SWOT Analysis of Grocery Store

Swot analysis of grocery store. A grocery store is a retail store that sells a general range of products and services, and they could be fresh, with, or without packaging. Supermarkets and grocery stores are synonymous with each other in the US. In the UK, the grocery store is a shop that sells groceries, and its other names are convenience shop, corner shop, or grocery shop.

The average profit margin on grocery products is approximately 2.2%, and it may seem low for a sale of a product. But the shop sells a lot of consumer products/services, and it earns reasonable profit and revenue at the end of the day or year.

According to an estimate, the annual revenue of 45000 square feet size store is 14 million dollars, and it means 500 dollars per square foot. The industry-wide annual earning of grocery stores is 400 billion dollars. In the sub-continental countries, the size of the grocery is very small and far from the supermarkets, they’re like mom-and-pop shops.

Today, we’ll discuss the swot analysis of grocery stores. It would analyze the internal strengths/weaknesses, and external opportunities/threats that to the store. Here’s the swot analysis of grocery stores as follows;

Strengths of Grocery Store 

Some of the main internal strengths of the grocery stores are as follows;

High ROI

If the stores invest more resources in their size and acquire more products and services, then the return on investment would increase. It’s because customers want variety in the consumer products, if a store has it, and then they would buy it from there.

Innovation & Technology

If a store makes effective use of the technology and offers a unique customer experience, it would amplify the impact and sale of the store. For instance, it could be easy to find products, a convenient way to check out, or a good store environment.

Successful Business Model

The business model of the grocery store business is successfully proven for the past more than 50 years. It requires efficient investment in the purchase of the supplies, effectively running various functions and operations, and earning profits on the sale.

Distribution Network

The supply chain and distribution network of grocery supplies are very large and they operate across the world. You can easily find a supplier in your area that would deliver your routine supplies for sale.

Brand Equity

Some of the grocery stores are a part of the bigger retail chain network of famous brands. If you want to be a part of such big brands, then you don’t have to work on marketing and promotion. The loyal brand customers would come to your store because of the brand name.

Customer Service

If your store remains open for 24 hours a day and 7 days a week. Your staff is amiable and assists customers, and then it is such customer service that has a great impact. The customers would value your input.

Price Range

Customers are usually cautious about the prices of daily supplies. If you offer reasonable prices competitive to the market, then the customers won’t react to it.

Quick Delivery

The trend of online and expecting fast delivery has increased significantly in the past few years. If your store offers fast delivery service in the local area, then it would multiply the growth and sale of your business.

Marketing & Promotion

The grocery store is such a business that doesn’t require a lot of effort on market and promotion because it comprises daily necessary consumer supplies. The customers would buy the product wherever they find it easily and conveniently. If you do some marketing, then it would increase the growth.

Weaknesses of Grocery Store 

Some of the main internal weaknesses are as follows;

Needing Technology

It is no doubt using the latest technology improves the customer experience, makes the store efficient and offers you a competitive edge in the market. The cost of implementing the latest technology is very high, and it’s unaffordable for many stores.

Operational Issues

The chain stores of the famous brands are there in almost every city across the world. They’ve got a strong database of loyal customers due to their investment in marketing and promotion. Customers can’t think of visiting other local stores in their presence.

Net Income

The store has to sell a lot of products and services in order to make the business profitable. In other words, the business owner is always under a lot of pressure to increase sales. Holidays, strikes, occasional off days, and weekends greatly impact the sale.

Opportunities available to Grocery Store 

Customer Trends

Studying the market trends is a great way to be aware of the customers’ needs and wants. It allows you to maintain the same inventory whatever customers are looking for. When you have it, then they buy it from you.

New Preferences

Speaking of customer market trends, the preferences of customers have changed towards a healthy diet, low sugar, low calories, and less salty products. If you offer such dietary products in your store, then you can attract a lot of young health-conscious customers.

Populated Asian Countries

The populated Asian countries like China, Pakistan, India, Bangladesh, and others have got a great growth potential for the grocery business. If you launch your retail chain brand in those countries, then the growth rate would be exponential.

Demography

Middle-class families are the main target market of grocery stores. Studies have shown that the middle class is increasing across the world. It means the growth of the grocery shop business, and that’s why the starting rate of the grocery business is increasing worldwide.

Environmental Policies

The new environmental policies and eco-friendly trends are a great sign for the grocery shops business because customers are saying no to the industrialized products. If the shops are offering organic products, then it would be highly beneficial to their sale.

Threats Grocery Store has to face 

Limited Contract with Suppliers

It’s no doubt that you can easily find suppliers and distributors in the grocery business, but the chances of establishing a long-term contract with them are very low. If your store doesn’t have a regular supplier, then it would impact the quality of products/services, and ultimately sales.

Increasing Cost

The cost of daily food items and other supplies is increased for the past few years. Resultantly, it has increased the retail price of the products. Since grocery customers are price-sensitive, they don’t take the increase in price lightly. In fact, they start looking for a substitute retailer or store.

Regulations

Running the grocery shop isn’t easy, you have to comply with the regulation of many various government departments like health and safety, labor, sanitation, and others. Putting your business up to standards and regulations is very costly.

Competitors

The grocery shop business has become very competitive in recent years. The store has to compete with the other established shops in the market and chain brand stores. It’s difficult to gain a competitive edge because the consumer products and suppliers are the same.

Conclusion: Grocery Store SWOT Analysis Example Company

After an in-depth study of swot analysis of grocery store; we’ve realized that grocery shop is a world’s leading business that you can find it everywhere. While analysis grocery shop swot analysis example company; the shop owner should focus on the abovementioned strengths to capitalize on opportunities and avoid weaknesses and external threats.