Do you run a small grocery store or business that sells produce and other perishables? Then you can always make improvements to increase profitability. After all, the typical profit margin for grocery stores is only about 2.2%, so you need to make money where you can.
Some of the best ways to make more with your small business include the tips below:
Don’t Undercharge
It’s common for new small businesses in the perishable and produce space to undercharge. We understand that you want to grow your client base by offering low prices.
But you best serve your customers by making a solid profit, so you’re in business for a long time. Look around at what other grocers are charging and make sure you’re competitive. However, your prices shouldn’t be far below their prices.
On a related note, you shouldn’t rely on weekly discounts to get more customers in the door. Yes, discounts can help bring in more people or eliminate inventory temporarily. However, relying too much on discounts can make you look like the local discount grocer or produce shop, and you may not want that image.
Keep Equipment In Good Repair
Every business needs to invest in its equipment to keep the business operating. For example, if you sell fresh foods, you need to ensure all the parts for your walk-in refrigerator are working. And the unit needs to be running efficiently, so you don’t have a huge electric bill every month.
If the refrigerator goes out due to a lack of maintenance, you lose thousands of dollars of inventory. Then, you’ll have to close your doors temporarily.
Invest in a regular maintenance schedule for your essential equipment, and you will make more money.
Reduce Spoilage
You probably know that some of the most profitable goods in your store are produce, meat, cheese, and other perishables. However, remember that your fresh fruits and vegetables have a short shelf life.
One survey shows that up to 40% of the food supply in the US is wasted at retail and consumer levels.
It can help if your company uses a produce inventory management tool to manage food inventory.
Don’t Keep Too Much Inventory
It’s wasteful to keep too much inventory because it must be kept fresh. It’s often best to have only two or three days’ worth of merchandise on hand, so you offer the freshest foods possible.
Be Strategic In Displaying Products
Smart grocers display their wares in ways that encourage consumers to buy more stuff. So put your lower-cost products with more expensive ones so people will buy both.
For example, if you sell avocados, you also should have guacamole mix available nearby. If you sell tomato sauce and pasta, you can make a lot more money by having a red wine display right there.
Product endcaps are a fantastic way to sell two items simultaneously, so take advantage of them.
Help Consumers Spend More Money
Many customers may enter the store only needing to buy a few fresh vegetables. But you make more money if they buy more. So, provide a bigger shopping cart so they will fill it.
Also, put small shopping baskets around the store, so they have a place to put goods and purchase more. Research shows that when someone is holding a basket, they are more likely to fill it with items.
You need to compete with other grocers and businesses in your area. So it helps you to stay in business if you follow the money-saving tips highlighted here.
