Grocery shop

stonemad73

Hello i'm thinking of buying a small grocery shop in a small town,can anyone tell me what the profit margins are like and what is the return policy with the suppliers on out of date food,any advice welcome,p.s this is my first post:eek::D

drunkmonkey

You need an accountant to look over the books you'll see the profit then.

sandin

I know very little about this end of the business, but do know that having a symbol group name over the door would be a huge advantage.

Talk to Musgraves (Centra, DayToday) Barrys (CostCutter), ADM Londis, BWG (Spar) - all of them will give loads of advice and steer you in the right direction.

stonemad73

thanks for your advise,any help is welcome!

DubTony

sandin wrote: »

I know very little about this end of the business, but do know that having a symbol group name over the door would be a huge advantage.

Talk to Musgraves (Centra, DayToday) Barrys (CostCutter), ADM Londis, BWG (Spar) - all of them will give loads of advice and steer you in the right direction.

They'll certainly give loads of advice, but the steering will come from a very one sided agenda. Personally I've dealt with 2 of these directly. I've never seen or heard of ADM Londis refuse a shopkeeper a franchise, unless there was another Londis close by. In my opinion Musgrave are a lot more professional in how they operate, and will go through current numbers and projections in a much more detailed way to see if they feel the shop is viable. They won't touch it if they think it won't work. Londis, on the other hand, do (or at least used to do) a back of the envelope type exercise and seem willing to put their name over any door.

Anyway, to the OP. Your margins depend on the product mix you sell, the type of customers you have, how much competition is in the area and a load of other factors. Gross margins run anywhere from 18% up. The biggest I heard of was 37% in a Spar selling lots of fresh food and deli.

My last store did well to get a 20% gross margin as I had to be competitive and the main sellers in my business was grocery. That was a tough slog. Prior to that, I hit 25% comfortably and with little effort as the main sellers were confectionery and minerals. So there are many variables.

But that was all pre-recession. I'm sure things have changed. Give me more info on the location, shop size, nearby businesses and current turnover and I can give you better advice. PM if you want.

edit: Returns depend on the deal you have with the suppliers. As an independent you should get returns on all pre-packaged fresh food. If you're with a symbol group, this can differ depending on which one.

stonemad73

Thanks Dubtony for your detailed reply,i hope to get turnover on mon/tue i will pm you it when i get it.Shop is in small town in county Cavan with one other grocery shop.The shop size is 15m x 5m ,maybe to small for branded supplier??What are pros & cons of going with a branded supplier or going it alone...thanks again

DubTony

That size store is unlikely to attract a symbol group, although the DayToday operation run by Musgrave Cash & Carry division might be worth a look. This is different to Centra in that you deal with Musgrave Cash & Carry instead of Musgrave Retail Partners (SuperValu and Centra).

Pros and cons.

Recognisable name over the door instead of "stonemad's shop" is a help.
You would consider buying power to be an advantage, but your proximity to the border gives you access to many small wholesalers who will provide some great deals.
Support in areas you might be unsure of.
Store layout and design.
Central billing: a supplier delivers directly to you and is paid by the franchisor, who in turn bills you and offers a small additional percentage in the form of a quarterly, half-yearly or yearly rebate. It may also be the only way to get a direct supply of cigarettes.

Some of the cons are:
Franchise rules.
Central Billing ... Yup, it can be a double edged sword. Many suppliers won't "do a deal" with symbol stores as the symbol group has already cut their margin to the bone.
Franchise fees.

Lots more in both areas.

stonemad73

cheers ,i have a lot to go on,roll on tuesday