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How to Start a Departmental Store (Complete Guide)

how to start a departmental store

Are you looking to start a new departmental store in your area? Only a few people know how to register a shop and start their own department store.

In this article, we have listed the exact steps on how to start a departmental store in any place with low risk.

What is a departmental store?

Departmental stores are similar to Kirana shops. They are neighborhood stores that sell essential items like rice, dal, and other groceries. This business does not require any technical skills. People who have enough funds can start and run their departmental stores.

The size of the departmental store depends on the area as well as the capital one can invest.

Steps to start a departmental store

Below are the essential steps you need to follow if you want to know how to start a departmental store successfully with less money and low risk.

Analyse your plan

Without a long-term plan, it is difficult for any company to survive in the long run. It would help if you analysed certain things like the target audience, pricing plan, where you would like to have the departmental store set up, and the average income of the customer. Also, you must know the costs involved in packaging, hiring the employees, etc.

Register your business

Once you have analyzed the plan for your business, the next step is registering the business and registering your brand name. You need to go through the proper business structure so that you will not go through any legal issues later on. However, the standard registration documents required are:

GST is only needed if the annual income exceeds 20 lakh rupees.

Select the location

Before starting the registration and license process, finalizing the location, you would like to set up the departmental store is crucial. The site you choose must be secure and easily noticeable by the general public. Also, ensure you have little to no competition in the area where you are setting up the shop.

Calculate the investments

Now that you know the location and the registration process, you need to calculate the investments required to set up the store. It includes the salaries of the employees, the cost involved for having the vendors, rent of the store, etc. This cost varies depending on the size and location of the departmental store you want to open.

Decide your inventory

Before opening the store, know which brands and products you would like to sell in your store. You can also get a clear idea of what is selling around your neighbourhood stores and try to include some of those brands in your inventory list. You can either purchase these goods from the wholesaler or the manufacturer themselves. 

To make inventory tracking more accessible, it is recommended to have good accounting software for your business. It helps you have a clear idea about the stocks in your store.

Find appropriate suppliers

After deciding on the list of products and brands to sell, it is time to find the right supplier to source the items for you. You have to list the suppliers who can fulfill your inventory requirements in the shortest time. If you sell any goods with less shelf life (for example, dairy products), make sure that they sell out quickly. You must follow the first in and first out rule for such items.

Market your business

Now that you have the store ready, it is essential to market it to increase visibility. You can either use pamphlets for marketing your store or run local campaigns to make your store noticeable.

Benefits of starting your departmental store from scratch

  • Starting a local department store from scratch is less expensive than a franchise. Moreover, you are the store owner and ultimately control the business.
  • You can choose the budget and location as per your requirement.
  • You can design the store according to your and the local customer’s tastes. It will increase the number of footfalls to your store.
  • You can identify the highest-selling products from your neighbourhood stores and have the same stocks.

Tips to increase the profit of your departmental store

  • To gain more visibility initially, it is recommended to keep your store open even on the weekends.
  • Make sure to offer lucrative deals and discounts to the customers.
  • Always have multiple payment methods to help customers make the transaction smoothly.
  • Collect the details of the customer (like email and mobile number).
  • Introduce loyalty programs so your repeat customers will benefit from them and bring in more revenue for your business.


Starting a departmental store does not require any previous business expertise. However, the research and documentation involved in setting up a departmental store take time and effort. It is recommended to plan well and get the required documentation done before you get into the field.

How to Start a Departmental Store FAQS

Is departmental stores a profitable business?

Yes, departmental stores are a profitable business. The only thing you need to keep in mind is to start with a small store and slowly expand by testing new products that sell well in your neighbourhood. 

What is the required investment to start a departmental store?

There is no minimum required investment for a departmental store. It depends on the location where you want to start the store, the size of the store, and the number of employees you want to hire. Additional factors include payment to the vendors, a list of inventory, etc.

What is the average profit margin of a departmental store?

The standard profit margin of a departmental store varies between 5-20%. The minimum margin one can expect out of the store is 1-4%. However, the minimum profit margin is expected to be around 5% if you have multiple departmental stores in the same locality.

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