DATE STAMP: APRIL 2014
DECODING RETAIL START-UP COMPREHENSIVE ROLL-OUT STRATEGIES FOR A SUPERMARKET CHAIN RAHUL GUHATHAKURTA
RETAIL FORMATS
COMPANY OWNED MODEL
FRANCHISE MODEL
SUPERMARKETS
VALUEMARTS
(10,000 – 20,000 Sq. Feet)
(1,500 – 5,000 Sq. Feet)
SUPERMARKET LOCATION ADVANTAGES & LEASE ANALYSIS METRO LINE
MALL - A XXXX/- / Sq.ft
KOBA Cr. TAPOVAN Cr. IIT-G
ONGC
SABARMATI
ASHRAM RD.
MALL – B YYYY/Sq.Ft
PALDI
PHASE 1 : GROUND FLOOR – 10,000 Sq. Ft.
FRUITS
VEG
VEG
VEG
FRUITS
STAPLE - FOOD TROLLEY BAY
HOT OFFER
STAPLE - FOOD
HOT OFFER
HOT OFFER
STAPLE - FOOD
HOT OFFER
STAPLE - FOOD
STAPLE - FOOD
STAPLE - FOOD
TROLLEY BAY STAPLE - FOOD
PRODUCE
STAPLE - FOOD
PRODUCE
TOILETERIES
VEG
PHARMACY
STAPLE - FOOD
VEG
TOILETERIES
VEG
HOT OFFER
CS
FROZEN PRODUCE
HOT OFFER
TROLLEY BAY DAIRY
PRODUCE
POS
POS POS POS POS
POS STAPLE - FOOD TROLLEY BAY
PHASE 2: 1st FLOOR – 10,000 Sq. Ft. (If applicable…) TRIAL
APPARELS
BRANDED APPARELS
POS
TROLLEY BAY
MALE
TRIAL
FEMALE APPARELS
POS
ELECTRONICS / WHITE GOODS
FOLLOW FORECASTED TIMELINE
Oct 20X1 – Opening of 1st Store (Phase 1)
Mid-20X1
Early -20X2
Mid-20X2
Working on VMI – Vendor Managed Inventory System
Integrating Store Level Inventory System Jan 20X3 – Opening of 2nd Store (Phase 1)
Early -20X3
Mid-20X3
Oct 20X2 – To Cross BEP Milestone at 1st Store
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.)
BAKERY
FRESH FARM PRODUCE
CONVINIENCE GOODS (COSMETICS, DETERGENTS, OTC, SKINCARE, ETC.)
PHARMACY
HOME-CARE ACCESSORIES
Step-by-Step Roll Out to Store Strategy
Roll-Out to Store
BUDGET
A&B Local Characteristics, Assortment
Catchment Allocation
Space & Fixture Allocation
Financials by Size Grade
Category Mix
Store Positioning
Sales Per Square Feet Target & Standard Fixture List
Comparative Category Margins
Guidelines of Category Mix & Margin
Consumer Decision Tree
PLANOGRAM METHODOLOGIES - 1
MORE EXPENSIVE
SUPER PREMIUM PREMIUM
PREMIUM
MID PRICE
VALUE/BULK LESS EXPENSIVE
PLANOGRAM METHODOLOGIES - 2
PLANOGRAM METHODOLOGIES - 3
EVOLVING MERCHANDISE MIX
Development
Merchandising Techniques Modification (Addition / Deletion)
Expansion
Product Line / Category
Product Items / Brands
VENDOR DEVELOPMENT CLASSIFICATION Vendor Classes
Description
Vendor Class A
Frequent Buying in Large Quantity
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
Basis of Vendor Negotiations
Trade Discount Quantity Discount Promotional Discount Seasonal Discount Cash Discount Delivery Terms
Attributes HIGHLY TRUSTED
“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
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.) (NOTE: All Cost are mentioned in APPROXIMATE VALUES & Above list is tentative FOR 1 SUPERMARKET ONLY)
Net Price in INR
27,52,320
INVESTMENT BREAK-UP 2: Retail Fixtures Sr. No
Name of Item
Model & Manufacturer
Unit Price in INR
Quantity
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.) (NOTE: All Cost are mentioned in APPROXIMATE VALUES & Above list is tentative FOR 1 SUPERMARKET ONLY)
Net Price in INR
20,00,000 – 30,00,000
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. 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. (NOTE: All Cost are mentioned in APPROXIMATE VALUES & Above list is tentative FOR 1 SUPERMARKET ONLY)
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
Revenue Cycle 1
• Target Sales Margin • Pricing Optimization • Footfall Generation
SALES
Revenue Cycle 2
• Product Listing • Shelf Renting • Sales Promotional Activities
MARKETING
Revenue Cycle 3
• Loyalty Programs • Co-Branding Activities • Deploying Franchise Model
ORGANIZATION CHART
BOARD OF DIRECTORS
CEO/HEAD – RETAIL
KEY ACCOUNT MANAGER
ACCOUNT EXECUTIVE
STORE MANAGER
CATEGORY EXECUTIVE
HEAD CASHIER
BUYING MANAGER
BUYING EXECUTIVE
CASHIER TEAM (CONTRACT)
MERCHANDISER TEAM (CONTRACT)
SHOP FLOOR TEAM (CONTRACT)
LOGISTICS EXECUTIVE
LOGISTICS TEAM (CONTRACT)
FINANCE MANAGER
HR/ADMIN MANAGER
FINANCE EXECUTIVE
HR EXECUTIVE
Store Administration & Facilities Management - Licenses
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 Supermarket & Measures
Central Sales Registration under Central Tax Registration Sales Tax
Sales Tax Office
Supermarket
VAT / Gujarat Sales Tax Registration
Sales Tax Office,
Supermarket
Registration under stipulated section of state sales Tax Act, 1969
MARKETING STRATEGY
SPECIAL OFFER PAMPLETS
IN-STORE BTL & SALES PROMOTION ACTIVITIES
KEY POINTS TO THINK
• 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 crossselling 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.
THANK YOU! OPEN FOR QUESTIONS AND ANSWERS
ABOUT THE AUTHOR
Email:
[email protected] Mob: +91-9978066443
✔ 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 DATE STAMP: APRIL 2014
