Pakistan

How to Start Superstore Business in Pakistan

The proposed Superstore will provide variety of goods ranges from grocery to garments and alike to the customers under one roof. The proposed project is a single floor store on an area of approximately 4,500 sq. ft. having covered / indoor shopping facilities. The main investment in this business is of land and building, which is very high due to very expensive land in urban areas and high construction cost. It is recommended that Superstore should be started at owned place rather on rented premises. The cost of required land will be ranging from Rs. 25,000,000 to Rs. 40,000,000. The store will operate for 14 hours from morning to midnight. Operating time may vary in different cities as per norms & cultures.

In Pakistan, concept of Superstore has gained popularity in late eighties after the emergence of Utility Stores by the government. There is a lack of proper management and planning in public sector stores but private sector has made it one of the successful businesses in Pakistan. Public has liked this concept due to the availability of all basic utilities under one roof which saves their time about which people are more conscious these days. The factors that make this project viable in Pakistan are:

  • Easy access to wholesale markets.
  • Availability of resources / salesmen.
  • Variety of goods under one roof.
  • Margin for innovation.
  • Easy diversification towards new product mix.

Superstore is proposed to be located in any Metropolitan city such as Karachi, Hyderabad, Lahore, Rawalpindi, Islamabad, Multan, Peshawar or Quetta. Superstore is a large retail store organized into departments offering a variety of merchandise, commonly part of retail chain under one roof.

The total project cost for setting up a superstore in Pakistan is estimated at Rs. 53.653 million out of which Rs. 40.112 million is capital cost and Rs. 13.541 million is working capital. The project is proposed to be financed through 50% debt and 50% equity. The NPV is projected around Rs. 150.029 million, with an IRR of 59.72% and a Payback Period of 3.54 years.

Factors for Success of Superstore in Pakistan

The most critical considerations or factors for success of the project are:

  • Pricing strategy & understanding requirements of the target customers.
  • Location with ample parking space and with respect to customer’s turnout.
  • Supply chain experience & technical expertise of the business.
  • Efficient marketing through flier’s distribution & cable TV.
  • Staff hired should be well mannered and well trained in dealing with customers.
  • This business is very sensitive to the customer’s turnout. If the average number of customers in a day exceeds from 350 then the project viability is quite strong.
  • To obtain a good average of profits it is necessary to observe the buying behavior.
  •  Reasonable and competitive price & understanding requirements of the target market.

The market for Superstores industry in Pakistan has been developing steadily over the last decade and a mushroom growth of large stores observed in all big cities. Still a good potential is available for new stores as population of big cities increasing day by day and new societies are being developed. New residential towns are being developed. Location and amenities are some of the most vital factors in the success of a store. Superstores business is emerging as one of the good business ventures in Pakistan as it provides all the basic merchandise under one roof. Superstores business falls under retail sector. This sector has shown a significant growth over the last few years. In 2014-15, this sector showed a growth of 3.4%.3 This sector’s contribution towards GDP in the year 2014-15 is 18.3%4. Gross fixed capital formation (Investment in fixed assets) in this industry by private sector has also shown a progressive trend.

Pakistan has a domestic market of above 190 million consumers with growing income & changing consumption habits. The target customer for Superstores is the population of big cities. The Superstore chain provides a good example of the way, in which different groups of customers will have different expectations, by offering a wide variety of products with highly competitive prices.

Space Requirements for a Superstore in Pakistan

The space requirement for the proposed Superstore is estimated considering various facilities including Management building, Parking area, Godown, Building & store etc. In this Pre-feasibility, the cost of 4,500 sq. ft. land is taken Rs. 30 million.

Superstore Items List 

  • Groceries and Food items
  • Baby garments and Baby products
  • Crockery and Plastic items
  • Soaps, Detergents and Chemicals 10% 10% Cosmetic & Artificial Jewelry
  • Ice Cream & Beverages
  • Stationary & Gifts
  • Watches and Clocks
  • Electronics / Electrical products

Technology: The proposed store should be air-conditioned. Goods should be properly arranged in iron shelves categorically having ample passage between the shelves for service trolleys and customers. Bar-code reader, cash register, surveillance system & software for inventory and sales recording should be used for updated data at all the times.

Location: Superstore can be set-up in any metropolitan city such as Karachi, Hyderabad, Lahore, Rawalpindi, Islamabad, Multan, Peshawar and Quetta.

Product: The proposed product line consist of Groceries and Food items, Baby garments and Baby products, Crockery and Plastic items, Soaps, Detergents and Chemicals, Cosmetic & Artificial Jeweler, Ice Cream & Beverages, Stationary & Gifts, Watches and Clocks, Electronics / Electrical products and General items.

Superstore Process Flow in Pakistan

Stage 1: Orders for inventory is placed.

Stage 2: Distributors deliver inventory & goods.

Stage 3: Prices are fixed & tagging is done for bar-code reading.

Stage 4: Goods are arranged in shelves according to categories.

Stage 5: Customers visit the store for groceries / purchasing.

Stage 6: Cashier receives payment from the customers and handover the purchased items.

Stage 7: Reorder of inventory according to demand

Investment Required to Setup a Superstore in Pakistan

The total project cost for setting up a superstore in Pakistan is estimated at Rs. 53.653 million. The detailed financial model can be studied in the pre-feasibility study of a superstore in Pakistan by SMEDA.

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4 Comments

  1. All of this is pretty much common knowledge… I need info on how I can open up a franchise of a particular supermarket. As in the procedure for doing so.

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