Supermarket Franchise India

The Indian retail market is very robust.  It is growing at the rate of 20% annually.  The market’s total size is US$ 500 billion.  It has provided 35 million job opportunities which are second to agriculture. 

This blog will give you an idea of the franchising opportunities offered by the top retail companies in India.

Types of Food-Based Retailers

According to Rohan Agarwal, there are four types of food-based retailers:

  1. Convenience Stores
  2. Conventional Supermarkets
  3. Food-based Superstores
  4. Combination Stores/Super Centres

For this blog, some names will be changed for simplicity’s sake, like Supermarkets for Conventional Supermarkets and Hypermarkets for Food-based Superstores.

Combination Stores/Super Centres will be grouped with Hypermarkets since a hypermarket is a combination store selling general merchandise, department store items, and groceries.

This blog will have this classification:

  1. Convenience Stores
  2. Supermarkets
  3. Hypermarkets

Differences Between Convenience Store, Supermarkets, and Hypermarkets

Here we will compare the three types of food-based retail outlets in India.

Convenience Stores

These are small stores that are traditionally called “kirana.”  They are the corner shops of India.  The usual floor space is 2,000 – 3,000 sq. ft(186 to 280 sq.m.). They are located conveniently near or within the residential neighborhood.
In India, convenience stores dominate the retail industry.  They comprise 65% of the whole retail sector. The overwhelming majority fall under unorganized retailers.

Supermarkets

Supermarkets are bigger than convenience stores.  They have a wide array of food selections and household items.  Moreover, the items are placed on shelves and categorized.  You can find items of the same category on the same shelves or sections. Dairy products, for example, are found in one area while canned goods are in another section.

Supermarkets are self-service stores. The shoppers use “trolleys” or “baskets" to secure the items.  Once the shopping is done, the shoppers bring the trolleys or baskets to the checkout counters for payment, usually located near the entrance.

Hypermarkets

They are much bigger than the supermarkets.  They are like supermarkets but with a department store. The big difference is that the hypermarkets have more volume of items. Most likely, the things that you see in supermarkets are also found in hypermarkets.

The floor space area of hypermarkets ranges from 20,000 to 50,000 sq. ft (1,860 to 4,645 sq.m.).

There are other differences aside from size.  Generally, supermarkets are well-designed buildings.  The hypermarkets, on the other hand, look like warehouses.  Supermarkets are customer-oriented, whereas hypermarkets are not.  However, hypermarkets offer lower prices than supermarkets.

In India, classifying retail companies into supermarkets or hypermarkets is quite a challenge sometimes.  The reason for this is that these companies are into the two formats, supermarkets, and hypermarkets.

Pros and Cons of Convenience Stores, Supermarkets, and Hypermarkets

1. Convenience Stores

Here are the pros and cons of running a convenience store.

Pros

  1. It is relatively easy to get started.
    Because of their size, the investment needed is not so big compared to other retail stores.  Initial items to be purchased are not that many.  Concerning licensing, there are only a few compared to other retail stores.
  2. The neighborhood is your market.
    Your store will become the natural destination for immediate needs like snacks, drinks, ice cream, etc.  It can even become a favorite hang-out place, especially for young people.
  3. You have the opportunity to set your prices.
    Most likely, the items that you will sell will be purchased at wholesale prices.  This means that they are cheaper than the regular prices.  Because of this, you can set the profit margin that you want to some degree.
  4. Your business can provide economic stability.
    The convenience store business is fairly stable.  All the more, people will patronize you during difficult times.  This is when they could not afford to travel far to buy things in bulk.

Cons

  1. Convenience stores often need to open for long hours.
    There are now convenience stores which open 24/7.  One good example of this is 24Seven.  Many operate for long hours, like opening at 5:00 a.m. and closing at 11:00 a.m. This can be tiring, especially when you don’t have enough staff for a rotating work shift.
  2. Convenience stores are easy targets for theft.
    Convenience stores are easy targets for robbers.  The best marks are those that are open 24/7.  They rob for money, but if they feel threatened, they could fire at people in the store.

    Another common problem is shoplifting.  To discourage shoplifting, use convex mirrors in blind areas.  Better still, install CCTV cameras in different places of your store.
  3. Convenience stores need constant cleaning.
    As people enter and leave the store, they leave tracks on the floor.  This becomes common during rainy days.  To keep the store clean, you keep on cleaning or mopping the floor.
  4. There will always be inventory losses.
    There will be losses due to expiration dates.  People do not want to buy drinks or snack foods that are expired.  It can even affect your reputation.

Supermarkets

Here are the pros and cons of running a supermarket business.

