How to Open a Grocery Store in Dubai?

• Posted on 15 December, 2019
• by Gilbert Sakr
• in Business Setup
• 4340

With thousands of grocery stores across Dubai, it’s no wonder that many entrepreneurs think that opening a grocery store is a good idea. We all know that food is essential to our existence. Grocery stores face a unique set of challenges: products spoil, and there is substantial competition from huge, well-established chains with decades of experience in the UAE. However, independent grocery stores can and do thrive in many neighborhoods across Dubai.

Start with Research

Start by surveying to see what your customers want before you decide what your store will provide. Check to see if your targeted community needs a premium or affordable store, organic or vegan foods or an ethnic foods market targeting a specific expat demographic.

Try to obtain demographic information of the targeted neighborhood from private sources as well as government agencies. Look at factors such as age, gender, and income distribution. Young families have different needs than affluent single expats looking for specialty foods. If the neighborhood is mainly composed of single male working-class expats, their needs might focus on easy to make convenience foods.

If you find a suitable location, check with the Dubai Municipality if the site is ideal as a grocery store. Licensing and the regulatory framework is subject to change. Therefore, the best practice is to consult in advance. Make sure any discussions with commercial property landlords in residential communities covers potential footfall created by the grocery store to avoid any surprises or misunderstandings in the future.

Getting a License to Start a Grocery Store

Most grocery stores in Dubai do not operate in free zone areas. Therefore, the most common type of license is a local license issued by the Dubai Department of Economic Development (DED). As with other commercial licenses, you will need to have a local sponsor who retains a 51 percent share in the business. We can help you by finding a reliable local partner and structuring an agreement where your interests are protected.

In 2018, the Business Registration and Licensing (BRL) section in the DED set new criteria for licensing grocery stores in the emirate. The requirements stipulate shop exterior and interior requirements. This includes unified signage with green foreground, red, dark green, and black logo and the term “grocery” clearly displayed and the business identity taking a less prominent role. Shelving space and height were standardized in addition to additional fittings and lighting requirements. These rules were amended to improve the shopping experience for clients.

Understand the Local Rules for Opening a Grocery Store

Dubai municipality has been tightening its control over food products traded at a grocery store and has been organizing periodic and surprise inspection campaigns. This is being done to check compliance of guidelines while enhancing consumer confidence in the food circulating in the emirate.

Here are some other rules that grocery store operators must comply with:

• A standard grocery store business license does not give the license holder the right to sell medical, pyrotechnic, pharmaceutical, alcoholic, herbal or cosmetic products.
• A special permit is required to operate on a 24-hour basis.
• All product pricing must clear to the consumer, along with the date of production and expiry.
• Special promotions must be submitted to a regulatory body for approval.
• All grocery stores must be registered for VAT.
• All customers are entitled to a receipt for their purchase.
• Customers paying by credit card must not be charged any additional fees.

Long Term Success is Based on Providing a Great Shopping Experience

There’s one area where small grocery stores have always seemed to have a leg up on well-established competitors in the UAE – individual service. If your employees take the time to help customers, get to know them and their needs, provide high levels of service, they are much more likely to pay more to shop at your business. Ask yourself, would you roam the crowded aisles of the big hypermarkets in Dubai for a quick shop, or swing by the friendly neighborhood store that has all the basics?

As consultants, we have seen grocery stores fail and succeed. Don’t hesitate to arrange a free consultation with our consultants who can advise you with some top tips to help you get your grocery business license.