India is often referred to as the land of spices — and for good reason. Its cuisine relies heavily on saffron, cardamom, red chili, black cumin and other spices that are prized worldwide for their unique flavors. Opening an Indian grocery store can be a profitable and flavorful venture.
The Rise of Ethnic Foods
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Ethnic foods are rising in popularity, especially among millennials. Currently, there are more than 44,732 ethic supermarkets in the United States, with an annual revenue of over $40 billion and about 190,000 employees. These stores have had a 2% revenue increase in 2019.
Decades ago, authentic Indian foods were hardly available in the U.S. Today, each state is home to dozens or even hundreds of Indian grocery stores. On top of that, most supermarkets sell Indian spices and specialty products. Frozen Indian meals and entrees generated about $13.1 million in the U.S. in 2018.
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Generation Z and millennials are breaking away from the norm, choosing specialty foods and beverages. They’re not afraid to try authentic multicultural flavors, especially meatless meals and ethnic foods. Compared to the previous generations, they emphasize food quality and are willing to spend more on healthy snacks and dishes. Their food choices are driven by the plant-based movement, animal welfare and environmental concerns, and Indian meals use lots of vegetables, herbs and spices and rarely contain meat, so they align with this trend.
Launching an Indian Grocery Store
Indian grocery stores are perceived as exotic and hold a special appeal for chefs and foodies alike. Patel Brothers, one of the most popular stores in this category, has every Indian food you can imagine, from freshly fried chana masala to cumin, dals, spice blends and chapatti. This family business has been around since 1974 and now has 52 nationwide locations and several warehouses in Illinois, Texas, Georgia and other states.
If you’re passionate about ethnic cuisine, consider opening an Indian grocery store. This market isn’t as competitive as others (yet), so you have a pretty good chance to make a name for yourself. Patel Brothers’ small store became a multi-million-dollar business. You too can build a popular brand and turn your passion for Indian food into a full-time job.
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Like with any other business, it’s important to conduct market research and define your target audience. Also, you need to consider the costs involved and seek financing. Legal requirements vary among states, so it’s necessary to consult an attorney or reach out to your local chamber of commerce before getting started. Furthermore, you must come up with a business plan that covers every aspect of starting and running an Indian grocery store, from business registration and licensing to advertising.
Conduct Market Research
Start by researching the market, your audience and potential competitors. The key to success in this business is to get the right products in front of the right potential customers. When consumers are searching for Indian ingredients or spices that cannot be found in supermarkets, they typically go to specialty stores. Therefore, your target audience may include foodies, chefs, Indian expats, tourists and more.
Indian dishes are largely based on vegan and vegetarian food ingredients, and some also contain poultry or fish. Spices and herbs are heavily used in most meals. This means that you may also target vegans and healthy eaters in general. Familiarize yourself with the most popular Indian recipes and the ingredients used.
See what other Indian grocery stores are in your area and how they perform. Orlando, for example, is home to several Indian grocery stores, while Longwood has just a few. Study your competitors, visit their stores and try to come up with something different. Conduct a SWOT analysis to identify your company’s strengths and weaknesses and evaluate potential threats and opportunities before getting started.
Make a List of Suppliers
Next, determine where you’ll get your products. Most foods in ethnic grocery stores are imported directly from the country of origin. Depending on your needs and budget, you can either order foods and other goods from India or reach out to wholesalers who import Indian products.
Khana Pakana, for example, has its distribution center in Floral Park, New York and serves American and Canadian customers. The company sells wholesale Indian foods, spices and beverages, from freshly packed cinnamon sticks and masala powders to plum chutney and organic tamarind paste. Another option is to search for vendors on Alibaba. However, you’ll have access to a wider range of products if you order from India or go there and hand pick the best foods and spices.
Try to differentiate yourself from the competition by offering hard-to-find foods and spices. Maintain a diverse inventory to meet customer demand. An Indian grocery store should offer various products, from basic ingredients to rare spices and exotic foods. Some examples include:
- Different types of lentils, such as massor dal, urad and toor
- Cumin seeds and cumin seed oil
- Dried fenugreek leaves (kasuri methi)
- Tandoor masala
- Garam masala
- Paneer (a traditional cheese)
- Black mustard leaves
- Gram flour
- Baked chickpea flour (sattu)
- Assorted spices
- Sona Masoori rice
- Assam tea
Develop a Business Plan
Once you’ve made a list of suppliers, assess the costs involved. Consider the cost of rent, utilities, employee benefits and salaries, business licenses, permits and more. With these figures in mind, create a business plan that outlines your strategy and goals. Cover the financial, legal and organizational aspects of running an Indian grocery store, including:
- Executive summary
- Company description
- Short- and long-term goals
- Products and services
- Industry analysis
- Competitive analysis
- Legal business structure
- Organization and management
- Strategy and implementation
- Financing needs and financial projections
- Marketing plan
A well-thought-out business plan can increase your chances of growing beyond the startup phase by nearly 130%. This document can make it easier to attract investors and get a loan. It also defines your business objectives and the steps needed to accomplish them.
Your business plan should also outline the legal aspects of opening an Indian grocery store. You will need to choose a relevant name for your business, decide on the type of legal entity and register your company with the state. Additionally, it’s legally required to apply for a tax ID number, purchase insurance and open a bank account. Depending on where your store is located, you may need certain business licenses and permits.
Fine Tune Your Marketing Strategy
Once your grocery store is up and running, you need to fine tune your marketing strategy to increase sales and attract customers. Research other brands for inspiration. For example, one way to promote an Indian grocery store is to host cooking classes and educational classes. Consider inviting a popular chef for live cooking demonstrations.
Another strategy you may use is to set up food stations in your store. Invite customers to sample authentic Indian foods and snacks, freshly cooked meals and beverages. Also, use point-of-purchase displays to entice clients to buy more before leaving your store. You may also create a loyalty program or offer store cards to new and existing customers so they can earn reward points.
Having a strong online presence is a must. Create a website and display your products, tell your story and let prospective clients know what makes your brand unique. Consider offering home delivery services in your area. Reward your social media fans and email subscribers with special discounts, loyalty points or free samples.