If you’ve dreamed of opening your own independent or small grocery store, there is no doubt that possible profits have been on your mind. It may be natural for someone who doesn’t own a grocery store to think that profits must be soaring with there being a constant demand for food. While in reality, grocery store margins are actually quite modest. With margins being slim, you may wonder why anyone would want to own a grocery store in the first place. Don’t be fooled by the margins, though. Owning a grocery store can be a rewarding and profitable venture.
At LemonTree Products, we are a leading designer and manufacturer of high-quality produce display systems. We know that the details matter when it comes to operating a grocery store that people actually want to shop in, and we help you make your grocery store better. In this post, we outline some good-to-know information about grocery store margins for prospective grocery store owners and things you can do to make your store more profitable.
What Are Typical Small Grocery Store Profit Margins?
If you’ve ever assumed that grocery stores must have large profit margins, you may be sorry to hear that 1-3% profit margins are the norm. Why so little? There are many expenses associated with running a grocery store, including mortgage or building rental, utility costs, employee salaries, purchasing inventory and other infostructure needed to run a successful store, such as market tables and produce display racks. Once you start thinking of all the things you enjoy as a customer of a grocery store, it’s easy to see how costs can quickly add up.
Pair expenses of running a grocery store with the fact that farmers and producers must be paid, and food needs to be affordable for all, and you can see a clear picture of why margins are so low. But the missing piece of this puzzle is that although profit margins are low, volume is high. This can mean that a grocery store is profitable despite the low profit margins, but you’ll want to find as many ways as possible to keep your expenses low.
How Can I Save Money as A Grocery Store Owner?
When it comes to owning a grocery store, you’re going to want to have the products your customers desire. So, skimping on selection or quality simply isn’t a good idea. So how can you save money as a grocery store owner? One of the best ways to keep operating costs in check is to reduce produce shrink, or in other words, not have excess produce loss for any reason. Our previous post, How to Reduce Produce Shrink offers insight into reducing the amount of money a grocery store owner will lose specifically from the produce department though principles stated here can also be applied to other areas of your store.
How Can I Make My Grocery Store More Competitive?
Having the products your customers desire is one of the best ways to stay competitive as a grocery store. If your store caters to a specific demographic, be sure to carry traditional foods that are requested and pay attention to having appropriate foods in stock during holiday seasons. Beyond the contents of your store, make your store easy to shop and attractive to be in with a professionally designed product display system. From orchard bins to euro tables, the right display system can transform the functionality and appearance of your store, making it a place your customers truly want to be in.
Ready to take your grocery store to the next level and create a space your customers will want to come back to? Contact LemonTree Products today.