Published on April 1, 2014
RAHUL GUHATHAKURTA COMPREHENSIVE ROLL-OUT STRATEGIES FOR A SUPERMARKET CHAIN DECODING RETAIL START-UP DATE STAMP: APRIL 2014
SUPERMARKETS VALUEMARTS RETAIL FORMATS COMPANY OWNED MODEL FRANCHISE MODEL (10,000 – 20,000 Sq. Feet) (1,500 – 5,000 Sq. Feet)
SUPERMARKET LOCATION ADVANTAGES & LEASE ANALYSIS MALL - A XXXX/- / Sq.ft MALL – B YYYY/- Sq.Ft KOBA Cr. IIT-G PALDI ONGC SABARMATI TAPOVAN Cr. ASHRAM RD. METRO LINE
PRODUCE FROZEN PRODUCE DAIRY VEG VEG VEG VEG VEG VEG PRODUCE PRODUCE FRUITS FRUITS STAPLE-FOOD STAPLE-FOOD STAPLE-FOOD STAPLE-FOOD STAPLE-FOOD STAPLE-FOOD STAPLE-FOOD HOT OFFER HOT OFFER HOTOFFERHOTOFFER STAPLE - FOOD PHASE 1 : GROUND FLOOR – 10,000 Sq. Ft. STAPLE - FOOD STAPLE-FOOD POS POS POS POS HOT OFFER HOT OFFER PHARMACY POS POSTOILETERIES TOILETERIES CS TROLLEY BAYTROLLEY BAY TROLLEYBAYTROLLEYBAY
MALE APPARELS FEMALE APPARELS PHASE 2: 1st FLOOR – 10,000 Sq. Ft. ELECTRONICS / WHITE GOODS POS BRANDED APPARELSTRIAL TRIAL POS TROLLEYBAY (If applicable…)
FOLLOW FORECASTED TIMELINE Mid-20X1 Early -20X2 Mid-20X2 Early -20X3 Mid-20X3 Oct 20X1 – Opening of 1st Store (Phase 1) Oct 20X2 – To Cross BEP Milestone at 1st Store Working on VMI – Vendor Managed Inventory System Integrating Store Level Inventory System Jan 20X3 – Opening of 2nd Store (Phase 1) To reach BEP at early stage and to make profits, we have to cut costs aggressively and focus on store-level profitability and supply chain issues.
GROUP CATEGORY CLASSIFICATION STAPLE GOODS (FOOD, BEVERAGES , FROZEN, ETC.) CONVINIENCE GOODS (COSMETICS, DETERGENTS, OTC, SKINCARE, ETC.) PHARMACYBAKERY FRESH FARM PRODUCE HOME-CARE ACCESSORIES
Step-by-Step Roll Out to Store Strategy Store Positioning Category Mix Financials by Size Grade Space & Fixture Allocation A & B Catchment Allocation Roll-Out to StoreBUDGET Local Characteristics, Assortment Guidelines of Category Mix & Margin Comparative Category Margins Sales Per Square Feet Target & Standard Fixture List Consumer Decision Tree
PLANOGRAM METHODOLOGIES - 1 LESS EXPENSIVE MORE EXPENSIVE SUPER PREMIUM PREMIUM PREMIUM MID PRICE VALUE/BULK
PLANOGRAM METHODOLOGIES - 2
PLANOGRAM METHODOLOGIES - 3
EVOLVING MERCHANDISE MIX Merchandising Techniques Product Items / Brands Product Line / Category Development Expansion Modification (Addition / Deletion)
VENDOR DEVELOPMENT CLASSIFICATION Vendor Classes Description Attributes Vendor Class A Frequent Buying in Large Quantity HIGHLY TRUSTED Vendor Class B Semi-Frequent Buying in Large Quantity TRUSTED Vendor Class C Substitute Buying in Medium Quantity TRUSTED Vendor Class D Very Less Buying in Small Quantity TRIAL PURPOSE Vendor Class E Dissatisfaction Encountered NOT TRUSTED/ BLACK-LISTED Trade Discount Quantity Discount Promotional Discount Seasonal Discount Cash Discount Delivery Terms Basis of Vendor Negotiations “VENDOR PAYMENT TERMS INCLUDES – 35 DAYS TO 90 DAYS CREDIT PERIOD.”
