Yes it is. People will always need food. You get to buy low and sell high(er). If times get tough you can eat the slightly expired food that you can't sell to customers - at least the frozen and canned stuff.
No. You'll eventually be surrounded by other types of competitors and every other customer will attempt to shoplift from you.
No the mark up is low. Can you compete against Wallmart and Target selling groceries. I don't think so.
Mom and pop grocery stores make their money on sandwiches and subs and crap like that. They only make a couple cents on shelf items.
Put up a bunch of those electronic slots on a corner of the wall that say amusement only no cash Come down to Miami and you will see all these little Bodegas making money, selling cuban coffee and stuff through the window,groceries,nicknacks,etc.. some have the "Amusement only slots" etc.. They thrive quite well in Miami.
Or come to NYC. The markup on the stuff at the corner non-chain grocery store is ridiculous and they are always packed. 'Course the rent is insane as well.