Complete supermarket feasibility study 2023
The supermarket project is one of the best profitable projects as it relies on selling consumer goods that are indispensable to people, which are not greatly affected by high prices or market competition because the goods are sold at the same price and are available in every supermarket, so it is natural to sell to those who are next to you And he also sells to those next to him. However, this does not mean that the feasibility study of a supermarket is not important because it is a profitable project and the probability of losing it is low.
Supermarket feasibility study
1. Project description
The supermarket is a commercial business in the retail sector that aims to display and sell canned foods, grains, oils, drinks, and household items such as soap, washing powders, sanitary paper, and the like. Fresh vegetables and fruits, meat, dairy, bread and sweets, canned food. Plastic tools… and other consumer tools.
The legal form of the project: a supermarket
Required licenses: Municipal license, Ministry of Municipality + Chamber membership, Chamber of Commerce
2. Choose a name for the supermarket
The project name is considered one of the influencing factors, so the project name must be chosen carefully. (A distinctive business name: 7 things to consider in order to get a name that attracts attention)
3. Choose a suitable site
To choose the most suitable project site, you must consider:
* Website clarity and accessibility
* Starting in high traffic areas
* Avoid starting where competitors are.
Location strategy: Unlike small groceries that do not require when choosing a location other than their presence in a residential area, and the absence of competitors in the immediate vicinity, choosing the location of the supermarket is more complex and requires balancing two contradictory aspects:
First: It should be in a spacious place that can provide the necessary space for parking the cars you are going to.
Second: It should be easily accessible to shoppers to ensure returns that exceed operating costs. Therefore, it seems that the vicinity of vital roads within cities or at their outskirts is the location that most supermarket companies choose to establish their branches. In addition to the site’s ability to attract shoppers, it also plays an important role in the internal planning of the supermarket itself, down to the type of goods it displays.
The income level of the area’s residents, population density, and the direction of growth of the area are also taken into consideration when choosing the location of the supermarket.
3. Market analysis
Competition: Although the competition is great within the retail sector, the size of the actual competition within this type of project depends on the actual location of the supermarket in terms of the number of competitors and their proximity to the project.
Demand volume: With an analytical look at the reality of the consumer goods retail market in the project area, we find that it can absorb more of those wishing to enter the market. This is evident from the following justifications:
* Existence of investment opportunities in the proposed project area, as it is an area with high purchasing power and a large consumption pattern.
* High population growth rate and, consequently, high demand for food commodities and consumer goods in the foreseeable future.
Customer segment: The project targets a large segment of the community within the project work area, which may be individuals and families of citizens and expatriates within the project area.
4. Determine the capital and cost of the supermarket
The capital of the supermarket is the main factor for its success, and it is what depends on it in preparing the project, and the greater the capital of the project, the more it is expected to increase its success factors.
Establishment cost: It includes the administrative establishment fees such as the municipality license, and the commercial registration fees.
Fixed cost: which is paid only once at the beginning of the project, such as: the cost of shop equipment from the income and the outside, and the purchase of equipment and paint, lighting, shelves for products, the purchase of air conditioning for the place, the purchase of various goods and products at the beginning of the project .
Variable cost: These are the expenses that are deducted monthly, and they vary according to the location and size of the supermarket (labor salaries, space rent, utility bills for water, electricity, gas…and also advertising costs in magazines and on social media…)
Taxes: Tax costs for small and medium enterprises are usually simple, but in the case of a large supermarket and in a special place, estimated taxes will be calculated based on the sales estimate from the Tax Administration.
5. Estimating the volume of revenues, costs and profits
To get a general idea about expected revenues, operational costs, and the percentage of supermarket profits. You can use this form (feasibility study for a supermarket pdf: download link)
The cost of opening a supermarket in the Arab countries
Saudi Arabia
The high standard of living and the demand of consumers contribute to the success of the supermarket establishment in Saudi Arabia.
The suitable area for the project is about 300 square meters, so that this area is characterized by the diversity and inclusion of goods, so that the customer can acquire all his needs, in addition to the possibility of providing marketing offers for the goods. This is in addition to renting a warehouse of 100 square meters. The cost of the project ranges between 133-160 thousand dollars, and it covers the rental cost of 6,000 thousand dollars per month, in addition to the costs of supplies and equipment, as well as the cost of supplying goods for a year,” according to what Radi confirms. He points out that labor wages do not constitute an influencing aspect of the expenses, as it requires the presence of 6 workers, with a salary of around 1,500 riyals per worker.
Jordan
Jordan has become the focus of attention for food industry companies, due to the increase in the volume of consumption as a result of the increase in the number of residents in the country.
The cost of establishing a supermarket in Amman is lower than in other neighboring Gulf countries, as it is about $90,000, as a result of two factors. The first is the decrease in the monthly rent cost to $2,000, including the shop and store. The second factor is the limited cost of wages, as they start at $300.
Lebanon
Stores established in Lebanon meet only 60-65% of consumers’ needs, indicating that the market is still ready to accommodate more, and has even become a destination for major Arab and foreign hypermarkets.
The cost in Lebanon is similar to the Gulf countries, as it ranges between 130-140 thousand dollars, but more important than the costs is choosing the location of the supermarket, as it is necessary to search well in the middle places or neighborhoods that include shops with suitable rents starting from 250-300 dollars per square meter. annually. In addition, attention must be paid to the factor of constant fluctuation in the prices of goods in Lebanon, as many stores lose the ability to offer continuous promotions, and here lies the importance of the abundance of financial liquidity to purchase and store quantities of goods.
Egypt
North African markets, including Egypt, are characterized by a lower cost of establishing a supermarket project than most Middle Eastern markets, as the cost of establishing a supermarket in Cairo is estimated at about $65,000. The secret of the low costs is that the average rent for the store and store is only one thousand dollars, in addition to that the wages of workers will not exceed 192 dollars per worker.
However, the location of the project must be carefully selected, given that the competition is very high in Cairo, as there is almost no street without a supermarket due to the high population density, especially in Greater Cairo, which has more than 20 million people.
Tunisia
Supermarket projects in Tunisia are enjoying increasing growth until they have become a destination for many major brands. The cost of opening a project in Tunisia does not exceed $70,000, but more important than the cost is the ability to offer attractive promotions.
Algeria
The costs of establishing a supermarket in Algeria are very similar to those in Egypt and Tunisia, as they range between 65 and 70 thousand dollars, due to the low cost of renting the store and warehouse, which amounts to two thousand dollars per month, in addition to a similar amount of labor.
Algeria is distinguished from Tunisia by the high volume of consumption of food commodities, as it is a huge market that includes more than 30 million people, in addition to the relatively good level of income compared to Egypt. Supermarket projects in Algeria are not much different from the region’s markets in terms of the importance of promotions in attracting customers.