INVESTMENT BREAK-UP 1: IT-POS Systems Sr. No Name of Item Model & Manufacturer Unit Price in INR Quantity Net Price in INR 1 POS Terminal TVS TP – A570 70,885 12 8,50,620 2 Thermal Receipt Printer TVS-E- POS RP 3200 12,595 12 1,51,140 3 Customer Pole Display TVS-E PD - VFD220 6,890 12 82,680 4 Cash Drawer TVS-E POS 5,500 12 66,000 5 Barcode Scanner TVS-E BS- L 104 Platina 7,490 12 89,880 6 Barcode Printer TVS-E LP 44 Printer 22,000 4 88,000 7 Computers Any Brand 21,000 6 1,26,000 8 Printers + Fax + Scanner Any Brand 18,000 1 18,000 9 Automated Conveyor Belt + Cashier Desk Suzhou Yuanda Business Equipment Co., Ltd. China (Mainland) 90,000 12 10,80,000 10 Installation - 2,00,000 - 2,00,000 TOTAL (Approx.) 27,52,320 (NOTE: All Cost are mentioned in APPROXIMATE VALUES & Above list is tentative FOR 1 SUPERMARKET ONLY)
INVESTMENT BREAK-UP 2: Retail Fixtures Sr. No Name of Item Model & Manufacturer Unit Price in INR Quantity Net Price in INR 1 Shelves Adwel Racking System India 20 SET MOQ = 5,500 / Unit Depending upon Shop Floor - 2 Gondolas Adwel Racking System India 20 SET MOQ = 5,500 / Unit Depending upon Shop Floor - 3 Refrigerated Shelves India 65,000 – 1,00,000 Depending upon Square Feet/Lt - 4 Refrigerated Beverage (Closed Door) India 75,000 – 1,00,000 Depending upon Square Feet/Lt - 5 Electrical Lightening System India - Depending upon Shop Floor - 6 HVAC System India - Depending upon Shop Floor - 7 Shopping Trolleys Expanda Stand Private Limited, Chennai 1,000 Negotiable Depending upon Footfall Forecast - 8 Shopping Carts Expanda Stand Private Limited, Chennai 450 - 600 Negotiable Depending upon Footfall Forecast - TOTAL (Approx.) 20,00,000 – 30,00,000 (NOTE: All Cost are mentioned in APPROXIMATE VALUES & Above list is tentative FOR 1 SUPERMARKET ONLY)
INVESTMENT BREAK UP 3: OPERATING COSTS/EXPENSES Sr. No Cost Services 1 Manpower Cost Company Payroll Management Team – Store Level, Mid-Level & Seniors Contract Outsourced Store Merchandising, Cleanliness, Cashier, Maintenance Staff 2 Utility Cost Water, Electricity, Telecom etc. 3 Security Cost Company Owned Security CCTV Cameras / RFID Detectors Contract Outsourced Metal Detectors, Hand-Held Scanning Devices etc. 4 Warehousing & Logistics Cost Contract Outsourced 5 Property Rental NIL if Company Owned 6 Marketing Cost Quarter-Wise Budget Submission for Management Approval on Yearly Basis 7 Maintenance Cost Variable A Budget of INR 75,00,000 (75 Lakhs) should be kept for 3 – 6 months for running the operations. (NOTE: All Cost are mentioned in APPROXIMATE VALUES & Above list is tentative FOR 1 SUPERMARKET ONLY) Sr. No Cost Services 1 Product Procurement Cost Depending on Sales , Vendor Negotiation, Category Addition, Consumer Demand, Vendor Supply Chain A Budget of INR 50,00,000 (50 Lakhs) should be kept for 3 – 6 months for the procurement and rotational payment purpose.
