Want to build a new supermarket that is profitable from day one? Want a supermarket development that works for you over the long term?
Many independent supermarkets in rural communities boom when they adopt the right strategy from day one. The Gin Gin Supa IGA is a great case study of the top 5 things to do when developing your new supermarket.
The top 5 things to do when developing your new supermarket:
Determine the need
The first stage of any development process is determining that there is a need in the community for your particular service. It is important to predetermine the specific needs that could be met by you in a cost effective manner. Naturally you’ll take into account factors such as competition and current shopping/commuting patterns of locals. The correct needs analysis in Gin Gin allowed the business owner to capture a significant slice of the grocery market that previously travelled to Bundaberg to buy groceries.
Study the demographics
A smart supermarket operator once told me “If you want a successful business, find out what your customers want and give it to them”. It makes sense then that knowing the demographics of an area puts you in the box seat in your store. Once you know what they want, you can give it to them.
Some questions you may want to ask are: Is the population increasing or decreasing? What is most important to them quality or price? Is your market seasonal (e.g. are you affected by fruit picking or traveling baby boomers)? Or is it stable all year round? What is the average age of your potential common customers? Are there plans for major developments to be established in your area in the near future that you could capitalise on?
There are plenty of sources for this kind of information from local councils, various websites and the Australian Bureau of statistics. There are also various companies who specialize in supermarket industry sales prediction (like those who provided demographics for the Gin Gin store).
Choose location very carefully
“Location, location, location” is an oft quoted saying in the property market. This also holds especially true for independent supermarkets and convenience stores. You don’t have to be a brain surgeon to know that a high volume of passing traffic and exceptional visibility will add to the performance of your business. Other factors that will contribute to your success as a supermarket operator include ease of access, ample parking and a clean environment. If you are going to become part of a multi complex, you need the right mix of additional tenants who will also draw in business. Support tenants such as post office, newsagents, bottleshops, bakeries, chemists and medical centres can all assist in providing additional customers.
It may seem at times you are searching for the proverbial needle in the haystack, but sites that meet all of those criteria are available if you are dedicated to looking for them. Persistence resulted in The Gin Gin store being located on a site on the main street of town which met all of the location criteria and catered specifically to the high volumes of transient and local shoppers alike.
Look for overtrading
If stores are overtrading for their size it often indicates strong potential for business expansion and development. In Gin Gin the existing supermarket had an unusually high turnover for the 200 square metres of space it occupied. The business owners could tell that it was already overtrading.
The redevelopment of the site included a brand new, 1600 square metre, purpose built store and has breathed new life into the local community. Local customers say the store has saved them time and money in not having to travel outside of town to do their shopping.
Select the right partners
Selecting the right team for your success is crucial and the cost of doing things right the first time is always far cheaper than re-inventing the wheel. In the case of the Gin Gin Supa IGA, Aussie Supermarket Brokers arranged the purchase of freehold, IGA>D provided the head lease for the store and the supermarket operators bought the existing business and negotiated a long lease that would allow them to operate profitably for the long term. The property was then developed by ADE to the operators’ specifications to ensure it met their particular retail needs. This partnership approach meant the property was trading profitably from day one and continues to grow from week to week.