How to Start a Grocery Store in Australia (2025)
Opening a grocery store in Australia can be a profitable and fulfilling venture, especially when you focus on quality, customer service, and market demand. However, starting a grocery store requires careful planning and execution. From market research to marketing strategies, this detailed guide will walk you through every step of the process to ensure your store thrives.
How Much Can a Grocery Store Make?
Grocery stores in Australia typically generate annual revenue between AUD 1 million to AUD 5 million, depending on their size and location. Smaller, independent stores tend to have lower revenue, while larger supermarkets or chains like Woolworths, Coles, and ALDI can exceed AUD 10 million in sales. However, due to high operational costs and fierce competition, profit margins in the industry are generally low, ranging from 1% to 5%. This means a store with AUD 1 million in revenue can expect an annual profit between AUD 10,000 and AUD 50,000, while a store with AUD 5 million might see profits between AUD 50,000 and AUD 250,000.
According to Statista, AUD 139 billion is the annual turnover with 9,640 supermarkets and grocery stores operating in Australia. This makes the average annual revenue per store to approximately AUD 14 million. However, most of the revenue will be concentrated in the hands of larger supermarkets. For small to medium-sized stores, the average annual revenue will be between AUD 1 million to AUD 5 million.
Factors such as location, operational efficiency, and staffing play a crucial role in determining profitability. While grocery stores face high competition and slim margins, smaller stores that focus on low overheads and effective management may achieve better profit margins. Despite the challenges, a well-run grocery store in Australia can still generate a modest profit, typically ranging from AUD 10,000 to AUD 250,000 annually, depending on its size and operational efficiency.
Checklist for Starting a Grocery Store
- Conduct market research
- Develop a business plan
- Secure funding (bank loan, personal savings, etc.)
- Choose a location with high visibility and customer accessibility
- Register your business with ASIC and apply for an ABN
- Obtain all necessary licenses and permits
- Design your store layout
- Source suppliers for inventory
- Hire and train staff
- Set up an inventory management system
- Create a marketing plan (online presence, local advertising)
- Launch your grocery store
Step-by-Step Guide to Starting a Grocery Store in Australia
Step 1: Conduct Market Research
Why it’s important:
Market research is vital to understand your target customers, competitors, and market trends. It helps you make informed decisions about your store’s offerings and pricing.
Detailed actions:
- Identify your target audience: Are you targeting local families, busy professionals, or students? The type of customer will influence your product selection.
- Study local competitors: Research local grocery stores and supermarkets to evaluate their strengths and uncover gaps. Use this insight to define your unique selling proposition (USP).
- Understand demand: Analyze local needs such as organic produce, specialty foods, or ethnic products. Are there specific types of products that are underserved in your area?
Tools you can use:
- Surveys and focus groups
- Online market reports
- Industry publications
- Competitor analysis tools
Step 2: Create a Detailed Business Plan
Why it’s important:
A well-crafted business plan is the roadmap for your grocery store. It serves as a roadmap to guide your decisions, attract investors, and keep your business on track during its launch and growth stages.
Detailed actions:
- Executive Summary: Summarise the vision for your store, your goals, and your target market.
- Business Overview: Provide a detailed description of your store, location, and the products you plan to offer.
- Market Analysis: Include research from Step 1, outlining local demographics, customer behaviours, and competitors.
- Financial Projections: Estimate startup costs (e.g., $100,000 for equipment, renovations, inventory) and ongoing expenses (e.g., rent, utilities, salaries). Also, project your revenue based on market size and sales expectations.
- Operational Plan: Outline your supply chain, including suppliers, delivery systems, and inventory management.
- Marketing Plan: Describe how you’ll promote the store (advertising, online presence, loyalty programs).
Financial Planning Tips:
- Estimate both short-term and long-term revenue.
- Factor in seasonal fluctuations (e.g., higher demand during holidays or summer).
- Set clear milestones to track progress.
Step 3: Secure Funding
Why it’s important:
Most grocery stores require significant capital to get started. Whether it’s covering initial inventory or paying for renovations, securing funding ensures you have the financial resources to launch your store.
