Walk into any Indian city today, and you’ll see Reliance Smart, More Retail, or D-Mart packed with shoppers. At the same time, neighborhood kirana stores continue to thrive. This raises the obvious question for entrepreneurs: is opening a retail or supermarket business still worth it?
The short answer: yes—but only if you understand the margins, the competition, and the changing habits of Indian consumers.
Why Supermarkets Look Attractive
The allure of the supermarket model is scale. A single outlet can serve thousands of customers daily, with a product range that spans groceries, personal care, home essentials, and even electronics. Footfall drives volume, and in retail, volume is where the profits lie. Chains like D-Mart have built billion-dollar businesses on this formula, combining bulk procurement, efficient supply chains, and competitive pricing.
For smaller entrepreneurs, supermarkets promise:
- Higher ticket sizes compared to kirana stores.
- Brand credibility and trust.
- Opportunities for expansion through franchising or multiple outlets.
The Margin Game
Margins in the supermarket business are notoriously thin. Essentials like rice or wheat offer 5–8% margins, FMCG items around 10–15%, and premium or non-essential products up to 25–30%. The real money is made not from individual products but from sheer sales volume.
To make it worth the effort, supermarkets rely on:
- Efficient supply chains to cut procurement costs.
- Private labels (D-Mart and Reliance both push their in-house brands for better margins).
- Add-ons like electronics, fashion, or household goods with higher markups.
The Challenges You Can’t Ignore
- High setup cost: Renting a large space in a prime location, interiors, shelving, refrigeration, and staff can easily run into crores.
- Competition from kiranas: While supermarkets attract bulk shoppers, local kirana stores still dominate daily essentials with credit and home delivery.
- E-commerce and quick commerce: Apps like BigBasket, Blinkit, and Zepto are training customers to shop from their phones rather than visit a store.
- Thin margins: Even with volume, profits can feel underwhelming if costs aren’t tightly controlled.
Town Advantage: The Midway Path
Interestingly, small-town supermarkets are emerging as a profitable sweet spot. They face less competition from e-commerce, enjoy lower rentals, and cater to aspirational customers who prefer modern retail formats. A 5,000 sq. ft. supermarket in a tier-2 city often breaks even faster than a metro outlet because costs are lower and loyalty is stronger.
Is It Worth It?
If you’re chasing quick profits, supermarkets may disappoint. But if you’re thinking long-term, willing to invest in efficient sourcing, smart technology, and customer loyalty programs, retail can still be a solid bet.
For proof, look no further than D-Mart’s phenomenal rise—its no-frills, volume-first strategy has turned it into India’s most valuable retail chain. On the other hand, poorly managed ventures like Future Group’s Big Bazaar serve as cautionary tales of high debt and poor execution.
The Bottom Line
Opening a retail or supermarket business is worth it if you approach it with scale and efficiency in mind. It’s not just about stocking shelves; it’s about building supply chains, leveraging data, and adapting to customer needs in an increasingly digital world.
In metros, hybrid models that blend offline supermarkets with online delivery options seem to be the future. In towns, supermarkets thrive on community trust and aspirational shopping. Either way, success lies in understanding that retail is no longer just a store—it’s an ecosystem.
