RETAILING DECISIONS (FOODWORLD)
OPPORTUNITY RETAILER RESOURCES AND
IDENTIFICATION COMPETENCIES
• Focus on mass market • Wide range of products
• Faster growth of organized retailing MARKETS TO • Value for money
• Focus on food and health ENTER • Close proximity to residential area
• Mega cities in India
DRIVERS OF GROWTH
• The name- FoodWorld portrays the new
age customer
• Located in Residential High streets COMPETITION
• Positioned as functional SHOPPER • Non existent in supermarket form, only
• For the middle and upper middle class PROFILE local players were there like Nilgiris and
• Medium to high range width • Middle and Upper Nanz
• Value for money middle class • Other local retailers situated near
customers’ home
VALUE
PROPOSITION
• Residential full service
SHOPPERS EXPECTATIONS supermarkets
• Prices to be lower than the standard • Value for money
market price
• Air conditioned, clean store and neat
display RETAILIN
• Near their locality and provide extra
services
G MIX
Pricing
PROFITABI Location
LITY Availability of Stock
DRIVERS
FOR FOOD Increasing the variety
WORLD Operational Cost Management
Leveraging the Brand
PRICING
• Competitive Pricing (to be in the line with the corner grocer).
• SKUs or staples category products were cheapest in the cities to attract more regular customer.
• Top 15 Branded SKUs were placed @ 3% below MRP.
• Mega Price offer on at least two SKU every month.
• For the strategic category, aggressive value added range price for protecting margins was to be
followed whereas for the convenience and specialty categories, maximum retail price was to
followed
• 52 weeks continuous promotion.
• Aim to build an image of shop as VALUE for money store.
• For fresh vegetables, The top 5 items would be cheaper in comparison to market price and for the
other vegetables the price were on par with market price.
• Fruits sold on the premium quality price.
LOCATION
• Planned Layout to establish in residential high streets with minimum
6000 household in 2/3 Km radius preferably in shopping area of the
locality.
• Only ground property floor between 3000 to 3500 sq ft selected.
• Preferred outlets were closer to home
NUMBER
OPERATIONA CATEGORY OF
STORE OF
STORES
OPERATING EXPENSES
(RS 000) PBT
L COST A 2 1448 2270
MANAGEME
NT B 9 3569 1448
C 8 2650 1096
• We can see that for all the
three cities the operating
expense is very high. OPERATING EXPENSES PBT
• On an average category A (RS 000)
stores are more profitable
CHENNAI 2533 1441
stores
• In case of stores of category B
and C the operating expense BANGALORE 3526 1850
per store is less but even then
there PBT is less HYDERABAD 1608 518
• To increase the profitability
the company should decrease
the operating expenses
DIFFERENCE BETWEEN THE
PROFITABILITY OF NEW AND OLD STORES
• Facility of Stores
• Ambiance of the Stores
• Variety of Products Available: In 1990 there were 53 core categories of fast-
moving consumer goods with 7,715 SKUs However, by 1996, the total
number of SKUs increased to 15,160
• Pricing of the Products
• Marketing strategy
• Promotion
RECOMMENDATIONS
• They can focus more on mass market rather than targeting niche
• They can create Competitive Advantage by using Backward integration
• In Chennai and Bangalore the PBT/Sq ft is highest for A category stores.
• In case of Hyderabad as stores are new so focus should be on increasing the sales of current store
• From Table1.11 we can see that when we increase the number of stores the gross margin is increasing and the
operating expenses are decreasing
CHENNAI PBT/ [Link] BANGALORE PBT/ [Link]
A 0.138487 A 0.194855
B 0.112051 B 0.012943
C 0.0721 C 0.043841
RECOMMENDATI 25
Margin
ONS
23.24
20.18
20
18.2 17.94
• Focusing on Categories Process Foods, 16.78
Beverage, Non food items and 15
14.79 14.97
Perishables as they have high margin
• They can increase 3 stores in Chennai as
in Chennai all the stores except one are 10
profitable.
• In Bangalore as a B category store is
showing Negative PBT so they should 5
look to reduce the operating expenses
and increase Promotion to increase
sales 0
Staples Processed Beverages Non-food Health and Perishables H/Ware
• Increase the Trading area in Hyderabad Foods Beauty and Home
App.
NUMBER OF STORES THAT FOODWORLD SHOULD OPEN
WHEN IT BECOMES A PROFITABLE STORE
• Once the Stores become
profitable the company should
look into Expand to cities like NUMBER
Mumbai, Kochi, etc CITY OF STORES
•
Chennai 6
Bangalore 8
Hyderabad 5