Pros

  1. Low prices
    Since you purchase goods at a wholesale rate, you can afford to offer low prices.  You can provide customers with discount prices and special offers.
  2. Fast and large turnover
    With lower prices and a wide selection of essential goods, turnover is fast and large.
  3. Lower operations cost
    Since the supermarkets are self-service, the cost of labor is reduced.  The customers are the ones choosing, picking, and checking out for the goods. Sometimes, even the bagging of goods is left to the customers.
  4. Potential large profit
    The potential of large profit is brought by purchase prices, fast turnover of goods, and low operating costs.

Cons

  1. Requires a large amount of capital
    Starting a supermarket requires a huge investment.  You must have land and a building. 

    Whether you buy or lease land and building, it will still require a large amount of money.  A supermarket business needs a large land and building.

    On top of this, you need money for the purchase of goods.
  2. Central location
    The supermarket should be centrally located and not on the outskirts of the city.  Locations like this are not cheap.
  3. Not good for technical goods
    Because the supermarket is self-service, there are few supermarket workers around to ask about technical goods.
  4. Need of efficient manager
    For the success of the supermarket business, it should have an efficient manager.

Hypermarkets

Here are the pros and cons of running a hypermarket business.

Pros

  1. Lower prices
    They offer prices lower than that of the supermarkets’.  This has to do with the volume of goods purchased.  They purchase more goods than the supermarkets.  Vendors offer them big discounts, which in turn translates to lower prices for the customers.
  2. Fast and large turnover
    If the supermarkets have fast and large turnover, hypermarkets have quicker and larger turnover.
  3. Lower operations cost
    Like the supermarkets, hypermarkets are self-service too.  This means that the cost of labor is reduced. 
  4. Potential large profit
    Like the supermarkets, the potential large profit is brought by wholesale prices in purchasing, fast turnover of goods, and low operating cost.  Add to these is the low cost of land or lease since hypermarkets are found in the outskirts of the city or towns.
  5. Accessibility
    They are found in the outskirts of the city or town where the road traffic is light. This makes them accessible.

Cons

  1. Requires a large amount of capital
    Among the three retail stores, this is the one with the biggest investment considering its size.
  2. Location
    The location of hypermarkets can be a critical factor.  In some areas, being on the outskirts of the city or town is not attractive and accessible to customers.
  3. High cost of operation
    Because of the sheer size, the operational cost could go up.

What Attitude Do You Need to Manage This Kind of Business?

Eight traits are needed to successfully manage a retail business like a convenience store, a supermarket, and a hypermarket.

Here are the eight traits:

  • Emotional intelligence
    Emotional intelligence involves listening and empathizing with the people you work with, like your employees or customers.
  • Instructiveness
    You should be a strong leader, but you should be able to teach and mentor others.
  • Attention to detail
    Attention to detail is very much needed when you run promotional campaigns. You don't want the drive to fail.  Check every detail of the movement to ensure that it will bring the result you intended it to accomplish.
  • Self-regulation
    Self-regulation is the same as self-motivation.  Retail is a fast-moving business.  It is easy to lose yourself at work.  Keep yourself motivated.  Initiate campaigns, projects, and goals.  As you are motivated, others will be too.
  • Positivity and respect
    Positivity is an important trait in retail.  There is no business protected from problems.  It is during crises that positivity is very much needed. 

    Also, treat everyone with respect.  A “hello” or a “good morning” will be enough to show how you value and respect others.
  • Stress tolerance and adaptability
    As mentioned above, retail is a fast-moving business.  There are deadlines to meet, calls to make, meetings to attend, and so on.  It can be stressful.  You must learn to manage yourself in this kind of situation and adapt by having a strategy to lessen stress in your personal life.
  • Managing relationships
    Retail businesses will need people working together.  But at times, there would be conflicts among employees.  Learn how to do “conflict management.”  At the same time, have activities that will build trust and respect for one another.
  • Goal-oriented and able to prioritize
    Keep the company’s vision in mind. Each plan and goal should aim to accomplish the vision.  About the idea, arrange things according to their priority.

How Long Is the Return of Investment (ROI) For This Kind of Business?

Once again, let us check each type of retail store.  Each class will have a sample franchise.

Convenience store

Different companies offering convenience store franchises have different investment prices, anticipated percentage return of investment, and likely pay back period of capital for a unit franchise.  To have an idea, here are three companies chosen at random offering convenience store franchises in India.

  AMPM 24*7 Convenience Store Grocery 4U 24Seven
Investment range Rs. 1 Cr - 2 Cr Rs. 20 Lakhs - 30 Lakhs Rs. 50 lacs - 1 Cr
Anticipated percentage return on investment 45 % 24 % 45 %
Likely pay back period of capital for a Unit Franchise 2-3 years 1-2 years 2-3 years


The table above shows that the ROI timeframe for convenience stores is one year to 3 years.

