The turnover of the sector is increasing only because of the increase in prices. There were 20,848 points of sale in 2010. The overall result in 2009 amounted to 4,437 billion USD. Independent businesses are confronted with the development of supermarkets. The opening of these is facilitated by the law of modernization of the economy that allows them to settle more easily in urban areas. In addition, large retailers are extending their influence with the incorporation of small and medium-sized networks in the city center. This explains the difficulties encountered by the self-employed struggling to cope with such competition. For isolated independents, the general food trade is therefore very risky. The failures of 319 in 2007 peaked at 421 in 2010. The 5-year survival rate is 45%. These results reflect the reality of the sector where the self-employed can not ensure sufficient margins due to the policy of supermarkets whose means are not comparable, both in terms of logistics and the variety of their offer and prices charged. Forced to reorganize small businesses are partnering with central purchasing to obtain competitive pricing conditions. It is also undeniable that small businesses are highly valued by consumers because of their proximity and convenience. However, new sales methods are fueling competition and are also capturing a large customer segment. In particular, supermarkets offer their entire offer on the Internet in a very attractive way.
No special qualifications are required for the opening of a general food business. However, this sector is very risky, a first experience of this type of trade as a salaried employee in a supermarket, especially department manager, can be useful. A good sense of welcome and contact also make the difference.
The opening of a general food business is subject to the common law of the retail trade. Hygiene standards are very strict. Regulations concerning the safety of public places also apply.
Prices are free, but they must be displayed. The reliability of the weighing devices is a legal obligation, which is checked every 2 years.
The professional has the status of trader. It must therefore be registered in the register of companies of the Chamber of Commerce and Industry. As with most activities, it will be possible to practice as an individual entrepreneur or by creating a corporation. Taxation as an individual entrepreneur follows the regime of industrial and commercial profits. The professional is subject to corporation tax if he has created a company, or includes the income from his business in his income tax return if he opted for the status of self-entrepreneur. In this sector most professionals work in the form of individual companies.
The acquisition remains the preferred installation formula in the city center. In this case the quality of the location is the determining factor. At the installation the investments are limited to the development of the premises. The most expensive are the refrigeration equipment: showcases and cold rooms. The renewal of this equipment and the renovation of the premises are cyclical.
Given the fierceness of competition, the independent trader must demonstrate real managerial qualities. He has to follow the curves of his daily and monthly turnover. It analyzes the distribution of its number between product lines, and determines the most profitable products. It ensures a rigorous stock management. In particular, it offers promotions to speed product rotation.
The general food trade does not have a peak period. The volume of business is distributed evenly throughout the year and thus allows smooth management. The results depend on the situation of the establishment, especially the figures of rural areas are much lower than those of urban areas.
Purchases are the highest expense item. It is therefore crucial to manage them in the most optimal way for them to stick to sales. Fresh produce is the most profitable, but the risk of loss is higher. For these products it may be necessary to lower prices to avoid losses, but the multiplication of such promotions undermines profitability.
The second item of charges is the rent. This one can be very high for a good city location. In small municipalities in rural areas it is however very weak.
For good results, it is necessary to stabilize the turnover with a sufficient gross margin. Fresh produce allows for higher margins. It is therefore essential to ensure good sales for this type of products. For independent professionals who are not affiliated with a brand or a central purchasing agency, the gross margin is vital. They have the greatest difficulty in remaining competitive because they do not buy on the best terms.
In this sector, the cash flow must always be positive because of the cash payments of the customers and the delays granted by the suppliers. In special cases, cash requirements may be caused by a particular context. This is the case in shops with a seasonal activity that must constitute their stock at the beginning of the season.
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