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How to successfully run a supermarket business

How to successfully run a supermarket business

Tuesday July 23, 2019 , 4 min Read

The trends in supermarket business are changing continually due to technological advancements, growth of online grocery (Amazon and Wholefoods), varying consumer choices and continuous changes in quality standards. In order to keep up with the fluctuating trends, supermarkets have to adapt in order to thrive and survive in the industry.



According to survey-based research conducted by Relex solutions, 82% of the respondents consider fresh products as critical to the supermarket business. As the importance of fresh products increases, spoilage of inventory turns out to be a critical challenge for the supermarkets. The availability of fresh products is closely inter-linked to optimizing their inventory levels. The following antics might be useful to enhance the business share, increase profitability and cutting down the expenses: 


1.   Have an in-depth knowledge of the customer needs and preferences:


The highly competitive supermarket sector of retail industry provides slow growth opportunities and the stores vie fiercely for the market share. In order to succeed in such an industry, tracking customer needs and relationship building is essential to enhance their satisfaction and improve the reputation of the business.


2.   Adopt the most suitable inventory management technique


Low inventory turnover and unhealthy current ratios are detrimental to the supermarket’s performance and financial health. Whereas, high inventory turnover might lead to insufficient inventory for sales. In order to strike a balance between spoilage cost and shelf placement of products, the supermarkets have to adopt a suitable inventory management technique. This results in improved sales and lower cost of inventory. Various inventory management techniques that might be suitable for the business would include ABC analysis, Just in Time method, Economic Order Quantity (EOQ) model, VED analysis, Minimum safety stocks and Fast, Slow and Non-moving (FSN) method.


3.   Opt for the best storage techniques


Supermarket businesses should incorporate storage techniques for optimal warehouse efficiency. Keeping inventory organized leads to reduction in bottlenecks and spoilage costs. The warehouse should implement the suitable stacking method depending upon the inventory types. The layout of the warehouse should be rearranged followed by routine clean-ups and stock counts.


4.   Day-level forecasting and forecast-driven automatic replenishment


Striking a balance between fulfillment of customer demands and minimizing out-of-stocks is crucial for the supermarket business. Forecast accuracy and automatic replenishment are the solutions for responding to the demand signals more quickly and accurately. Walmart (largest retailer in the world) had effectively collaborated with some of its largest suppliers so that the inventory balances were monitored and replenished on regular intervals. The stores should use the forecast-driven store replenishment based on min-max and re-order points.


5.   Promotions, coupons and discounts


Supermarket business can attract customers through promotions and discounts on its products. The policies on discounts should be adjusted so that the store does not lose its major share of profit. Moreover, the stores should also keep a check on the re-order levels when offering promotions to the customers. In order to avoid spoilage of products, the slow-moving items should be included in the promotional deals and discounts.


6.   Scheduling of workforce for supermarket business


Long lines in the supermarkets and unavailability of support staff for guidance leads to loss of customers and reputation of the business. During the key business hours, more employees should be scheduled for assistance in the aisles and at the cash counters. A reliable workforce increases the smooth operations of a business and enhances profitability.


7.   Advancements in technology


Nowadays, convenience has become one of the foremost priority for the customers in addition to the availability of fresh products. Technological advancement has paved the way for new shopping styles including online shopping. In order to meet with these advancements, supermarkets have to integrate information technologies and link them to the inventory system of the store.


In the highly competitive retail industry with slow growth prospects, successful retailers have to focus on the food safety, inventory management, reduction of spoilage costs, effective storage techniques as well as on sustainability of the business in order to capture a sufficient share of the supermarket sector. The business should also focus on adopting effective strategies and making smart business decisions for the benefit of their customers.