Supermarket

Like convenience stores, different companies offering supermarket franchises vary in their investment prices, anticipated percentage return of investment, and reasonable payback period of capital for a unit franchise.  Here are three companies that were chosen at random, offering supermarket franchises in India.

  More Supermarket Nilgris Hyper Supermarket
Investment range Under Rs.40 Lakh Under Rs.30 Lakh Rs. 5 Lakhs – 10 Lakhs
Anticipated percentage return on investment    /td> 70 %;
Likely pay back period of capital for a Unit Franchise Approx. 1 year One year 6 Months


The table above shows that the ROI timeframe for supermarkets is three months to 1 year. The supermarket's timeframe is shorter than the convenience store.

Hypermarket

Like the two retail outlets above, different companies offering hypermarket franchises have different investment prices, anticipated percentage return of investment, and reasonable payback period of capital for a unit franchise. Three companies are chosen at random, offering hypermarket franchises in India.

  Spencer’s Retail DMart Star Bazaar
Investment range Above Rs.10 Crore Rs. 1.5 Cr – 2 Cr Above Rs.10 Crore
Anticipated percentage return on investment   40%  
Likely pay back period of capital for a Unit Franchise 1 – 1.5 Years Two years 1.5 – 2.5 Years


From the table above, you can see that the ROI timeframe for hypermarkets is between 1 year to 2.5 years.

Buying a Franchise in India

Before buying a franchise, educate yourself about franchising in India. Make a checklist of the things you need to prepare before buying a franchise.

List of Convenience Stores, Supermarkets and Hypermarkets

Convenience Store

1. Easyday

Easyday is a retail brand that has chains of consumer retail supermarkets and convenience stores. Future Retail Ltd. wholly owns Easyday.

  • Franchise Fee: not disclosed
  • Investment: Rs.  10 Lakhs – 15 Lakhs
  • Website: https://www.easyday.in/
  • Email: [email protected]
  • Contact Number/s: 09050402657

2.  24Seven

24Seven is the first 24/7 convenience store in India. It opened in 2005.  The Modi Group is the parent company of 24Seven.

  • Franchise Fee: not disclosed
  • Investment: Rs. 50 lakhs - 1 Cr
  • Website: https://www.24-seven.in/
  • Email: [email protected]
  • Contact Number/s: 011-66037000

3. AMPM 24*7 Convenience Store

AMPM Store follows that 24/7 format store.  This means that it is open 24 hours a day and seven days a week. At present, it serves Gurugram (Gurgaon), Karnal  & Panipat, Haryana.  However, it wants to expand to 1000 stores all over India.   Agility Venture Partners owns AMPM Store.

  • Franchise Fee: not disclosed
  • Investment:  Rs.  1cr – 1.1 cr.
  • Website: https://ampmstore.in/
  • Email: [email protected]
  • Contact Number/s: 88139-88130

 
4. Grocery 4U

Grocery 4U is a chain of convenience stores in India.  It aims to provide the essential daily needs of every Indian.  Grocery 4U is registered officially as Grocery 4u Retails Pvt.

  • Franchise Fee: Rs. 2,75,000 (franchise-owned, company-operated), Rs. 2,75,000/- until 1000 sq.ft. (franchise-owned, franchise-operated)
  • Investment:  Rs.  20 Lakhs - 30 Lakhs
  • Website: https://www.grocery4uretail.com/
  • Email: [email protected]
  • Contact Number/s: +91-120-4200069, +91-93114-13833

5. Mother Dairy

Mother Dairy’s primary products are dairy products from milk to ice cream. But they have extended their reach through their Dhara and Safal brands.  Dhara sells edible oil, and Safal is into fruits and vegetables.  They offer one of the lowest franchise fees since you can opt for a booth instead of a store.  National Dairy Development Board owns Mother Dairy.

  • Franchise Fee: Rs. 50,000
  • Investment: Rs.  5 – 10 Lakhs
  • Website: https://www.motherdairy.com/
  • Email: [email protected]
  • Contact Number/s: 18001801018

 
6. Reliance Fresh

Reliance Fresh is one of the leading convenience stores in India.  It offers basic grocery needs.  Reliance Retail owns Reliance Fresh.

  • Franchise Fee: not disclosed
  • Investment: Under Rs.30 Lakh
  • Website: https://relianceretail.com/reliance-fresh.html
  • Email: [email protected]
  • Contact Number/s: 1800 891 0001, 1800 102 7382

Supermarkets & Hypermarkets

The list of top supermarkets and hypermarkets will be combined since most companies operate the two formats.