SUMMATION OF INVESTMENTS Sr. No Investment Categories Description Value in INR 1 INVESTMENT BREAK-UP 1 IT-POS Systems 27, 52, 320 2 INVESTMENT BREAK-UP 1 Retail Fixtures 30,00,000 3 INVESTMENT BREAK-UP 3A Operating Costs/Expenses 75,00,000 INVESTMENT BREAK-UP 3B Product Procurement Costs 50,00,000 Total 1,82,52,320 i.e., INR 1.82 Crores (NOTE: All Cost are mentioned in APPROXIMATE VALUES & Above list is tentative FOR 1 SUPERMARKET ONLY)
RETURN ON INVESTMENT – GOVERNING FACTORS Sr. No Governing Factors 1 Price Optimization 2 Target Margin Optimization 3 Monitoring Vendor-End Supply Chain Dynamics 4 Store Level Inventory Control 5 Consumer Demand Factors 6 Store Locations and Demographic Factors
•Product Listing •Shelf Renting •Sales Promotional Activities Revenue Cycle 1 •Target Sales Margin •Pricing Optimization •Footfall Generation Revenue Cycle 2 •Loyalty Programs •Co-Branding Activities •Deploying Franchise Model Revenue Cycle 3 SALES MARKETING
ORGANIZATION CHART BOARD OF DIRECTORS CEO/HEAD – RETAIL KEY ACCOUNT MANAGER STORE MANAGER BUYING MANAGER HR/ADMIN MANAGER FINANCE MANAGER ACCOUNT EXECUTIVE CATEGORY EXECUTIVE BUYING EXECUTIVE FINANCE EXECUTIVE HR EXECUTIVE MERCHANDISER TEAM (CONTRACT) LOGISTICS EXECUTIVE LOGISTICS TEAM (CONTRACT) SHOP FLOOR TEAM (CONTRACT) HEAD CASHIER CASHIER TEAM (CONTRACT)
License Subject Issuing Authority For Retail format Registration Certificate Under Shops & Establishments Act Municipality Ward Office Supermarket/ Department Store Trade License Edible Oil, Ready made ice creams , sweets & chocolates Municipality Ward Office Supermarket Dairy License License for cow, buffalo milk Public Health Dept. of Municipality Supermarket License for frozen items License for Frozen Items Frozen Products Market & Slaughter Dept. of Municipality Supermarket Store Administration & Facilities Management - Licenses
License Subject Issuing Authority For Retail format License for rationing For retail sales of pulses, food-grains, sugar,etc Deptt of Civil Supplies Supermarket License for Weights & Measures License for weighing machines Inspector-Weights & Measures Supermarket Central Sales Tax Registration Registration under Central Sales Tax Sales Tax Office Supermarket VAT / Gujarat Sales Tax Registration Registration under stipulated section of state sales Tax Act, 1969 Sales Tax Office, Supermarket Store Administration & Facilities Management - Licenses
SPECIAL OFFER PAMPLETS
IN-STORE BTL & SALES PROMOTION ACTIVITIES
• Big retailers in India have been accumulating losses, mainly because they have been on an expansion spree. An overall slowdown, rising interest rates, delay in realty projects, cash crunch and debt trap forced several retailers to shut shops and defer expansion since 2009. • We should not focus on take-overs and acquisitions, believe in ORGANIC growth by deploying ONE STORE AT A TIME and build a sustainable RETAIL BRAND. • A Tier 1 City should be considered as experimental/target city for next 3 financial years. And, gradually we should move on to Tier-2 from the 4th financial year. • Being in retail industry, helps us to generate huge customer data on the basis of buying pattern, consumption pattern, spending pattern which eventually can be used for cross- selling of other products. • Inbound FDI in Multi-Brand Retail is in news . We have to take it as a sign to invest and develop a home grown retail format in Gujarat and get it valuated by a PE firm or Venture Capitalist Fund after 4-5 Years in Operation. Kindly note, the valuation will totally depend on the brand equity which we are going to build-up on the given time-frame. KEY POINTS TO THINK
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✔ Brand Management, New Product Development, ATL, BTL, Project Management, Country Intelligence - International Business, Customer Life Cycle Management, Retail Management, Strategy Consulting. ✔ Global Supply Chain & Logistics Planning & Optimization, Demand Planning, DC Network Set-Up & Planning, SEZ/FTZ Operations, Product Development & Customization and Vendor Management & Collaboration. ✔ Oracle 11i & R12 Implementation-Supply Chain Management:INV,P2P,Sourcing,iSupplier, iProcurement and Order Management, SLA, PMI Methodologies, Cross-Functional Dynamics. ✔ Specialties: Expertise in Emerging Markets – India/ UAE & MENA / Russia & CIS/ EU – CEE Countries Travelled: Switzerland, France, Austria, Turkey, Ukraine, Uzbekistan, Russia, Singapore, Oman & U.A.E Email: firstname.lastname@example.org Mob: +91-9978066443 ABOUT THE AUTHOR DATE STAMP: APRIL 2014
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