Detailed actions:
- Determine startup costs: List all expenses, including store lease, inventory, equipment (e.g., fridges, shelves), employee wages, and marketing.
- Explore funding options:
- Personal savings: Use your savings if you have the capital.
- Bank loans or lines of credit: Approach local banks or financial institutions for a small business loan.
- Investors or partners: Find investors willing to provide equity in exchange for a share of your store’s profits.
- Grants: Some local governments and organisations offer grants to support small businesses.
Funding Tips:
- Create a detailed financial projection to present to banks or investors.
- Keep your personal and business finances separate to ensure a clear financial picture.
Step 4: Choose a Prime Location
Why it’s important:
The location of your store has a direct impact on foot traffic, visibility, and accessibility. It’s essential to pick a site that is easy to access and strategically placed within a high-demand area.
Detailed actions:
- Analyse foot traffic: Choose a location that attracts large numbers of people, such as near residential areas, schools, or office buildings.
- Consider parking and accessibility: Ensure that your store is easily accessible by car, public transport, or walking.
- Evaluate the competition: Avoid oversaturated areas unless you can offer a unique product selection or exceptional customer service.
- Zoning and permits: Verify the zoning laws and ensure the area is designated for retail use, particularly for food retail.
Location Considerations:
- Proximity to suppliers (to reduce transportation costs).
- Size and layout of the store to accommodate your inventory and customer flow.
- Consider foot traffic and parking options.
Step 5: Register Your Business
Why it’s important:
You must legally establish your grocery store to operate in Australia. This includes registering your business name, getting the necessary licenses, and complying with tax regulations.
Detailed actions:
- Register your business name: Choose and register your business name through the Australian Securities and Investments Commission (ASIC).
- Apply for an ABN (Australian Business Number): You’ll need an ABN for tax purposes.
- Register for GST (Goods and Services Tax): If your store’s annual revenue exceeds $75,000, you must register for GST with the Australian Taxation Office (ATO).
- Obtain necessary licenses and permits: Depending on the type of products you sell (e.g., food or alcohol), you may need special permits or licenses.
- Food handling permits: Comply with local health and safety regulations.
- Liquor licenses (if applicable): Required if you sell alcohol.
- Other licenses: Check with local councils or industry bodies for additional permits.
Tip: Consult a business lawyer or accountant to ensure full legal compliance.
Step 6: Design Your Store Layout
Why it’s important:
An efficient and well-designed visual merchandising enhances the shopping experience, keeps customers coming back, and makes operations more streamlined.
Detailed actions:
- Plan product categories: Group products logically—produce, dairy, meats, dry goods, and non-food items should be easy to find.
- Optimise flow: Design the layout so customers can easily navigate and are encouraged to explore more areas of the store.
- Checkout design: Ensure the checkout area is quick and accessible. Self-checkout options can speed up transactions.
- Storage and stockroom: Allocate space for inventory management and restocking.
Store Design Tips:
- Place high-demand and impulse-buy items at the front to attract attention.
- Ensure aisles are wide enough to accommodate carts and people with ease.
Step 7: Source Suppliers
Why it’s important:
Your product range depends on reliable suppliers. Find and establish strong relationships with suppliers ensures you get fresh stock, quality goods, and favourable pricing.
Detailed actions:
- Inquire About Necessary Terms: Inquire about necessary terms such as bulk purchase prices, discounts for long-term contracts, delivery schedules, and return policies before finalising a supplier contract.
- Build supplier relationships: Contact suppliers who provide both perishable and non-perishable items. Develop strong contracts that outline pricing, delivery schedules, and return policies.
- Negotiate terms: Get the best prices and payment terms (e.g., bulk discounts or extended payment periods).
- Set up regular deliveries: Organize a steady delivery schedule, especially for fresh produce, dairy, and meats.
- Establish a local supply network: Consider partnering with local farmers or producers for fresh and unique offerings that might set your store apart.
Supplier Tips:
- Diversify suppliers to avoid relying too heavily on one source.
- Have contingency plans in case of supply chain issues.
Bonus Resources:
how to ask for a discount professionally
Step 8: Hire and Train Your Team
Why it’s important:
Hiring the right employees and providing them with proper training is crucial for delivering exceptional customer service, maintaining store operations, and ensuring compliance with safety regulations.
