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How to Run a Successful Grocery Store (Insider Pro Tips)

By: Author Jeff Campbell

Posted on  - Last updated:

Categories Operations

Are you looking to be a manager of a grocery store? Perhaps you’ve just been promoted to store manager and you’re not entirely sure what it takes to be successful at management? Don’t worry. Many have wondered how to run a successful grocery store.

Here’s what I know having done that for many years:

A great grocery store manager wears many hats and is not afraid to get their hands dirty and work alongside their team. They also focus on people first; both employees and customers. But being able to prioritize on the spot, be efficient with their time and stay calm under pressure are also essential.

But that only scratches the surface of what a great grocery store manager does.

As a manager, you’re going to carry a lot of weight on your shoulders. Grocery store managers oversee the day-to-day operations of grocery stores. They are in charge of every aspect of a store’s operations including supervising personnel, inventory and tracking financials.

What does it take to run a grocery store? How do you attract customers to your store? What, exactly, makes a good grocery store?

You have questions. I have the answers. Just keep reading.

What does it take to run a grocery store?

Running a grocery store is not for the faint of heart. Grocery store managers oversee the day-to-day operations of grocery stores.

They hire and train new employees, maintain employee schedules, and track inventory.

They also need to have good relationships with customers and vendors. Grocery store managers may also need to cover other positions when short-handed during shifts.

To get to the management level, you’ll need to understand your store’s products, pricing, and people. You’ll be responsible for handling finances and marketing. You’ll also need to make sure that your associates are properly trained.

More importantly, you’ll have to be able to juggle multiple priorities quickly, efficiently, and calmly.

In my 20+ year career with Whole Foods Market, there were many times where, in the space of minutes, I was alerted to 3 or more of the following scenarios:

  • An employee had a serious cut that required medical attention
  • A customer slipped, fell, and was injured
  • Another customer was trying to return a large purchase without either a receipt or the product itself
  • My regional boss was calling about a serious financial issue
  • The local health inspector had come by due to a customer complaint
  • A local news station showed up wanting to film a segment in our store about a controversial subject

If that happened, what would you do? How would you prioritize those issues? Would you crumble from the stress or get angry and lash out at those around you?

A good grocery store manager has to be calm under pressure at all times.

Grocery stores will require at least a high school diploma.

Many grocery stores prefer a four-year degree in a business-related field. All grocery stores will require a certain amount of experience and on-the-job training.

To read more about the education requirements, head over to this article I wrote that details the requirements for each of the major grocery chains.

Just click that link to read it on my site.

How should the manager of a grocery store spend their time?

As a grocery manager, you’re responsible for all aspects of running the store. From supervising employees to maximizing profits. As a result, it’s important to make sure you are current on what it takes to run a store.

By putting in the time to keep current and become a better manager, you will advance your personal development and it will benefit your store, associates, and customers.

The number one thing a manager should do is keep learning, be humble, and never ask an employee to do a task they are unwilling to do themselves.

To get to the management position, you have shown that you are a good leader, understand grocery products, pricing, and people. Just understanding these things isn’t enough, though.

You have to understand how each department works, how the customers see the store, and what kinds of problems or roadblocks your employees may run into trying to do their job. The best way to do that is to spend time on the floor working alongside the employees in each department; even if it’s just for a short time.

That being said, a common misconception is that the boss has to be the best at everything.

You don’t. Hire people for each job who can do it better than you could. Ensure they get the training they need. Then you provide the motivation, encouragement, feedback and big-picture vision to keep them moving forward.

Be a leader. As a manager, your associates will look to you for guidance.

Set the example and keep the store clean. Greet customers and clean up spills. Support your associates by letting them learn from their mistakes and owning up to your own.

Finally, remember that communication is key. Talk to your associates for a few minutes per day to discuss any potential stocking issues, answer questions, and address any staffing needs.

How can I make my grocery store more profitable?

Like salaries, profit margins can vary widely.

Larger grocery chains can operate with few employees, don’t typically have an in-house butcher or hand out samples. Their goal is to sell products at the lowest possible price and still make a profit. They will generally have a profit margin of 1 to 2 percent.

Smaller stores, natural food stores, or gourmet stores, however, may have a profit margin of 10 to 12 percent.

Why such a large gap and how do grocery stores set their profit margins? Luckily, I cover it all in a recent article.

Just click that link to read it on my site.

The profit margins on food items are much smaller compared to other businesses. This is because grocery items are a commodity. If you don’t like the price of an item at one store, you just go to another. Grocery stores are everywhere, so it’s not hard to find an item priced reasonably.

