How To Start Supermarket Business in Nigeria or Africa: Complete Guide

How To Start A Lucrative Supermarket Business In Nigeria or Africa: Complete Guide | Image: Pixabay

A supermarket is a large store that offers varieties of items for sale, which are classified into sections for customers to pick for themselves. A supermarket is an advancement on the traditional grocery store, and it forms a major component of every major society. Today, supermarkets run into hundreds in every major town and city both in developed and developing countries. Besides making life easy for dwellers of the society with the various commodities offered, the supermarket business contributes significantly to the world economy.

As of 2019, the global supermarket business was valued at US$11.7 trillion with a projected CAGR of 5% from 2019 to 2027. At the moment, China has the highest grocery market in value of $1.595 billion and the potential to grow by 5.5% CAGR by 2023. The United States of America comes close to China in grocery value of $1.494 billion. Other countries with leading grocery revenues are India ($510), Japan ($459b) and Brazil ($328b).

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Nigeria has one of the largest grocery stores in Sub-Saharan Africa. As of 2017, Nigeria recorded over $44.8b in revenues from supermarket and grocery retail, with the food retail segment comprising $33.6b of these revenues. From 2017 till date, lots of new supermarket chains have sprung up all across the country to cater to the growing population. Nigeria’s population now stands at about 200 million people and has been projected to double by 2050. While this might have its adverse consequences, it holds a large grocery market retails in the country. More so, the supermarket industry is estimated to grow at CAGR of almost 10% by 2027. The supermarket business is found predominantly in areas such as Lagos, Benin City, Rivers state, FCT, Kaduna, Kano and Ilorin.

From time to time, more supermarket chains spring up in one major city or the other, and this explains why Nigeria has the fastest grocery market growth rate in Africa. As a matter of fact, the growth rate isn’t dropping anytime soon due to the growing competition among major supermarket chains. However, the supermarket industry in Nigeria is still at its maiden stage and can expand significantly. This makes it a brilliant opportunity for any investor in any part of the country. If you’ve decided to set up a supermarket business in Nigeria or any other part of Africa, here is a step-by-step guide to help you.

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What Is A Supermarket?

A supermarket refers to a large brick-and-mortar store where various commodities and groceries are displayed for sale. It is a self-service hub of commodities where the buyer walks through the aisles of items already arranged with their price tags attached and picks whatever items they want before making payments at the cashier point. Supermarkets are not as big as hypermarkets, but they’re bigger and provide more commodities than traditional grocery stores found in corners and streets of Nigeria.

 

What Is A Supermarket Business?

Starting a supermarket business describes all the activities involved in stocking up wares and retailing them for daily consumers. Setting up one would cost nothing less than 1 million Naira. A full-fledged supermarket in Nigeria in major cities could cost as much as N5 million to N10 million or more, depending on the volumes of groceries offered. Most Nigerians now prefer shopping at a supermarket to the regular grocery shops and the reasons are not farfetched. Besides the security and convenience that supermarkets offer, they also give shoppers conducive modern environment where they can make all their bulk purchases at once and pay via means other than cash.

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Business Opportunities In Supermarket Business In Nigeria And Around The World

The supermarket business comes with several other job opportunities, including the following:

1). Cashier Services:

Every supermarket enlists the services of two or more cashiers, depending on its size. These slots are mostly reserved for young people with excellent business acumen to relate with customers and conduct transactions.

2). Delivery Services:

Delivery services related to supermarkets is in two folds. All traditional brick-and-mortar stores frequently stock their supermarkets with groceries and other household items from wholesale distributors. They require the services of delivery personnel. On the other hand, ultramodern supermarkets now create digital platforms for people who cannot be physically present at the store to make their purchases. With the aid of mobile applications, people can access virtual supermarkets and have their purchases delivered to them.

3). Cleaning And Janitorial Services:

As inconsequential as it seems, cleaning and maintenance is a key service required in traditional supermarkets. This, therefore, leaves opportunities for cleaners and janitors in the supermarket business all across the world.

4). Security:

Another essential service required for the successful operation of a supermarket is security. Besides keeping the security personnel employed, supermarkets also need the services of CCTV technicians and operators.

5). Café Operations:

Some supermarkets choose to spice things up by creating an added section for cafe services. This could also be a job opportunity for cafe operators.

