Household chemicals, like products, are a commodity of daily necessity. Every family buys it, regardless of income level. Therefore, start-up entrepreneurs want to open a household chemicals store quite often. How to do this and avoid errors will be described in the article.
Pros and cons of trade in household chemicals
To open a household chemicals store, you need to understand the specifics of this business. It has its advantages and disadvantages for a start-up entrepreneur, which must be understood before the first expenditures are made.
The advantages include:
- Detergents will always be in demand because they end quickly. Every person wants to live in purity, therefore, people usually go 1-2 times a month to go for household cleaning.
- The long shelf life of most products (up to two years) allows an entrepreneur not to worry about the safety of product residues in stock.
- Buyers get used to certain brands of household chemicals, so they often buy her whole set in one store. It is quite easy to attract loyal customers to your side with the help of loyalty programs.
- Scalable business. The format of the store of household chemicals can always be expanded at the expense of cosmetics, kitchen equipment.
- To open a household chemicals store, a minimum amount of permits is required.
Trade in household chemicals has its drawbacks, which must be taken into account when choosing a room and forming an assortment:
- High competition. As with the opening of the grocery store, trade in household chemicals is very common. It is necessary to immediately prepare the tools to fight for the market with close competitors.
- The range of household chemicals is huge, so the entrepreneur in this business is constantly forced to look for new high-quality products and their suppliers.
Thus, when opening a household chemicals store, an aspiring businessman should be ready to fight for the buyer. And without perseverance and enterprise in this matter cannot do.
Features of business registration
Opening a household chemical goods store requires a person to register their activities in the Federal Tax Service. For a budding entrepreneur, it is better to register as an IP on a patent (with a planned shop area of up to 50 sq. M.) Or on a UTII (with a planned shop area of up to 150 sq. M.) Subsequently, when expanding a business, you can open an LLC.
You also need to decide on the codes of economic activity. In this area you can use several:
- 31 – household chemicals;
- 2 – household items, dishes, knives;
- 75 – beauty and personal care products in specialized stores.
A specific list of activities depends on the selected range of the store.
If the business opens in a new building, then it will be necessary to additionally receive permission to conduct activities from SES, firefighters and the local administration. You also need to arrange a corner of the consumer. After that, you can begin to purchase equipment, goods, and other organizational issues.
Modern market of household chemicals
Household chemicals are sold in almost every shopping center, supermarket, on the market and even in the grocery store. Therefore, competition in this area is great.
The main competitors for the new store will be:
- large specialized retail chains that have developed bonus programs and an optimal range;
- grocery stores have small departments with household chemicals;
- Small shops of household chemicals and departments in the mall.
Finding a place in the city to start a business without competitors is possible, but no one guarantees that they will not appear there a month after the start of operations. Therefore, an entrepreneur should initially work out not only an advertising campaign but also events to retain customers.
The choice of premises for the store of household chemicals
Household chemicals – this range, for which they do not go to the other end of the city, and buy around the house. The main target audiences of such stores are family women and pensioners. Therefore, the room must be sought in areas with high-rise residential buildings. A good location will be near bus stops or in pedestrian areas.
Although in small cities, where people live mainly in the private sector, you can also look at the markets and locations near supermarkets. Opening in the mall is not recommended, because the target audience rarely visits them to buy household chemicals.
Next to the store, there should be a minimum of competitors in a similar format, otherwise, it is unlikely that it will be possible to quickly develop a profitable business. It is also undesirable to open next to the cosmetics market. To entice buyers from them is very difficult.
And near grocery supermarkets, you can open a household chemicals store, because it is easy to compete with them due to a wider range, lower prices and the opportunity to consult a seller.
The recommended minimum area of the outlet is 50 sq.m., the optimum is 100 sq.m. Many household chemical goods are large and take up a lot of space in the window, so the store has less than 50 sq. M. It will be difficult to lay out an acceptable range.
It should be remembered that for a large area you will have to pay a considerable rent, on which the overall profitability of the business will depend greatly. But do not choose a room on the principle of “the best of the worst.” It is necessary to open a household chemical goods shop only in a well-suitable place for this.
What equipment will have to buy?
In principle, the trading equipment that will need to be purchased to open a household chemical store does not differ much from that of any other retail store. Much will depend on the plans for the location of goods and their quantity. The following equipment is purchased as standard:
- display cases (open, closed);
- cash equipment.
If the store has a partial self-service, then you will additionally need:
- carts and baskets;
- drawers for things;
- Video surveillance system.
- When planning should be aware of the convenience of visitors.
It is necessary to place the racks so that there is space for the passage and a comfortable choice of goods.
