business ideas: Your business: open a home appliance store

* The calculations use the average data for the World Starting investments:

7 800 000 ₽

Store Area:

from 200 sq.m

Net profit:

200 000 ₽

Payback period (excluding working capital):

from 4 months

The home appliance store can hardly be called a promising undertaking for small business in Russia. The share of single stores is declining, and the share of networkers is growing. The same trends are observed in Europe.

Household appliances are an indispensable companion of life for every person. Saving time and effort on domestic services, we thereby increase the quality of our lives. Many manufacturers and rapid progress in this area are encouraging households to constantly update their household appliances. The organization of a business selling household appliances does not require special knowledge and experience; rather, it requires entrepreneurial experience. This business, due to the high competition in this segment, especially from the federal retail chains, requires serious knowledge in the field of people management and choosing the best product range.

What relates to household appliances: the concept and grouping of assortment

Home appliances are called electric or mechanical machines that perform home functions, such as cooking, cleaning, or helping to store or process food. This is the simplest definition. Let us consider in more detail what relates to household appliances.

Household appliances, which include any equipment from the list of numerous and various electrical, electromechanical, mechanical or gas devices, have mainly become widely used in the 20th century to save labor and reduce the time it takes to service a household.

These devices, for example, facilitate the creation of single-person households; in two parental families, they allowed parents to enter the labor market and otherwise freed up a large amount of time and energy that housewives previously engaged in cooking and washing floors, cleaning the house and general household chores. Consequently, the further result was a significantly reduced occupation of household workers. The tendency to use automatic and powered household appliances to facilitate basic household work, after they were created, soon spread to such additional areas as personal hygiene and care.

The most commonly purchased items of household appliances are a microwave, washing machine, electric kettle, blender, vacuum cleaner. Large household appliances, such as, for example, a stove or a refrigerator, are purchased less often due to their long life.

Household Appliances Market in Russia

As a rule, data on the household appliance market are given in conjunction with the electronics market, since large retailers who firmly occupy this market usually trade together with these two groups of goods - household appliances and electronics, the so-called BT&E market.

The volume of the market of household appliances and electronics in the Russian Federation in 2017 showed a growth of 6% in value terms by 5% in unit terms compared with the previous 2016, as GfK Rus points out in its study. The growth was mainly due to online sales, which increased by 13%, while offline sales through traditional points of sale grew by only 4%.

The process of consolidation is continuing on the market of BT&E, as is typical for a market with a tougher competitive environment, this is a general trend characteristic of both Europe and Russia. According to experts, in 2017 in Germany there were six large networks for the sale of electrical energy and energy, making the bulk of the turnover, instead of 28 networks in 2000. Only five major networks remained in the UK, instead of 22 in 1985.

In 2017, the share of large Russian networks in total sales of energy and electrical energy in value terms increased to 47%, from 44% a year earlier, while the share of medium-sized networks decreased to 21%, that is, two percent a year earlier, and the share of other networks decreased to 32%.

In 2017, the market for small household appliances (MBT) remained at the level of 2016 indicators in monetary terms, and in units showed an increase of 7.5%. The growth in demand for small household appliances was caused by a decrease in the average price for a number of assortment categories by 5%, which was due to the stabilization of the ruble exchange rate.

The year 2018 in the BT&E segment seems to show growth, which is associated with both deferred demand and the low base of 2017, as well as with an increase in the number of goods purchased on credit.

Thus, in recent years, the home appliance market has been stable and showing insignificant growth. At the same time, the share of non-chain stores in sales of household appliances is quite small and continues to decline.

In which segments is it profitable to operate a home appliance store?

Large network players clearly dominate the home appliance market. A small store will not be able to compete with them in price or assortment. Expanding a number of goods sold even to the assortment of a small network selling household appliances is very expensive, since working capital in the product will amount to tens and hundreds of millions of rubles.

The only, in our opinion, quite cost-effective niches in this segment remains either a small single-brand home appliance store or exclusive premium-segment appliances, which networks, as a rule, do not exhibit in a sufficient assortment.

The price in the premium segment of household appliances is 4 or more times higher than household appliances with similar consumer characteristics, but the usual economy segment. That is, this technique is designed for wealthy people, with incomes well above the middle class.

When trading in monobrand goods, as a rule, one or several assortment lines of one manufacturer are offered for sale. This is often the household appliances of the economy segment.

The choice of premises for a household appliance store

First of all, household appliances are bulky, so a lot of space is required for its retail space. If you want to present a fairly wide range of products, you will need at least 200 m2 of area.

It is advisable that the store is located on the ground floor of either the central shopping street or in the center of the local housing estate. A free planning room is required, in front of the building should be parking for at least 10 cars. For the delivery of goods, a convenient access for freight transport is required, preferably from the back of the building, so as not to block the entrance to customers. The area of storage facilities should be, as a rule, from 20% of the area of the trading floor.

It is possible to place a household appliance store in a shopping center, but the cost of renting a room of such an area in the passageways of the shopping center will be quite high.

To carry out store activities, less than 60 kW of electric power is required, a good ventilation and air conditioning system.

If you focus on sales of small household appliances, such as, for example, teapots, blenders, mixers and other types, the area of the store can be reduced by 2-3 times. In this case, you can consider the possibility of renting a room in a shopping center.

Once again, we want to draw attention to the fact that for our business, the choice of a niche for the goods sold is very important. Work in the economy segment, as most retail chains do, is usually unprofitable. Therefore, when choosing the location of a home appliance store, first of all, pay attention to the lack of chain hypermarkets that sell similar products in the immediate vicinity of your point of sale.

The facade of a household appliance store should go to the entrance or roadway and be convenient for advertising, which should be clearly visible from intersections and public transport.