 

Facts And Benefits Of Supermarkets

  • Supermarkets offer a variety of products and commodities, including foods and household items.
  • Supermarkets make it easy to do all your shopping at one spot.
  • Prices of commodities in supermarkets are relatively lower than prices elsewhere because supermarkets have a larger buying power since they buy directly from manufacturers.
  • Supermarkets operate on self-service, which makes it comfortable for customers because they buy without pressure.
  • China, USA, India, Japan and Brazil are countries with the highest revenues from the supermarket industry.
  • Supermarkets offer quality products from trusted manufacturers.
  • Customers are not compelled or deceived into picking items that they do not want.
  • Supermarkets are often located in busy areas.
  • In Nigeria, major cities and towns such as Port-Harcourt, Lagos state, Abuja, Benin City and Kaduna are some of the areas with the largest concentration of supermarkets.
  • Supermarket business gives no room for debts or credit.
  • Supermarkets do not involve needless haggling of prices of commodities.
  • A Netherlands policy holds that if there are four people in the checkout lane and the points are not open yet, you get your groceries for free.
  • In Rhode Island, it is prohibited for supermarkets to open on Thanksgiving.
  • In Europe, there are platforms for people to buy goods discarded from regular supermarkets. These platforms are called social supermarkets.
  • An average person spends 43 to 45 minutes at the supermarket on each visit.
  • People shop more on Saturdays than on other days.
  • About 25% of grocery income is made from the sales of processed sweets.
  • According to reports, if you go to the supermarket when you’re hungry, you’ll likely spend more money on items that contain calories.
  • On weekdays, people shop more within 4pm and 5pm.
  • Only 3% of shoppers buy groceries online.

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Types Of Supermarkets

There are precisely no types of supermarkets. Supermarkets themselves are a type of stores which is often mistaken for other retail stores. As a matter of fact, there is very little difference between convenience stores and supermarkets. However, one can clearly tell a supermarket clearly from a drug store or a hypermarket. Meanwhile, people could choose to spice up their supermarkets by adding other related services such as a cafe.

Beyond this, supermarkets can be classified into two:

1). Traditional Supermarkets:

These are the regular supermarkets located at busy spots of towns and cities and require your physical presence to make your purchase.

2). Online Supermarkets:

Also known as e-supermarkets, online supermarkets are just gaining grounds in some parts of the developed world. As of now, only about 3% of shoppers prefer to use digital supermarket platforms.

 

How To Start A Lucrative Supermarket Business In Nigeria: Step-By-Step Guide

1). Create A Business Plan:

To start up a lucrative supermarket, you need a business plan that involves all the critical decisions and steps to take. Your business plan entails the size of your capital or how to generate the necessary capital. You also need to decide on what type of supermarket you intend to start. Since the common type is the traditional physical supermarket, you need to determine the size of your supermarket. After that, conduct a feasibility study on the success rate of a supermarket in the selected area.

2). Get a Business Site:

After securing the key factors such as capital, get a favourable business site for your supermarket. In some parts of Nigeria, plazas and large shops are commonly used. The most important factor is that the supermarket has to be situated in a busy area where the dwellers are at least middle-class people.

3). Set Up The Supermarket:

The next stage is to set up the supermarket with the required facilities, including cashier’s desk and chairs, shelves, security devices, labels, price tags, baskets and trolleys, etc.

4). Employ Staff:

After setting up the supermarket, it is now a good time to employ labour. A typical supermarket requires services of cashiers, security personnel, delivery personnel, a manager, drivers and janitors, etc.

5). Connect With Manufacturers And Wholesale Distributors And Stock Up:

You need to network with several categories of people in the grocery industry such as manufacturers, wholesale dealers and distributors, among others. Strike deals with manufacturing companies to get wares at favourable prices and stock up your supermarket with the items that your feasibility study revealed to be the common items needed in the area.

6). Register Your Business:

For smooth and undisturbed operation, you should register your business with the Corporate Affairs Commission.

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7). Run Advertisements:

Apart from those who walk by the new supermarket, not many people would know that there’s a new supermarket in town. This is why you need different forms of adverts, depending on which ones you can afford or which is most applicable in your locale.

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Challenges Of Supermarket Business In Nigeria

  • High startup costs
  • Maintaining a supermarket business could be expensive and demanding.
  • Supermarkets are not available to people in small towns and villages.
  • Erratic power supply in most parts of Nigeria.
  • High risk of robbery attacks.
  • Distrust between supermarket owners and employees
  • Most commodities cannot be sold in bits.
  • Poor road network makes delivery difficult and expensive.
  • Difficulty in reaching across to manufacturers outside the country.
  • High shipping costs.
  • High costs of rents in major cities.

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To Sum It Up

A supermarket business contributes maximally to the economy of any society, and not just brings massive profits to the investors. The supermarket business in Nigeria can be a lucrative and profitable venture to start-up, due to its vast market demand and on your ability to build a wide sales network. If you’re looking for a lucrative business to venture into, the supermarket business in Nigeria is a great option to explore.

 

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