But the best ways to increase the profits at your store include:

1. Cross-merchandising

Cross-merchandising is when you combine items that naturally go together, like a display of pasta sauce, boxed pasta, and a bottle of wine, or olive oil, or balsamic vinegar.

How this helps with profitability is when you have 1 item that is a lower margin item but combine it with 1-2 items that are much higher margin.

Assuming most shoppers buy all the items you have grouped together, you’ll end up with a blended margin of all the items combined. Done correctly, you can often get that much higher than if you just had wine alone on your display.

I go a lot deeper into merchandising and how it impacts sales and profits in a recent article. I even cover the WRONG way to merchandise that can cut your sales in half.

Just click that link to read it on my site.

2. Putting your lowest-priced items at the ends of displays and aisles

A produce aisle that leads with conventional (non-organic) onions or bananas is naturally going to give the impression that the prices throughout the department are low.

By contrast, if you have an aisle that leads off with the most expensive item in the department, that will subconsciously imply that ALL your prices are expensive.

So lead with value and then allow then to discover the full range of your products as they go deeper into the store.

3. Tighten up your purchases so you aren’t over-buying

I couldn’t tell you how many times I’ve taken over a store and gone into the backroom only to find enough products to stock a brand new store.

Let me be very clear. When we have too much stuff in back it WILL cost you money.

Every time you touch a product you lose money. When you have stuff in the backroom you’ve already paid an employee to take it off a truck, stock the shelves, and then take it to the back room. Then you have to pay them again, to stock the shelves again later.

It’s FAR more efficient just to go from truck to shelf. 

If your delivery schedule is sporadic or infrequent, you may have to stock up, but you should only have to order just enough product to not run out before the next delivery.

Plus, having a ton of stuff in the back increases your shrink, also called spoilage. That refers not only to products that go out of date or get stolen, but also just stuff that gets damaged. The more you move products, the more likely they are to get damaged.

Which leads me to . . .

4. Keeping a close eye on your shrink

Shrink refers to anything you have purchased that you aren’t able to sell. That could be:

  • Items that are stolen
  • Packages that go out of date
  • Items that come in damaged (and can’t be credited to the vendor)
  • Damaged goods caused by your employees
  • Fresh produce, deli, meat, seafood items that go out of date or get spoiled

If you aren’t careful, your shrink can easily get out of control.

How much shrink is too much? That will vary by department, store, area of the country, and company. But a good rule of thumb for the store as a whole is about 3% of your total store sales.

Perishable departments like produce, dairy, meat, seafood, and deli will obviously have the highest shrink. So that’s where you should ensure you have good systems in place for tracking your shrink.

5. Have a way to repurpose bruised or damaged food items that are still edible

To be clear, I’m not talking about out of date items or anything with compromised quality.

But a bruised apple, while not visually appealing, can still work just fine in a juice bar. So train your teams to know the difference between shrink and items that aren’t quite up to snuff for display that are still just fine to eat.

Have a deli and some overripe avocados? Sounds like a great way to take something you might otherwise throw away and turn it into high-margin guacamole!

To learn more about whether it is profitable to own a grocery store, and what makes one store more profitable than another, head over to this recent article.

What makes a good grocery store?

Think about the things that attract you to a grocery store.

Better yet, think about the things that keep you away from a grocery store. Customers are very loyal to stores and will drive right past certain stores to get to “their” store. Sometimes even a different location of the same chain.

1. Parking

Good grocery stores have decent parking, even when the store is busy.

The parking lots need to feel safe, have plenty of cart corrals, and (most importantly perhaps), wide parking spaces. We’ve all been in those parking lots designed for 1985 Honda Hatchbacks.

Today, more than ever, especially here in Texas where I live, people drive large cars. And tiny parking spaces that are hard to get into or get your doors dinged every time will send people to your competitors in droves if everything else is equal.

2. Aisle layout

They have nice, wide aisles that are full of options.

Shoppers don’t like to go to multiple stores to get what they need. As a result, good stores have healthy food options as well as junk food. They also have items for picky eaters and general household items like toilet paper and paper towels.

They also have things laid out in a way that makes sense and makes it easy to find what they want.

3. Competitive prices

Good grocery stores have competitive prices and run specials regularly.

But low prices aren’t the only thing that customers want. They also want super friendly staff and items that are easy to find. That’s why companies like Whole Foods Market have dominated despite not being the cheapest store in town.

If your prices are low, but your staff is unfriendly, or the store is confusing to navigate, customers won’t be thrilled with their shopping experience.

On the other hand, if your prices are a little higher, but you run really good deals and your staff is friendly, customers are likely to return regularly.

4. Properly staffed checkouts

Good grocery stores have plenty of staffed checkout lines and self-checkout lines.