Requirements for the staff of a household appliance store

The store staff consists of a staff of accountants, administrative staff, staff of cleaners, movers, sales assistants and security guards. The number of personnel in each area of activity is determined on the basis of specific indicators and the size of each store in particular.

It is necessary to dwell in more detail on the requirements that apply to sales consultants, since, as practice shows, the volume of sales of a store depends on the quality of their work.

It should be noted the growing negative trends, which are intensifying for sales consultants, especially in large networks. Sellers are loaded with any work, from acceptance and loading of goods, to cleaning the premises and conducting cash transactions. In our opinion, all this distracts the seller-consultant from fulfilling his main functions - advising and selling goods. Such a load reduces the motivation of sellers and, accordingly, sales.

A significant difference in the cost of household appliances from different manufacturers can vary very significantly and necessitates a high-quality consultation of the client on the features and advantages of each product.

The main responsibilities of the seller-consultant:

advising customers on technical issues regarding the sale of household appliances;
an extract of all necessary documents for the goods, including guarantee certificates;
assistance to the client in packing household appliances for transportation;
acceptance of new goods and their placement on stands and racks of a trading floor;
participation in the inventory of the remaining goods.

In addition, the seller-consultant of a household appliance store should have a set of personal competencies, such as sociability, stress resistance, good memory, and others.

The average salary of a sales assistant in Moscow is about 40-50 thousand rubles, in large cities about 20 thousand rubles. If you pay slightly higher than the average market indicators and provide good working conditions, you can choose the best of those who work in this area.

The correct material motivation of sales consultants is also important. Experts in this area believe that wages should be divided into three parts. The first part is a permanent salary, it accounts for about 40% of all earnings. The second part, which is calculated on the basis of the percentage of personal sales, makes up the same percentage. The remaining 20% is calculated based on the total sales of the store. In this case, we encourage personal sales and motivate the employee to help colleagues to get the maximum result. For a small store, you will need 2-4 sales assistants.

The profitability of a home appliance store as a whole will mainly depend on the proper selection of professional sales consultants and a competent definition of their responsibilities.

Financial performance of a household appliance store

Financial investments in the household appliance store are quite large. First of all, it is working capital, which must be invested in goods for sale in circulation. The specific amount of such investments depends on the assortment offered in the store and the price category of the goods. But on average it is for this segment it is about 35 thousand rubles per square meter of floor space of the trading floor.

That is, for an area of 200 m2, it is necessary to invest about 7 million rubles in working capital. This is a significant amount, therefore, the choice of assortment must be approached especially carefully to avoid storing illiquid goods.

The store’s revenue of such an area is about 36 million rubles a year or 3 million rubles a month. The average mark-up is different and depends on the price segment of the product. As a rule, it is from 20 to 40%.

Consider the current costs of opening a home appliance store, per month:

The cost of employees will be about 350 thousand rubles.
Deductions for social needs will amount to about 100 thousand rubles.
Expenses for current maintenance of the building and utility bills will amount to about 50 thousand rubles.
Room rental will depend on the location of the store. With a fairly good location, it will cost about 100-150 thousand rubles.
Payment UTII (single tax on imputed income) will be about 100 thousand rubles, depending on the region. You can reduce this amount by the amount of deductions for social needs, but not more than 50%. Thus, the actual amount of tax paid will be about 50 thousand rubles.
Other expenses for which we will allocate about 30 thousand rubles per month.

Total current costs for the maintenance of a household appliance store will be approximately 700 thousand rubles per month.

We calculate the amount of necessary investment to open a home appliance store of the format we are considering.

The investment costs include the purchase costs for the store of commercial equipment and furniture, redecorating the premises and the costs of opening a company. The costs for the purchase of commercial equipment will amount to approximately 300 thousand rubles, since basically the equipment will be shelving racks, as well as cash registers and equipment for recording goods. Cosmetic repairs will cost about 350 thousand rubles. The cost of opening a company will be about 20 thousand rubles.

Total investment costs excluding costs for the purchase of goods will amount to 670 thousand rubles. Taking into account the purchase of goods, the total amount of necessary investments will be approximately 7.8 million rubles.

The average monthly profit of a household appliance store with an area of approximately 200 m2, according to our estimates, will be about 200 thousand rubles a month or 2.4 million rubles a year. With the calculated data indicated by us, the payback period for the main investments that do not include initial investments in the purchase of goods will be about 4 months.

Legal design of a household appliance store

To open a household appliance store, in our opinion, the best option would be to register as an individual entrepreneur (IP). As a tax system, we recommend choosing a single tax on imputed income (UTII). A clear and simple tax calculation and payment scheme makes this form of taxation the most attractive.

The amount of UTII for payment, for a store with a sales area of about 200 m2, will be about 300 thousand rubles per quarter, deviations are possible depending on the region where the store is located. You can determine the tax amount yourself using the calculator on the website of the Federal Tax Service of Russia.

When opening a home appliance store, it is necessary to comply with the requirements of the SES (sanitary-epidemiological station), Rospotrebnadzor and the fire inspection. We recommend that you familiarize yourself with the list of documents that may be required to open a store in the regional divisions of these organizations at the place of registration of a household appliance store, due to the fact that the requirements may vary slightly for each region.

The main code used for OKVED is 47.54 “Retail sale of electrical household appliances in specialized stores”.

Do not forget that in accordance with the Federal Law "On Advertising" dated 18.08.2019 N 38-ФЗ, it will be necessary to coordinate the signs and advertising materials that you will place on the facade of the building.

To summarize. The business selling household goods is quite cost-effective, but requires large initial investments in working capital. This raises the threshold for entering this business, but thereby reduces the number of competitors in this segment. The greatest risks in this business arise from competition with large federal networks.

Anton Vodolazov, business consultant, candidate of economic sciences

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