Detailed actions:
- Hire key positions: You’ll need store managers, cashiers, inventory clerks, stockers, and cleaning staff. Consider hiring experienced individuals who are customer service-oriented.
- Offer training: Ensure that staff understand customer service, product knowledge, food safety, and store policies.
- Develop a strong team culture: Foster teamwork and communicate store goals clearly to staff.
Training Tips:
- Regularly review employee performance and provide feedback.
- Promote employees who demonstrate strong leadership and operational skills.
Step 9: Implement an Inventory Management System
Why it’s important:
A stock management system (IMS) helps you keep track of stock levels, minimise waste, and optimise the supply chain. It integrates with your point-of-sale (POS) system to streamline sales and stock data.
Detailed actions:
- Choose the right IMS software: Look for software that integrates with your Grocery POS system and allows for real-time tracking of stock.
- Monitor inventory regularly: Set up automated alerts when stock levels are low, and ensure that you avoid overstocking.
- Implement stock rotation: Use a first-in, first-out (FIFO) system to ensure that perishable goods are sold before they expire.
Tip: An efficient IMS reduces shrinkage (lost or stolen goods) and helps maintain profitable stock levels.
Step 10: Market Your Grocery Store
Why it’s important:
Effective USP and marketing attract customers to your store and help retain them. A solid marketing strategy will set you apart from competitors and create long-term loyalty.
Detailed actions:
- Pre-launch promotions: Build anticipation with local ads, flyers, or a website countdown.
- Grand opening: Organize special offers like discounts, product giveaways, or contests to bring people in.
- Ongoing promotions: Introduce loyalty programs, offer seasonal discounts, and host community events.
- Create a strong online presence: Build a website, set up social media accounts, and engage with customers online.
- Advertise locally: Use local radio, newspapers, and flyers to spread the word about your store.
Marketing Tips:
- Regularly update your website and social media with promotions and new products.
- Create an email list to send out weekly specials or important announcements.
Bonus Content: New Store Opening Marketing Strategies
Step 10: Launch Your Grocery Store
Average Cost to Start a Grocery Store in Australia
In 2025, the cost to open a grocery store in Australia is estimated to range from AUD 130,000 to AUD 350,000, depending on factors such as location, size, and store format. Here’s a breakdown of the estimated minimum costs involved:
Lease and Deposit: $4,000 - $20,000
- Securing a suitable location is critical, and initial lease costs can vary based on the store's size and location.
Fit-out and Renovations: $30,000 - $100,000
- This includes costs for store layout, shelving, flooring, and any necessary renovations to create an inviting shopping environment.
Initial Inventory: $50,000 - $100,000
- Stocking your store with a variety of products to meet customer needs is a significant initial expense.
Equipment (shelving, refrigerators, POS systems, etc.): $20,000 - $50,000
- Essential equipment to operate the store efficiently includes shelving, refrigeration units, and point-of-sale systems.
Licenses and Permits: $2,000 - $5,000
- Obtaining the necessary licenses and permits to legally operate your store is a crucial step.
Marketing and Advertising: $5,000 - $10,000
- Investing in marketing strategies to attract customers and build your brand is important for your store's launch.
Staff Wages (initial few months): $20,000 - $50,000
- Hiring and training staff to provide excellent customer service will require an initial outlay for wages.
Miscellaneous (legal fees, insurance, etc.): $5,000 - $10,000
- Additional costs, such as legal fees and insurance to protect your business, should also be considered.
Total Estimated Minimum Cost: $136,000 - $345,000
These figures provide a rough estimate of the initial investment needed to start a grocery store in Australia. The actual costs can vary based on your specific circumstances and business plan.
Building a Successful Grocery Store in Australia
Opening a grocery store in Australia can be a rewarding and profitable endeavour, provided you focus on key elements like quality, customer service, and understanding market demand. Success in this business requires thorough planning, from conducting market research to implementing effective marketing strategies. By following this comprehensive guide and executing each step with attention to detail, you can lay a solid foundation for a thriving grocery store that meets the needs of your customers and stands out in the competitive market.
More Resources: