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Tata Capital > Blog > Loan for Business > How To Start A Grocery Store Business In India

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How To Start A Grocery Store Business In India

How To Start A Grocery Store Business In India

Business is driven by profits or by the desire of providing something valuable to society.  

The grocery store business in India is quite profitable and allows one to do greater good for society. By setting up an online grocery business, one could give customers the luxury of ordering groceries at just a click of a button and save them the pain of driving to the market now and then. 

Moreover, starting a grocery delivery business does not break the bank. One can do it with a small capital investment.

Grocery Stores in India: Revival of the retail industry

India’s retail industry is growing at an unprecedented rate, and it is estimated to grow to $2 trillion by 2030. The retail industry has many players in it and is fast becoming saturated. 

It could be hard for a new entrant to establish a strong base in such a competitive space. However, tough competition doesn't have to mean that starting a grocery delivery business is impossible.

Establishing a lucrative grocery shop business is easily achievable with a strategic and well-thought-out approach. One could differentiate the offerings from the rest of the competition by sourcing local produce and organic products. 

Another differentiator could be targeting a particular demographic subset and catering to its specific preferences. The overall buying experience could be crafted to sync with a particular ethnic group.

With some research and proper niche selection, one could run a successful grocery shopping business.  

The rise of grocery stores in India

Grocery stores are relatively new in India. In olden times, farmers used to sell their produce, spices and other staples in a designated place on a particular day of the week. The farmers from the neighbouring counties used to travel to markets known as mandi, to sell consumables of sorts. 

However, the rapid urbanization and growth of the middle class led to lifestyle changes and thus, new forms of trade emerged owing to the convenience and ease of access sought by the middle class. 

This development led to the rise of Grocery stores in urban localities wherein people could buy staples, fruits and vegetables etc from stores which were more accessible to them.

How to start a grocery store business

Choosing the right location

Choosing a good location for your grocery business is half the battle won. The ideal location shouldn't be amid the hurly-burly of the city and it shouldn’t be far off either. The store should have decent storage space and floor space that could accommodate many customers at once. 

The location should have decent parking space and it would be best if it is close to commercial spaces or offices (a palace where people commute daily).

Finding the right spot can be tricky and a lengthy process. So it is best advised to start looking for it early, right from the ideation stage.

Compliances and other formalities

Before starting any business, one needs to seek prior permissions and licenses. The certifications and other compliance formalities depend largely on which state the business is in, however, retail business permits and the license to sell food product is the bare minimum for running a provision store business. 

Other permissions include a safety protocol certificate from the municipality and challan - a kind of rental fund paid to the local municipality. 

To start a grocery shop business in India, the following documents are required:

  • Obtaining a business licence for your retail establishment
  • Putting your company on the books under the Shops and Establishment Act of 1953
  • Obtaining a licence from the FSSAI
  • Registrations of taxes, such as obtaining a TAN or a GST number, etc.

Rent, Buy or Lease the space

Acquiring a space on rent, buying it or acquiring it on lease depends to a whole lot extent on the risk posture of the business owner and the size of the capital. 

Buying a piece of land up front, even before the business has proved to be viable could lead most business owners in tricky situations as financial constraints would emerge when marketing the store and in day-to-day operations. 

Acquiring a space on lease is relatively cheaper than buying the land and it would also fight off the demons of monthly rental expenditure which more often than not gets under the skin of the grocery store business owners.

Renting is the cheapest option upfront but it could sabotage the whole business if the business owner fails to enter into the contract with the land owner in the following year of the business’s inception.


To crack the best deals and source the products on time, one should build a good rapport with wholesalers and manufacturers of the products. Credit leverage is also critical to the success of one’s business, the greater the credit cycle, the more resilient is the business to cashflow disruptions.

Managing Inventory and Pricing

Managing inventory is the key in the grocery business as the store needs to have ample refrigeration to stock fruits and vegetables so that they don’t perish before exchanging hands.

Competitive pricing would depend a lot on how far are the consumables bought and the bargaining prowess of the owner. Moreover, cutting operating costs and other miscellaneous expenses leaves a wide room for selling products at competitive prices. 


Marketing one’s store through various mediums is no longer a luxury. It has become a necessity for business to reach out to their target customers via a message which conveys the business’ USP to prospects and incentivize them to purchase from the store.

Moreover, how one cements the business inside the subconscious mind of the customers, paves the road to success for the business in the long run.


Grocery shops may play a key part in this growth since they are at the community's center, enabling people to buy more healthy and fresh meals, and encourage the usage of fresh and nutritious foods by teaching their customers about the benefits.

If you wish to start up a grocery business of your own and are running short on funds, consider taking a business loan from Tata Capital.

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