Group9_RM Term Paper Final_Effectiveness of Small Retail Stores - Athicas

8/8/2019 Group9_RM Term Paper Final_Effectiveness of Small Retail Stores - Athicas

1/8

Retail Management

Term Paper on

Measuring the Effectiveness ofSmall Retail Stores Athicas

November 15

2010

Group 9

AbhishekAggrawal 0911074

Akhil Gupta 0911076

Josefalarran Izquierdo 09E5004

Suman Mondal 0811061

Simone Messina 09E5070


2/8

Term Paper on Measuring the Effectiveness of Small Retail Stores Athicas Retail Management

Group 09 Page2

CONTENTS

1. Howdo we Define Effectiveness .................................................................................................................. 3

2. Understanding the Businessand Environment ............................................................................................. 4

2.1 Understanding the Missionand Goals of the Business................................................................................. 4

2.2 Understanding the Business Variables......................................................................................................... 4

2.2.1 Store Life Cycle...................................................................................................................................... 4

2.2.2 Store Characteristics............................................................................................................................. 5

2.2.3 Product and Service Portfolio ............................................................................................................... 5

2.2.4 Store Economics................................................................................................................................... 5

2.2.5 Retail Strategy ...................................................................................................................................... 5

2.2.6 Future Plans.......................................................................................................................................... 6

2.3 Understanding the Environment ................................................................................................................. 6

2.3.1 CompetitorAnalysis .............................................................................................................................. 6

2.3.2 Understanding the Customers.............................................................................................................. 6

3. FrameworkforMeasuring Effectiveness ofAthicas .................................................................................... 6

3.1 Metricsfrom thestore perspective...................................................................................................... 6

3.2 Metricsfrom thecustomerPerspective ...................................................................................................... 7

4. CompetitorBenchmarkingand Gap Identification ....................................................................................... 8

5. Future Course ofAction.................................................................................. Error! Bookmark not defined.


3/8


Group 09 Page3

1. OBJECTIVE The project is aimed at measuring effectiveness of small store formats in our case the campus store

Athicas,by a thorough understanding of the mission of thebusiness. It isagainst this missionandgoals that

theeffectiveness of thestrategy of theretailerwillbe measured. The objective isalso to find out anddefine

what characteristicsdefine theeffectiveness of the store and rate the store on these dimensions through

extensiveconsumersurveysand in-depth interviewswith thestore managers/owners. F inally, thestudy aims

to come up withrecommendations that canbe implemented to improveAthicaseffectiveness to achieve its

objectives.

2. METHODOLOGYThestore operatesinanalmost monopoly likesituationinboth theformats campusstoreand theextension

counter near the students hostel blocks. In such a scenario, measuring customer service becomes an

important aspect bothfrom thestoresand theconsumers perspective to find out ifany gapsexist in the

expectations ofservicelevels.

The primary focus is to find out if the store iseffectiveby rating the store onvarious parameters that we

believewilldefineeffectivenessforthestore

Even though thestore operates inanearmonopoly situation, thereareafewcompetitorswho couldfill the

gaps by introducing new products, greater variety and depth in existing products, better services or a

combination of thesefactors.

We thenintend to compare ourunderstanding of the performance ofAthicasstoresandanidealstore that a

customerhasexperienced

Variousresearch toolshavebeendeployed to collect dataandanalyze. Wehavecarried out theresearchand

collectedinformation using thefollowing plan ofaction:

y Secondary research to explore theeffectiveness measurement techniquesy InterviewswithAthicas Ownerandstaff to understand theiroperationsy FGD and InterviewswithAthicascustomers to understandcustomerbuyingbehaviorand their

expectations

y Developingaframework to assesseffectiveness ofAthicasy Conductingacustomersurveyy Analyzing thedatacollected usingstatistical modeling


4/8


Group 09 Page4

We thenintend to present ourrecommendations onhowAthicascanbecome moreeffective to achieveits

goals.

3. DEFINING EFFECTIVENESSAs pertheexistingresearch,effectivenessrefers to howsuccessfully organisationsachieve theirmissions (Wan

Ching, 2010). Effective organizationsare those that produce moreandhigher quality productsandadapt

more effectively to environmental changes, at the same time maintaining a high level of satisfaction of

individual members (Likert, 1973). Effectiveness measures are concerned with understanding the unique

capabilities that organisationsdevelop to ensure that success (Wan Ching, 2010)

However, there isnot muchresearchavailable on measuringeffectiveness ofsmall retailstores likeAthicas

presently. Most of the research concentrates around designing systems to improve effectiveness of huge

corporations, most of whichare completely irrelevant to the store that the paper has studied. Hence, the

paperproposesanactionableframeworkandan implementation plan to measureand then identify areas of

improvement foreffectiveness ofAthicas Storesat the IIM B Campus

4 . UNDERSTANDING THE BUSINESS AND ENVIRONMENT2.1 UNDERSTANDING THE MISSION AND GOALS OF THE BUSINESS

Ashasbeenalready establishedabove, to measureeffectiveness,a thorough understanding of the mission of

thebusinessis of utmost importance. It isagainst this missionandgoals that theeffectiveness of thestrategy

of theretailerneeds to be measured.

According to our preliminary hypothesis, both the Athicas stores in the IIMB campus will have the same

mission,whichis to makesustainable profitsinsort of monopolisticsituationin thecampus.