From cash equipment you need to purchase the following:
- online cashier ;
- program for accounting for goods ;
- acquiring ;
- cash drawer ;
- Barcode Scanner.
Before you open the store of household chemicals, you need to think about the range, given the number of available funds.
Required product categories for the outlet will be:
- Household chemicals: cleaning and detergents, powders and gels for washing, air fresheners, insect repellents.
- personal care products: soap, shower gels, intimate hygiene products, bath salts, toothpaste and brushes, products for shaving, toilet paper, diapers, etc.
- Cosmetics: shampoos, perfumes, creams.
The latter category of goods is a backup and it can be purchased if there is money left and a place to be displayed after purchasing the main range.
The distribution of goods by price categories may be as follows:
- budget – 50-60%;
- premium – 30-40%;
- Elite – 10-15%.
The target audience of household chemical goods stores are people of low and medium incomes, seeking to save on purchases. Therefore, elite household chemicals should be presented in a minimum quantity.
How to form a pricing policy?
Wanting to open a household chemicals store, an entrepreneur must be ready for price wars. The first months will have to be dumped in order to lure some buyers away from competitors. The average mark-up on the goods is small – 30%, so you should not expect an easy victory.
Buyers are well aware of the prices of popular laundry detergents and conditioners. These products for customers are markers that serve to determine the price policy of the store. Therefore, such products should be as cheap as possible; otherwise, visitors will find a retail outlet unnecessarily expensive.
To compensate for the reduction in margins on well-known brands can be due to less popular products. It can throw up to 40-60% of the purchase price.
Where to buy products?
Having one or two suppliers of products when opening a household chemicals store will not work, because well-known brands have their own distributors in each region. That they have to look for the purchase of products. Contacts of such companies can be taken on the websites of manufacturers of household chemicals.
The rest of the products it is desirable to buy from two or three wholesalers. Their contacts can be found on the Internet. If you initially find a supplier with good prices and assortment does not work, in the first weeks, the sales representatives of almost all companies in the region will visit the store. After that, supply problems must be solved.
You can replenish stocks of goods and regional wholesale bases. The prices there are higher than the official distributors, but to cover the short-term demand, you can use the services of these companies.
How much does a household chemistry store need staff?
In order for a household chemicals store to bring a decent profit, there must be a constant flow of visitors. For their service, one seller will not be enough; you need to hire at least two per shift. Total for a shop of 50 sq.m. 4 sellers is required.
If at first the role of the administrator and accountant can be performed by the entrepreneur himself, then it will be possible to hire a person later. The range of household chemicals is quite large and it will be difficult for sellers to keep track of them on their own. Ordering goods, monitoring balances and inventory should be done by an individual employee. And the program for automation of trade will help to make its work as efficient as possible.
Also, the store should be someone to monitor the cleanliness, although the cleaner can come in half an hour once a day.
Staff costs when opening a household chemicals store are not small, so they should also be immediately taken into account in the business plan.
When opening any store, the amounts in the business plan depend on many factors. It is necessary to take into account the cost of rent, the number of personnel, the amount of working capital and so on. And most importantly, it is almost impossible to predict the proceeds from trade. Therefore, to open a household chemicals store, you need to be confident insufficient demand for products.
Total, to open and work the first month, the entrepreneur will need 15-16 thousand dollars. It should be remembered that it is possible to reach the average level of revenue only after six months when residents of the area get used to the store. Before this income may not even be enough to cover current expenses. Therefore, an entrepreneur should have several hundred thousand dollars in reserve.
Due to the low margin, in the region of 30-40%, it will be possible to recoup the costs only in 1-1.5 years. But after this period, the entrepreneur will receive a profitable and easily manageable business.
How to advertise a household chemicals store?
Open a successful household chemicals store without advertising will not work. Potential buyers should learn about the outlet in the first days of its work. Since the store visitors will be mainly residents of nearby neighborhoods, the following types of advertising will be relevant:
- distribution of leaflets near the store;
- posting nearby bills;
- advertising at the entrances;
- Placing ads on city forums, in social networks.
In a good household chemicals store should be its own discount system. A multifunctional program for automation of the store will help to create a customer base and manage discount cards. It is available even for start-up entrepreneurs.
Do not do in the first months of work and without stocks. Sometimes it is worth setting a zero markup on 2-3 popular products so that people initially come to the store. This will attract visitors who additionally buy related products, providing a profit.
Increased customer loyalty is a major factor in the profitability of a household chemical store. Therefore, marketing tools in this business should be given paramount attention.
Open a household chemicals store is not a problem. The difficulty lies in making it profitable and independent. To do this, you will need to take into account all the nuances described above and work in good faith during the first months of work, as well as intensively apply marketing techniques.