Customers hate waiting in insanely long lines. Self-checkout lines can help reduce line length. They allow customers with just a few items to check themselves out and go about their day.

We all know that there are occasionally days when you get short-staffed and may have long lines. But that can’t be the norm. And the store manager needs to respond quickly when big lines form, even jumping in and cashiering if needed.

5. Store atmosphere

Think about stores you’ve been in.

Whole Foods is colorful. There’s usually lively music playing that’s NOT Muzak. Much of the time there are employees in the store offering free samples.

Sometimes there’s live music or events like when Maynard from Tool came to my store once to sample his brand of wine.

But beyond that, it’s not just linoleum floors and fluorescent lights in a stark white and bland environment. 

No the store designers, architects, and marketers at Whole Foods understand that the more comfortable, relaxing, and homey that they make the stores, the slower people will shop and the longer they will want to linger.

Bad for the parking lot. Good for the store sales as the longer someone is in the store, the more they are likely to spend more.

Let’s be honest. No one meets friends at Target or Walmart just to hang out.

But they do that all the time at Whole Foods. So if you want loyal fans who flock to your store and hang out with their friends, put some thought into the design, decor, colors, and atmosphere of your store.

6. Knowledgeable & friendly employees

Ultimately, this is more important than any of the above items.

As a store manager, I had to be able to count on my employees to treat every customer the way I would. When I was the GM of the large downtown Austin store, I had well over 600 employees!

More than 80 of them worked the overnight shift.

In fact, that was ultimately why that job was my least favorite job I held in my career at Whole Foods Market. There was just no way to really get to know my team members and build camaraderie.

I tried. But ultimately was only marginally successful.

You can sacrifice on prices, parking, and even the size and layout of your store. But if you don’t hire the best people you can find, train them well, work alongside them and have their back, your store will never fully succeed.

How do supermarkets attract customers?

There are several ways to boost sales and increase customer loyalty at your store.

Advertising and loyalty programs can attract new customers and keep old ones. It’s important to gather data and analyze it to understand your customer base.

If customers are not having positive experiences at your store, they may not return. By gathering and analyzing data, you can rest assured that your customers are having positive experiences.

It’s important to frequently check the labels and expiration dates on your products. Incorrect messaging and expired products on your shelves can quickly damage your reputation as a reliable grocer.

The use of technology and digital advertising can increase sales.

For example, a grocery store app where customers can get their coupons and specials directly on their phone is a great way for grocery stores to embrace technology. Apps where customers can make grocery lists and see what items are in each aisle allow customers to navigate stores quickly and efficiently.

By embracing technology, grocery stores can keep up with trends while increasing engagement, customer outreach, and customer service.

Loyal customers that purchase more during their trip are the lifeblood of consumer foods. Getting existing customers to purchase more during a given shopping trip, is all about the appearance price.

For example, studies show that a two for $5 deal is more effective than a product being sold at $2.49 each. If you have a two for deal, you’re almost guaranteed that every customer will buy multiples. source

To attract new customers, it’s all about location and convenience.

People while widely shopping online, prefer to purchase food and beverages in-store.

Studies show that foot traffic to grocery stores peak at about 4 p.m. Mondays through Thursdays. With this kind of insight and helpful location targeting, you can attract new customers and solidify relationships with existing customers.

For example, if your store is near a school, you’re likely to get that 4 p.m. foot traffic after parents have picked up their kids. Your strategically-located store will be the most convenient one on the way home from school.

It’s also important to understand that people shop at multiple locations for things they need.

They’ll shop at pharmacies, dollar stores, and convenience stores to get items at a lower price. By using technology and targeting the location of your customers, you can send strategically timed coupons and ads to drive them to your store.

(source)

What degree do you need to be a grocery store manager?

Education requirements vary widely by grocery store chains. Some companies only require a high school diploma or GED. Others require a high school diploma but would prefer a four-year degree in business or some other related field.

The paragraphs below discuss the requirements of some of the most popular nearby grocery chains.

1. Walmart

While Walmart doesn’t require any formal education, they do expect you to have experience supervising employees and have some general management experience under your belt.

Because they sell firearms, Walmart also requires you to complete a general firearms training and pass a criminal background check. If they only sell ammunition you have to obtain a specialized certificate to sell ammunition.

2. Safeway

Safeway’s educational requirements consist of a college degree with six months of retail experience.

Otherwise, they require a combination of four years of college and retail experience. This could mean a two-year college degree combined with two years of retail/retail management. It could also mean that you are a high school graduate and have four years of retail/retail management experience.

3. Kroger

Kroger only requires a high school diploma or its equivalent. They also want you to be proficient in computer usage and have a lift truck certification or license.