2.2 UNDERSTANDING THE BUSINESS VARIABLES

2.2.1 STORE LIFE CYCLEWewouldwant to get aroughsense of thestage of maturity of thebusinessinaccordancewith the Wheel of

Retailing theory and theory of thelifecycle ofbusinessitself

Ourpresent understandingis that althoughaccording to the theoreticaldefinition,Athicaswillbecalleda Early

Stage Retail, but the owner might have not muchambitions to expand beyond the campus orevengrow

within thecampus. Its mostly asustainable profits thestore might belookingas just a means to earnlivelihood


5/8


Group 09 Page5

ratherthenlookingasarealgrowingbusiness. Thesamewillbeconfirmedby interviewswith thestore owner

in thenext stage of the project. (READTHEORY)

2.2.2 STORE CHARACTERISTIC S Weintend to identify the type ofstoreaccording to the theoriesin Retail Classification,based onwhichafew

characteristics of thestorecanbecompared orextrapolated. We plan to use Ownership Basedand Strategy

Basedclassification.

2.2.3 PRODUCTAND SERVICE PORTFOLIOWe plan to study the Merchandise management processforthestore,withfocus on:

y Detailed product andservices portlofio forthe 2 storesy Howdo they choosewhat to stockandinhow much quantityy Howdo they monitorwhethertheirdecisionhavebeencorrect ornot and takecorrectiveactions

2.2.4 STORE ECONOMICSWe plan to understand thefollowingin thissection:

y Revenues of the 2 storesy Averagenumberofcustomersserved perdayy Revenue percustomery Home/ Room deliveries perdayy Growth Rate of Revenuesy Target setting processforRevenuesy Working Capitaly Profit Margins

2.2.5 RETAIL STRATEGY We then plan to lookinto theretailstrategy forthe 2 storesindetail,withhighfocus on thefollowing:

y Supply chainstrategy with most focus onsuppliersforAthicasy Customeracquisitionandretentionstrategy

o Product display strategyo Credit facility


6/8


Group 09 Page6

2.2.6 FUTURE PLANSWe thenalso intend to understand the plans forgrowth that the ownershaveeither inside or outside thecampus

2.3 UNDERSTANDING THE ENVIRONMENT

2.3.1 COMPETITOR ANALYSIS

It isnecessary to completely understand thecompetitivelandscapeforAthicas to measureandbenchmarkit

oneffectiveness. Wewillspecifically coverthefollowing:

y Intensity of Competitiony Entry BarriersforCompetitorsy What is theentry processy Are thereaudit processesandstandards that Athicasneeds to meety Contractual obligationsin IIMBy Strategic Group Analysis

2.3.2 UNDERSTANDING THE CUSTOMERS

We plan to understand thefollowingaspectsabout thecustomersin the project:

y Customerprofilein terms ofdemographicsandhow thisvariesamong the 2 storesy Customerbuyingbehavioranddecision making processy Purchase patterns ofcustomers

5. MEASURING EFFECTIVENESS

6. FRAMEWORKFOR MEASURING EFFECTIVENESS OF ATHICAS From theliteraturereviewand the teams own understanding, theeffectiveness ofAthicaswillbe measured

on thefollowing metrics:

3. 1METRICS FROM THE STORE PERSPECTIVEy Functional Effectiveness


7/8


Group 09 Page7

o Ourpreliminary hypothesisis that Athicas operatesandis organizedin manpowerallocationaround 3 majorfunctions Food preparation,storeandcashhandlingand Delivery function.

Each of the 3 functions are manned by 1 employee each. We plan to measure the

effectiveness of this function and identify any gaps in either the division of functions or

manpowerallocationin orderto improveeffectiveness,broadly on 2 metrices

Delaysin time to complete tasks Quality /Accuracy of the taskscompleted

y Debt Collection Effectivenesso GivenAthicashaslarge proportion ofsales oncredit, 2 metricareimportant in thissection,

namely:

Time ofcollection ofdebt Baddebt percentage

y Product Portfolio Planning Effectivenesso Theeffectiveness of thestorewillneed to be measured in terms of planningeffectiveness.

Thisisbroadly to understandif thestoreisable to planas perthechangingcustomerdemand

patterns orothervariablesin theenvironment andadaptswell ornot

y In-Store Process Effectivenesso Therearevariouscrucialinstore processes that arecriticalforcustomersatisfaction,suchas

display effectiveness;etc

y HRManagement Effectiveness

We plan to study thefollowingaspects of HRM to understand if these practicesareeffective-employee morale, productivity,commitment,absenteeism,compensation

system,appraisals,employer-employeerelationshipsandemployee turnoverrate

3.2 METRICS FROM THE CUSTOMER PERSPECTIV E

y Store Experience Effectivenesso Behaviorof Store Personnelisakey variable to beevaluatedfrom acustomerperspectiveo StoreAppearance

Sense of Hygiene that thecustomerperceives Product Display effectivenessforthecustomer

y Inventory management Effectivenesso Weneed to understandhow oftenstockoutsforparticularSKUs take place,howsoonand

promptly they arerefilled

y Pricing Strategy Effectiveness


8/8


Group 09 Page8

o Weneed to seeif the pricingstrategy adoptedby Athicasisbeing perceivedwellby thecustomers

y Credit Facility Effectivenesso How many customersactually value thecredit facility?o If they do,howvaluableit is?

y Service Effectivenesso Weneed to understand the orderservicing timeanddelivery timedynamicsandwhetherthe

customersaresatisfiedwithit

7. COMPETITOR BENCHMARKING AND GAP IDENTIFICATION We thenintend to compare ourunderstanding of the performance ofAthicasstoresamong themselves on the

effectiveness parameters

8 . ALSO, WE PLAN TO EVALUATE THEOTHER COMPETITORSOF ATHICAS ON THESAMEPARAMETERSAND COMPARE ATHICAS EFFECTIVENESSWITHTHEM ON

VARIOUSPARAMETERS

Documents

Group9_RM Term Paper Final_Effectiveness of Small Retail Stores - Athicas