligations to open a Kirana store?

Following are the legal obligations that need to be fulfilled before opening a Kirana store: • Business registration • FSSAI License • Shops & Establishments Registration • GST Registration

8. How do Kirana stores work?

Kirana stores thrive on a narrow profit margin per item. Generally, daily household items sold in the department store ranges from 1-3% depending on the item. Remember that small grocery shops like Kiranas earn profit on quantity and regularity of sale. Kirana stores depend on every customer purchasing multiple items which thereby increases the profit margins.

9. What is the required investment of a Kirana store?

In the initial stage, a Kirana store generally requires a round about of Rs. 50,000/- including the fixed and variable costs.

10. Which products have the highest profit margin?

FMCG products like soaps, detergents, toothpastes, etc. have a high profit margin and yields lucrative returns to shop keepers. Apart from FMCG, dairy products (milk, curd, paneer) also have a very high profit margin, though you need to be careful with the quantity initially due to their perishable nature.
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