Kroger prefers that you have a four-year degree in business or some related field. They also prefer that you have knowledge of the Fred Meyer policies, procedures, and organizational structure. This means that most likely they’re going to hire in-house because their in-house employees are the ones who are going to have the most solid knowledge of their policies.

Although Kroger’s minimum requirements are high school diploma or GED, they’re going to give preferential treatment to people with experience or a bachelor’s degree.

4. Trader Joes

Trader Joe’s does not have an education requirement, but they require 3 years of recent retail, restaurant or hospitality experience.

They also require two years of recent experience at the supervisory level. While they don’t require a bachelor’s degree, they do prefer that you have one.

Target’s educational requirement is that you have a four-year degree or equivalent experience.

5. Whole Foods Market

Whole Foods doesn’t have any educational requirements, but they do want you to be proficient in math. They also want you to have an understanding of computer applications and programs including things like Microsoft Office.

For a more thorough idea of the education a grocery store manager needs head over to this post on my blog. I not only cover basic education and experience you need to be a store manager, but I go store by store, showing the requirements of all the top companies in the US.

Just click that link to read it on my site.

How much do grocery store owners or managers make?

On average, grocery store owners make around $62,419/year according to Indeed.com. But there’s a lot that factors into that, such as:

  • Location
  • Size of store
  • If it’s a franchise

Some grocery store owners, like a small specialty shop on the streets of NYC, for instance, might clear multiple 6 figures. By comparison, a Grocery Outlet store in a neighborhood that’s heavily reliant on food stamps might only earn $60,000/year.

Bear in mind too, it’s hard to get exact numbers from independent grocery stores that aren’t publically traded. There are no financial reporting requirements, nor are grocery store owner salaries listed on sites like GlassDoor.

Outside of Whole Foods (which I get into below since that’s my area of expertise), here are how store manager salaries stack up in other grocery stores, according to GlassDoor.

Grocery Store Annual Salary Range
Kroger $67k to $70k/year
Piggly Wiggly $50k to $54k/year
Safeway $88k/year
Whole Foods $99k/year
Albertsons $95k/year
Wegmans $78k to $83k/year
Sprouts $82k/year
Publix $116k/year
Ralphs $98k/year
The Fresh Market $58k to $63k/year

The salary will vary by location as well.

According to payscale.com, the average salary of a General Store Manager in South Carolina is $48,901. In New York City, the average salary is $89,819 per year.

While this may seem like a huge difference, the cost of living in NY is much higher than the cost of living in SC. If you’re looking to live comfortably as a General Manager, you’d be better off in SC.

In Denver, CO the average salary is $58,000, which is interesting, as the cost of living in Denver is also very high.

How Whole Foods Store Manager Salaries compare

I was a GM for Whole Foods Market for well over half of my 20+ year career. Whole Foods calls their GMs Store Team Leaders.

During that time, I ran 4 stores and was an Associate Store Team Leader (assistant GM) in 4 other stores.

On average, and bear in mind the last time I did this was in 2013, so it’s been a little while, I made in the low 6 figures. While I knew some store managers who made around $150,000 a year (salary plus bonuses), I never got that high.

Officially on their website today, Whole Foods lists the starting salary for their GMs as $99,000/year.

But while I’m sure things have changed since Amazon bought them, that’s most likely without bonuses. The bonus structure for Whole Foods Market store managers provided a quarterly bonus on top of their salary. The bonus was based on a somewhat complicated profitability calculation.

So while in a store that wasn’t doing well, that bonus could be nothing, I also knew store managers who bought brand new Jaguars with just 1 of them.

So for many, compared to the risk of being a grocery store owner, it makes sense to be a grocery store manager for a large company.

To learn more about the salaries of grocery store owners specifically, and the factors that play into various salaries, head on over to this article on my website. I get more into details on owner-operator salaries which can be different from working for large chains.

Just click that link to read it on my site.

Did I cover all you wanted to know about what it takes to run a successful grocery store?

Running and/or building a grocery store can be very lucrative if the location is right.

However, it is a lot of work. Grocery store managers carry a lot of weight on their shoulders. Not only are they responsible for day-to-day operations, but they’re also responsible for personnel issues and helping the company reach long-term goals.

They need to be able to communicate effectively with customers and staff. Successful grocery stores keep up with current shopping trends. They focus on prices as well as the entire shopping experience.

In the end, a great grocery store manager needs to be a jack of all trades, focus on people, be calm under pressure, and willing to move quickly from one task to another.

Photo credits which require attribution:

Grand Central Market New York by cogito ergo imago is licensed under CC2.0

Jeff Campbell
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By Author Jeff Campbell

Posted on  - Last updated:

Categories Operations