1. More Supermarket

More Supermarket has two formats, supermarkets, and hypermarkets.  It has 172 stores all over India.  It offers online retail services.  Samara Capital and Amazon own More Supermarket.

  • Franchise Fee: not disclosed
  • Investment:  Under Rs.40 Lakh
  • Website: https://www.moreretail.in/
  • Email: [email protected]
  • Contact Number/s: +91 8108138000

 
2. Big Baazar

Big Bazaar is one of the oldest and largest chains of hypermarkets in India.  They are also into discount department stores and grocery stores. Future Group is its parent company.

Franchise Fee: Rs. 5 Lakh
Investment: Under Rs.50 Lakh
Website: https://shop.bigbazaar.com/
Email: [email protected]
Contact Number/s: 1800 266 2255
 

3. DMart

DMart focuses mainly on hypermarkets.  They had 196 stores all over India as of December 31, 2019.  Avenue Supermarts Limited owns and operates DMart.

Franchise Fee: Rs. 10 Lakh
Investment: Rs. 1.5 Cr – 2 Cr
Website: https://www.dmartindia.com/
Email: [email protected]
Contact Number/s: +91 22 33400500

4. Nilgiri's

Nilgiri’s is a supermarket chain in South India.  It is one of the oldest supermarkets in India.  It was founded in 1905.  Future Group is its parent company.

  • Franchise Fee: not disclosed
  • Investment: Under Rs.30 Lakh
  • Website: http://www.nilgiris1905.com/ (broken link)
  • Email: [email protected]
  • Contact Number/s: 1800 210 0060

 5. Spencer's Retail

Spencer’s is another company that has multiple formats.  It has the following formats: convenience store and hypermarket.  Its convenience stores are known as Spencer’s.  Its hypermarkets are known as Spencer's Hyper.  At present, it has over 135 stores all over India.  Its parent company is RP-Sanjiv Goenka Group.

  • Franchise Fee: Approx. Rs. 5 Lakhs
  • Investment: Above Rs.10 Crore (hypermarket)
  • Website: http://www.spencersretail.com/
  • Email: [email protected]
  • Contact Number/s: 1800-103-0134

 
6. Star Bazaar

Star Bazaar is a Trent Limited company which, on the other hand, is under Tata Group of companies.  It has two formats, supermarket, and hypermarket. The supermarket carries the name, Star Market. The hypermarket carries the name Star Hyper.  At present, there are 48 stores in Mumbai, Pune, Bangalore, Kolhapur, and Hyderabad.

  • Franchise Fee: not disclosed
  • Investment: Above Rs.10 Crore
  • Website: https://starbazaarindia.com/
  • Email: [email protected]
  • Contact Number/s: +91 9029002233

 
7. Hyper Supermarket

Hyper Supermarket is a chain of supermarkets in India.  At present, it has about 58 stores all over the country.

  • Franchise Fee: Rs. 3 Lakh
  • Website: http://hypersupermarkets.com/ (broken link)
  • Email: [email protected]
  • Contact Number/s: +91 96679 61820

 
8. Reliance Smart

Reliance Smart is a chain of supermarkets under Reliance Retail. It is a one-stop shop selling fresh produce, bakery, dairy products, home, personal care products, general merchandise, smart apparel, and appliances. 

  • Franchise Fee: not disclosed
  • Website: https://relianceretail.com/reliance-smart.html
  • Email: [email protected]
  • Contact Number/s: 1800 891 0001, 1800 102 7382

Conclusion

The Indian retail industry is moving on forward.  Despite the pandemic, different retail companies are planning to expand.  With the country's large population, a bright economic forecast, and an increasing middle class, the retail industry is on the right track. Indians have noticed this opportunity.

If you search for “convenience store franchise India” or “supermarket franchise India,”  you will notice that many are asking if a certain retail company is offering franchises. If they are offering, they ask how much is the franchise fee or the total investment money needed.

One thing that is not covered in this blog is online shopping.  Almost all of the top retail companies mentioned above have their online shopping with their physical stores. 
A unique example of this is Reliance Smart. It has opened another retail business under the name Retail Smart Point.  They offer franchises for this.  Reliance Smart Point requires a small floor space from their franchisees.  

This is because Reliance Smart Point is into online shopping.  The store is a selling point but at the same time a delivery point. They sell products online which cannot be found in their store.  If a customer buys online, he picks up the item at Reliance Smart Point.

It is an exciting time for the retail industry in India, with companies innovating to serve the people better.  And these innovations will give opportunities to ordinary people to become partners in their retail business.

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