You’ve established a thriving neighborhood grocery store. Customers are happy, revenue is rolling in, and you’re ready to take the next step: opening a second location.
This can be a smart move — but only if you’re completely ready.
In this blog, we’ll help you decide whether it’s the right time to grow your business, walking you through six essential requirements for grocery chain success.
1. Make Sure Your First Store Is Consistently Profitable
If your current grocery store is barely breaking even or experiencing constant cash flow issues, opening a new location will only make these problems worse.
That’s why our number-one tip is to make sure your current grocery store is consistently profitable. You should have steady foot traffic, high inventory turnover, and healthy profit margins.
Ideally, demand should be so high that you’re struggling to keep the shelves stocked and checkout lines short. Customers of successful grocery stores often ask owners to open a second location.
Remember: Opening a second location won’t make your current grocery store profitable — but it can help you capitalize on the existing success of your first location.
Related Read: How To Write a Grocery Store Profit and Loss Statement
2. Understand What Works About Your Current Grocery Store
We’ve established that your current grocery store has steady profits — now it’s time to investigate the why behind your current success.
This step should be easy if you created a comprehensive business plan. This document outlines your:
- Product mix
- Pricing approach
- Target customer demographics
- Standard operating procedures
- Store layout
Instead of starting from scratch, rely on your original business plan to set up your new store. That way, customers will enjoy the same great product selection, organized floor plan, and excellent customer service at any of your locations.
Pro tip: Focus on replicating the success of your current store at first, then find ways to tailor your product selection and operations to the needs of your second location customers. For example, if you expand into an affluent, health-conscious neighborhood, you might sell more organic produce, high-protein snacks, and gluten-free options.
3. Choose the Right Location for Your Next Store
Finding another promising location is one of the biggest challenges grocers face when expanding their business.
If you choose a location that’s too far from your current store, you’ll have to manage the commute, build brand awareness, and attract a new customer base.
If you choose a location that’s too close to your current store, you run the risk of cannibalization — when your new store pulls customers away from your existing store rather than attracting new ones.
Luke Henry, our grocery industry expert, recommends a unique solution to this problem: purchasing an existing grocery store and converting it to your brand.
This is often more affordable than renovating a new retail space, since displays, refrigeration units, and other equipment often come with the purchase.
Plus, you’ll start with an existing customer base — all you have to do is win them over.
4. Build a Strong Relationship With Your Local Banker
A good relationship with your local small business banker is a must-have for opening a new grocery store.
Growing your business is expensive, but the right banker can make it manageable. They can help you understand what you can afford to borrow, structure financing in a way that protects your cash flow, and find the right funding sources.
Don’t wait until you need money to invest in this relationship! Well before you plan to open your next location, meet with your banker to discuss your long-term goals and make a plan to improve your credit, prove your profitability, and get financially ready for your next step.
5. Lean on Your Best Employees
You can’t be in two places at once — which is why you need a trustworthy leadership team at both of your locations.
Before opening your new store, build up your current team of floor managers and department leads. Make sure they have the tools and training they need to run the store without your direct supervision.
When it’s time for your new location’s grand opening, you can trust these leaders to keep your first location running smoothly and train new hires at your second location.
6. Invest in Technology That Can Keep Up With Multi-Store Operations
Tracking inventory levels, creating purchase orders, and monitoring sales trends are the biggest challenges for single-store grocers — and opening additional locations makes things even more complicated.
Fortunately, the right technology can help. You need a grocery store point of sale (POS) system designed for multi-store operations. Here are some specific features to look for:
- Cloud-based access: Access inventory records, sales reports, and other critical features from any internet-connected device. This lets you manage your stores from anywhere, at any time.
- Integrated purchase orders and simplified receiving: Save time and stay organized by creating purchase orders directly in your POS software. When new inventory arrives at your store, employees can simply scan the barcodes to add it to your records and ensure order accuracy.
- Multilocation loyalty rewards: Reward loyal customers with your POS system’s built-in rewards program. Make sure they can earn points and redeem discounts at any of your locations.
- Advanced sales reporting: Monitor the financial health of individual stores and your overall business with in-depth reporting and analytics.
- Multilocation pricing: Charge different amounts for the same products depending on your store’s location. For example, you can charge strategic markups in higher-income areas.
A grocery-specific POS system with these features makes running your business stress-free — whether you own one or 10 stores.
Related Read: What Is the Best Multi-Store POS System? 5 Top Options for Supermarkets
Make Your Next Move With IT Retail: The Best POS for Independent Grocers
Ready to take the leap and open your next grocery store location? We’re here to help.
Whether you’re brand new to owning a grocery store or an industry veteran looking to expand your chain, IT Retail has all the features you need to succeed. Plus, our team of grocery store experts is available during the onboarding process and beyond to help you tackle challenges and make the most of your new software.
Learn more about IT Retail by scheduling your personalized demo today!
by Margaret Thacker
by Luke Henry
