How to start a kirana store - A complete guide

May 12, 2021

The recent pandemic induced lockdown saw a surge of supermarkets turning into small kirana stores to avoid long queues and crowds. There was an overwhelming number of stories of other small businesses like restaurants and jewellers turning their shops to kirana stores for a livelihood during the lockdown. By February 2020 there were roughly 6.5 million kirana shops set up across the country. This popularity has made kirana shops an attractive business option as it requires less investment and yields sizable returns. In this blog we outline the key points on how to start a kirana store and how to procure a profitable income.

Before figuring out how to start a kirana store we must know what a kirana store is. A small general provision store in your neighbourhood selling grocery items and daily essentials according to local preferences is a kirana store. A perfect example would be a village kirana shop that caters to the grocery demands of the people in that street alone. Here are some of the simple steps on ‘how to start a kirana store’:

Have a well-designed kirana store business plan

A job planned well is half done. Starting your small business dream by charting out a detailed kirana store business plan will put you on a pedestal. Decide the size of your kirana store by assessing the demographics of the area you wish to establish your store in. Understand your target customers' financial positions and decide the kind of items, the quantity you will have to stock to supply for their daily needs, pricing the commodities, studying their brand choices, consumption preferences etc.

Choosing a location

The most integral part of ‘how to start a kirana store’ is in choosing the right location. Kirana stores are popular and sought after by locals due to its easy accessibility by foot or public transport. Make sure you pick a residential location that lacks a small general provisions store as the lesser the competition, better the sales. It is for this reason that many opt to open a village kirana shop as the competition is lesser compared to semi-urban areas. Choose a location that is safe, accessible and also affordable to you for rent or lease. Once you have nailed this aspect you are halfway through to opening a kirana store or even buying a kirana shop franchise

Observing customer preferences

Understanding your customer’s needs and preferences is an important step towards opening a kirana store. Ideally your target market is the locals in the vicinity, mostly within one or two kilometres of the shop. Take a survey of the locally preferred brands for rice, pulses, oils, bathroom products, chocolates, chips etc. Stock up more on snack items and candies if there are more kids in the locality. Find out your customers purchasing patterns and stock up on your store inventory accordingly. You can consider inventory financing options to fund your stock purchase.

Evaluating Investments

Before you invest in this business you must be wondering what the average profit in kirana stores is. Starting a kirana store has turned out to be one of the most profitable sectors in India giving big retailers a run for their money. The profit margin of a kirana store depends on the number of customers it attracts monthly and varies from store to store. Though a perfect number cant be put, the profit margin is largely between 5% - 30%. You might have to invest anywhere between 50,000 to a few lakh rupees to start a kirana shop. The kirana store business is very profitable in the long run if you start on a small market which will give you time to assess the market conditions and reduce your chances of failure.

Funding the opening of a kirana store

There are various means of funding your kirana shop business and the most popular among them is a kirana or grocery store loan which is technically a small business loan that is unsecured meaning no collateral is required. You can also get a short-term loan with tenures up to 2 years to fund setting up your kirana store.These are unsecured loans and may incur a high interest rate. Another sought after option is availing an MSME loan under the Mudra scheme, a government initiative which offers upto 10 lakhs for businesses and individuals to set up a new business or expand an existing one without demanding any collateral. However, the downside is most of these business loans require prior business experience, annual turnover proof, business plan and some more exhaustive documentation.

You can consider availing a gold loan as it is relatively simpler, faster and more importantly has no end-use restrictions. Which means you can use the loan amount for whatever purposes you need without having to show a business experience proof or plan. Since gold loans are also secured loans where gold is pledged as collateral, interest rates are considerably lower than other types of business loans . Additionally, unsecured loans set the Loan-to-Value ratio based on the borrower’s credit history which can be inconsistent and vary. On the contrary, gold loans have a more fixed value and offer high LTV. This feature ensures that you get the highest valuation of your asset.

Gold loan as a funding option

There are many banks and NBFCs that offer gold loans with flexible loan tenures to suit business needs, but Rupeek is a pioneer in the gold lending market and is known for its hand-held customer service. Since they ensure the applicant gets the highest per gram value, pledging even a small amount of your family’s gold jewellery can fetch you a sizable sum that would be abundant to kickstart your kirana store. With Rupeek’s easy repayment options you can repay the EMI with great ease. Some of the attractive features of Rupeek gold loans are:

  • No exhaustive documentation, just basic KYC required
  • Highest per gram value
  • Interest rates starting at just 0.79%
  • Flexible loan tenure for maximum affordability
  • Transparent gold evaluation process done at your doorstep

Follow these simple yet effective steps to not only open a kirana store but to also run a successful small business.

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