Setting up a bargain shop - help please!

chargerman

I have 10+ years of grocery retail experience. I worked for small supermarkets as store manager. I always had a keen interest in the likes of pound shops/ discounters etc. I was thinking of setting up a small discount store in my home town.
The town has a population of approx. 3,000, there is a national school and a post office next to the unit I was looking at.
I know one or two suppliers that supply pound shops/discount supermarkets and they said they would be happy to supply me. Items I would sell include:
Minerals, conf, toiletries, household, home wares and grocery -all approx. 25% margin, health & beauty @ 30% and greeting cardsetc at 30% margin.
I would work in the store myself full time.
Anyone any advice on whether or not its a good idea? and if so costs/overheads to expect

Thanks
Chargerman

hytrogen

only one way to know; ask around what people of your town actually want & IF it fits their criteria then boom, it's a winner!
A simple poll survey taking a day or two of general walking traffic, forecast the books & promote promote promote! who knows, ya might be the next Fergal Quinn.. :cool:

sandin

3000 is a very small population and probably can't support a discount shop.

Think of it as approx 650 families, then how many of these will shop in a discount store and also how close are you to a main shopping town.

You'll get the "leftovers" I think.

Also your margins seem a little low as most discounters will work on average 45-50% margin.


Here's a quick calculation to see if it is feasible

basic costs
rent - lets say 5,000/year
rates - 1500 / year
heat/light - 1500/year (assuming its a small shop)
stores supplies (bags etc) - 1000 / year
living wage + part-time staff - 40,000 / year incl employee prsi
misc costs - 1200/year

circa 50,000 a year cost base

will require a turnover of about 3000 / week (incl vat) on 42% average margin

average sale in a discount shop is usually well under a fiver - that's 600-800 sales a week in very small town.

Simply too much of a risk.



But why your local town? - Why not travel a few miles and get the right location? I reckon you will need a town of at least 7,000 people and it will have to attract hinterland shoppers - for supermarket or farm store.


Margins - minerals sweets etc, you should be able to achieve 33%, health & beauty, probably 40% if you get the right supplier, and greeting cards and toys/games, a 50% margin can be had. Maybe pay a visit to Budget Greeting in parkwest Dublin 12 to give you an idea (60,000 sq ft wholesale warehouse)

One final point - managing a store and managing a business are two different skillsets. I doubt if I could manage a single store, but I can run a multiple outlet business with my eyes closed. Possibly in the current market, stay where your skill lies?

chargerman

thanks for replies
Yes I think there is demand. The town is 12km from the nearest town which has lidl/Tesco etc. Our town has 2 small convienience stores alright.

I was wondering if anyone could give me idea on initial costs, such as shelving, till system etc or sites I could look at

cheers

Fries-With-That

Hi Chargerman,

You have been playing around with this idea for almost a year now, so I'd say to you at this stage if you're serious you need to put some serious research into it.

Today sit down with a pen and paper, and list the shops in your town, which of these shops are you going to take business from, how are you going to bring their customers to you.

I'm amazed you're asking about tills shelving etc., before doing your basic research.

Before you spend a cent on anything find out about your competitors, your potential customers, rent & rates, refurbishment costs, initial stocking costs, the list goes on.

sandin

secondhand shelving is easy to come by - donedeal.ie or auctionxchange.ie are 2 sites I'd check.

But with 2 convenience stores and lidl/tesco just 10 minutes away, I'd look for something in that town rather than your home town.

also to have a separation from work and personal life, locating away from your local area is best.

but still I think its too much of a risk - your market size is far too small for a discount store and you may not have the necessary experience to run it successfully. As I said above, there's a huge difference between running a store as a business and running it as a manager - do you need the stress??

edit - Just to give an idea. There have been three different people try a discount store in kildare Town (about 12,000 hinterland populaion, tesco, lidl, aldi and eurospar) - discount store has never worked cos the population wasn't there to support it. A discount store needs a serious amount of passing footfall.