How to start a grocery business in Kenya the smart way

Starting a grocery business in Kenya is a good idea. No, it’s a great idea! The name grocery is synonymous with food, and we all love food. All human beings need food to survive. Animals need food to survive. If only they could think and buy stuff, then boom, your customer base would have expanded. 

Starting a grocery store is a great idea, but you need to tread carefully before you open one. You need to sit down and ask yourself many questions. The answers to these questions will help you navigate the treacherous labyrinth of business that has lost many others before you.

What is the best location to start a grocery business?

A grocery business thrives in high-population areas. Don’t start a grocery store in rural areas. Everybody grows their food there. Move to your nearest town or city and choose a high-population area.

If you came by car, then park it somewhere safe and take a stroll into town. Your purpose for this stroll is to find suitable spots within the town that can host your grocery business.

Look for closed shops and signs that seem to indicate vacancy. You can even save the numbers on your phone and make the inquiries later at home.

Scout for shops in estates that have a high population. This is good for new businesses because all the residents will be your customers. 

Identify shops that have enough display space for your products. Groceries perform better if all items are out on display for all your customers to see. This is a marketing strategy on its own.

Which licenses are needed to start a grocery business in Kenya?

Your grocery business will need a license to operate. This will legitimize your business and help you operate in peace, free from the arms of the authorities.

You will need the following license to operate your grocery business in Kenya:

Single Business Permit: A Single business permit is required for the hassle-free operation of all businesses in Kenya. It ensures compliance with business rules set by the Kenyan government.

Kindly visit your local county government offices for single business permit applications. The cost of permits depends on the size and nature of your business.

business permit

Licenses also come in handy when applying for loans and Government Tenders.

Health Permit: This license is issued to businesses dealing in food items. These businesses include groceries, hotels, milk, juice parlors, and hospitals.

Health Permit – Nairobi

How will I compete with other groceries? Is the market saturated with mama mbogas?

Grocery businesses are very competitive. This does not mean you will not get customers. If you have a good location, then customers will come flowing. However, you need to stand out from other groceries near you.

Standing out will give your existing customers a reason to continue shopping with you. You need to treat your customers nicely, be kind, and offer incentives.

How much capital do I need to start a grocery business in Kenya?

Starting a grocery business in Kenya is relatively inexpensive and does not require a large investment.

It’s cheaper to start a grocery business in a small town compared to one in a big city like Nairobi. Licenses and rent for big cities are usually expensive.

The capital needed to start a grocery business in Kenya depends on three factors: the location, the size of the shop, and the number of employees needed to run the operation.

If you have financial constraints, then it’s always better to start in a small space in a location with high traffic. This will help you jumpstart your business with little capital and start earning immediately.

You generally need between Ksh 100,000 and Ksh 500,000 to start a grocery store. Depending on the factors above, this money will be used to pay for the following:

  • Rent – You need space to run your business.
  • Business Permit – This will help you operate your business legally.
  • Products – Research food products that move quickly. These will help you pay your bills faster.
  • First salaries – You need a bit of money put aside to pay your employees before the business gains traction.
  • Branding and Marketing – Let everyone know you have started a new business. open social media pages and brand your shop
  • Shelves and Display Items – Buy crates and wooden shelves to display your food.
  • Refrigerators, freezers, and other machines required to operate the grocery business

Try reading this piece if you do not have enough capital to start your business.

How much should I charge my customers?

Your product pricing will depend on many factors such as the quality of your items and offers available at the shop. Items that are unpackaged are usually cheaper compared to packaged items.

You should offer discounts for guys who buy items in bulk as this will entice more customers to shop at your grocery store. It will guarantee repeat buyers. These types of offers are the type of things that will secure your place in the market.

When is the right time to start my grocery business?

You require proper planning before starting any business. Check out this article I wrote for more guidance.

How can I make my business more profitable?

Diversify your grocery store by adding amenities like a juice parlor, coffee shop, or snack point. These can dramatically increase your profit potential.

What kind of threats will I face when I start my grocery store business?

Most new grocery businesses usually face a lot of challenges once they open a shop. Knowing the type of stumbling blocks you may face will help you make smart choices and plan better. Below are some of the issues you might face:

  • Poor control of quality products from suppliers
  • Running out of stock
  • Underpricing your products
  • Handling your customers negatively
  • Mismanaging your shop
  • Not paying your suppliers on time leads to the loss of suppliers
  • Not keeping sales and purchase records
  • Refusing to listen to customers when they try to advise you

All these issues can be avoided if you plan carefully and listen to advise.

Conclusion

Starting a grocery business is fun and can bring in good profits if managed well. Groceries deal with perishable goods which means you will need daily replenishment of fresh items. Look for reliable suppliers who will not let you down. Quality is important over quantity. Finding consistent quality suppliers will help you stay ahead of the rest and be the best.

Grocery Business Analysis

Starting a grocery store business is a good idea. It doesn’t require a lot of capital and its’ profitability is good. The only thing you need to work on is how to manage it. Research a bit more and get actual training. This will help you succeed.

Profitability
84%
Capital needed to start
30%
Skills needed to operate
70%

Joseph Boit
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Joseph Boit

Joseph is a social entrepreneur with a curious mind and a love for farming. Big dreamer and a technology enthusiast.

1 Comment
  1. This is a well researched and Informative piece. Thanks

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